Preserving the National INFORM Consumers Act to Protect Small Businesses and Prevent an Inconsistent State Law Patchwork

The federal INFORM Consumers Act took effect less than one year ago, yet certain big box retail companies are already looking to change it. These companies are pushing unnecessary amendments to state INFORM laws that would create a new patchwork of inconsistent rules for businesses that operate online. These efforts go against the clear intent of the federal INFORM Act, which created a consistent and clear national standard for businesses to follow.

Enacted to curb organized retail theft and the sale of counterfeit products online, the INFORM Consumers Act received bipartisan support in Congress, as well as full input from industry. The law specifically included critical language preempting state laws and establishing a uniform compliance standard for small- and medium-sized businesses to follow, no matter where they operate.

Some big box retailers involved in writing the federal law are now hitting state capitols, claiming newly discovered "loopholes" that they say need to be closed through one-off state bills. In reality, these companies are seeking changes to state law that would prioritize their business model over those of online competitors. This would hurt both consumers and small businesses. It is not a coincidence that these changes, like the original INFORM law, impose zero new requirements on brick-and-mortar retail.

In Georgia, both chambers of the state's legislature passed SB 472. If signed into law, this bill would require online marketplaces to do the impossible: track sales that do not occur on their marketplace. Online marketplaces can't track off-platform and in-person transactions because they have no reliable way to determine what happened.

For example, the bill could create hurdles and cumbersome data collection requirements for families doing something as simple and routine as selling used furniture online or advertising items for an upcoming garage sale on social media. Current INFORM Act laws recognize the reality that online marketplaces can only determine sales threshold limits when they have reliable information at their disposal.

Patchwork legislation like Georgia's will hurt small businesses and consumers and do nothing to prevent organized retail crime. What would prevent organized retail crime? Meaningful legislation targeted at modernizing criminal statutes, funding for law enforcement, and creating opportunities for public-private partnerships. Georgia's SB 472 does none of these things.

Georgia is not the only state considering bills like this. California also introduced similar legislation, and big box retail companies could seek out bills that favor their business model over others in additional states. Bills like Georgia's SB 472 would unwind the work that's been done in Congress that ensures we have one uniform, national standard. Hopefully, state lawmakers will see through this ploy and reject it for what it is - harmful and unnecessary.