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FTC: Online Marketplaces Need To Police Fake Goods

 |  June 21, 2023

The Federal Trade Commission (FTC) is reminding online marketplaces of the duty to ferret out fake merchandise.

The agency issued a notice Tuesday (June 20) on the new Integrity, Notification and Fairness in Online Retail Marketplaces for Consumers Act — or the INFORM Consumers Act — set to go into effect June 27.

“The INFORM Consumers Act requires online marketplaces to protect consumers from counterfeit, unsafe and stolen goods by verifying their high-volume third-party sellers’ identities, and making it easier for consumers to report suspicious marketplace activity,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a news release. “The commission will enforce the act to the fullest extent possible and will collaborate with our state partners to hold online marketplaces accountable.”

The FTC has sent letters to 50 online marketplaces urging them to review the INFORM Act and take steps to be ready to comply next week. Violations of the law may be treated as a violation of an FTC rule, which means marketplaces could face civil penalties of $50,120 per violation.

Related: Regulatory Humility: Should Legislators Rethink Plans to Overhaul Online Marketplaces?

Some companies have already begun their own campaign against fake goods. Amazon in April debuted its Anti-Counterfeiting Exchange, which lets participating stores share information about counterfeiters to help all industry participants identify and stop counterfeiters who might try to use their services.

Amazon reported earlier this year that it had prevented 6 million counterfeit products from entering the ecosystem in 2022, making some headway in beating back the tide of counterfeit merchandise that has bedeviled online marketplaces for years.

PYMNTS reported in November that counterfeiters were enjoying a boom, with counterfeit and pirated goods making up $500 billion per year in global trade.

However, many younger consumers said they don’t care if they’ve purchased fakes, as they’re more concerned about saving money.

It’s part of the same mindset that has led to the rise of reCommerce, which in turn has led brands like Rolex to invest in the authentication of its pre-owned goods.