April 28, 2023

Legal Corner: INFORM Act Effective June 2023 Seeks to Increase Seller Transparency on Online Marketplaces


With growing concerns about the safety, quality, and authenticity of products being sold on online marketplaces and the third-party sellers that sell them, Congress is stepping in with a new law designed to give more transparency and impose more accountability on online marketplace operators with respect to the higher volume third-party sellers that sell on these platforms.

Late last year, the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act (the INFORM Act) was signed into law and takes effect at the end of June. Its purpose is primarily to increase transparency for consumers, brands, and online marketplace operators about the sellers and sources of products that consumers buy online. It requires that online marketplace operators collect, verify, and disclose certain information about their “high-volume third party sellers.” Based on the Act’s definitions, these high-volume sellers are split into two categories:

By June 27, 2023, online marketplace operators will have to have a system in place that allows them to do the following for these Tier 1 and 2 “high volume” third-party sellers:

  • Collect certain information from all high-volume sellers, including bank account information, names, Tax IDs, and current working email addresses and phone numbers.
  • Disclose the contact information of the Tier 2 high-volume sellers clearly, either on a product listing page or on the customer’s order confirmation or other post-purchase communication. With few exceptions, this contact information must include the seller’s full name or company name, physical address, current working phone number and email address or other direct messaging means, and whether the seller’s product was supplied from a different seller upon purchase.
  • Verify all information collected and disclosed within 10 days of collection.
  • Suspend any high-volume seller that does not comply with these requirements.
  • Provide and disclose for consumers a reporting mechanism for electronic and telephonic reporting of suspicious marketplace activity.

If an online marketplace does not comply with the INFORM Act, the Federal Trade Commission (FTC), state attorneys general, or other state officers can bring an action against the online marketplace. There is no private right of action under the Act meaning that a brand or a consumer is not able to sue a marketplace operator for failing to follow the Act.

Time will tell how and whether online marketplaces will be able to implement the INFORM Act and how frequently the FTC and state attorneys general will enforce it. Based upon the FTC’s first-of-its-kind enforcement action against a manufacturer for its alleged “review hijacking” on Amazon product variation listings, some sort of FTC investigation or enforcement action into certain marketplace operator’s compliance with the INFORM Act seems likely. Undoubtedly, however, bad-actor sellers will surely attempt to find ways to skirt the requirements, evade identification, or avoid qualification as “high-volume” sellers under the Act. Vorys eControl will continue to monitor these developments as the Act takes effect and is enforced.

If you have any additional questions, please reach out to Vorys eControl attorney Emma Morehart at: