On 27 June 2023, the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act (INFORM Consumers Act) will come into effect in the US, as confirmed by the Federal Trade Commission (FTC).
The INFORM Consumers Act is designed to offer support to both consumers and brands by putting more onus on online marketplaces to ensure their platforms are transparent and secure. It aims to reduce fraud and counterfeiting and to stamp out the practice of selling stolen or illegal goods online.
The act’s primary targets are online marketplaces used by third-party sellers. Under the terms of the new law, these marketplaces will have to collect information about high-volume sellers and make it available to consumers, offer efficient reporting tools that allow consumers to flag suspicious activity, and be prepared to sever ties with sellers who do not comply with the new rules.
Seller information that marketplaces will be required to collect includes bank details, tax information, and contact details, and any data must be verified before it can be disclosed to consumers. Online marketplaces that fail to adhere to these new rules can expect to face fines of $50,120 for every infringement.
While much of the responsibility is being placed on marketplaces, merchants must also be willing to cooperate and provide the necessary information as and when it is required.
For affiliates and affiliate managers, this act is significant, and it will require careful planning and forethought to ensure they are compliant when the rules come into effect. Affiliates who refer customers to third-party ecommerce merchants must ensure that these merchants are complying with the new rules. This will require communication between partners and a collaborative approach to adapting business practices to the new act. Affiliates and publishers should be proactive and make sure offers that consumers are seeing match the end outcomes to stamp out deceptive advertising.
Affiliate networks that connect brands with affiliate marketers must also take action ahead of the act. They must work to make sure that any merchants on the network are verified and authorized to operate under the new rules. Failure to do could see networks link affiliates with merchants that are in direct infringement of the rules, which could seriously harm brand image and reputation.
In addition, lead generation businesses in the US must be prepared to verify if their partners are adhering to the new rules. Otherwise, they could be directing customers to unauthorized or even fraudulent merchants, which could have serious repercussions.
