Online shopping scams often are built around pitching bargains to unknowing consumers who think they're getting the real deal but end up losing good money on fake or stolen merchandise.
Finally, we could see more of a crackdown on the crooks.
The INFORM Consumers Act went into effect on June 27, requiring online marketplaces to verify key information from "high volume third-party sellers." These sellers have had 200 or more separate sales or transactions of new or unused consumer products, and $5,000 or more in gross revenues during any continuous 12-month period in the past 24 months, according to the Federal Trade Commission (FTC).
INFORM stands for the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act. Retailers and others lobbied Congress to tackle the spike in organized retail theft, which involves then selling stolen goods online at deep discounts.
How the crackdown against fake goods will work
Going forward, online marketplaces must gather more information about who exactly is selling online and, as a result, slow down online sales of stolen high-end sneakers, counterfeit handbags and other phony goods.
NEW YORK - JUNE 22: Knock-off luxury watches are displayed by sellers along a sidewalk on Canal Street in Manhattan on June 22, 2023 in New York City. Online marketplaces are now putting new policies in place to crackdown on sale of stolen and counterfeit goods, too. According to the U.S. Intellectual Property and Counterfeit Goods Office, the value of the international counterfeit luxury items market is estimated to be between $400 billion to $600 billion. (Photo by Spencer Platt/Getty Images)
Online marketplaces covered under the law, according to the FTC, must "suspend high-volume third party sellers that don’t provide the required information and must offer a clear way for consumers to report suspicious conduct."
The goal, according to an FTC spokesperson, is for the new requirements to lead to less fraud as online marketplaces take more proactive steps to verify that only legitimate sellers are operating on their platforms.
Online marketplaces could need to spend more money on new controls. But in the long run, you'd think such actions should boost business if consumers know that they're not about to be played as part of some crime ring. Consumer watchdogs warn that some items, such as risky toys and unsafe cosmetics, are sold by unscrupulous vendors online, too.
Last year, the FTC received nearly 360,000 complaints related to online shopping fraud — and 43% of those complaints involved losing money. The total loss reported was nearly $359 million and the median loss was $179. Online shopping fraud ranks No. 2 for complaints, behind imposter scams.
The FTC data also notes that military consumers filed about 12,600 online shopping-related complaints in 2022 — with 73% of those reports involving some financial loss. The total loss for military consumers was about $25 million with a median loss of $189 each.
Teresa Murray, the consumer watchdog at the U.S. PIRG Education Fund, said the new law will help cut into shady online sales, particularly by making it tougher for thieves to sell stolen merchandise online.
Many online marketplaces haven’t been doing enough, she said, to protect consumers from sellers who appear to be peddling stolen or counterfeit goods.
The red flags of online fraud
Consumers, of course, still need to look out for red flags to avoid getting scammed.
PIRG's Murray warns that consumers should still be suspicious of ridiculously low prices being advertised, an online seller who seems to have a lot of watches or handbags to unload with the tags still on them, buying medication online that could have unregulated ingredients and sellers based overseas.
It never hurts to do an online search about scams and rip-offs. Recognize that crooks can use stolen photos to make a deal look legitimate, too.
Every single shopping holiday — including hot deals on everything from flip-flops to electronics in July — consumers are warned about the sale of counterfeit goods online. Top brands that scammers focus on, according to an alert from the Better Business Bureau, include Nike shoes, NFL clothing, Apple gadgets, Louis Vuitton handbags, Tiffany jewelry and LEGO toys.
Of course, some online scammers amazingly have just the right puppy or kitten at a bargain price — a pet that will never show up even after you hand over a crateful of cash.
Some online marketplaces, such as eBay, say they support the passage of the new regulations. The national standard can "protect consumers from bad actors who seek to misuse online marketplaces, while ensuring important protections for sellers," according to a statement sent to the Free Press Monday from an eBay spokesperson.
Amazon stated on its blog that it began contacting sellers who are covered by this new law several months ago to help them comply. "We have been communicating regularly with instructions and resources, and we have a large group dedicated to calling sellers to walk them through the verification process and answer any questions," the blog states.
The FTC sent letters to 50 online marketplaces nationwide notifying them about their obligation to comply with the new law. Violations could result in civil penalties of $50,120 per violation for online marketplaces.
And in this surreal world of scams, the FTC letter suggests that online marketplaces warn sellers that they need to "avoid potential imposters attempting to trick them into sharing sensitive personal or account information."
Online marketplaces will be verifying a seller's identity, including asking for tax ID numbers, government-issued IDs and bank account information. The marketplaces must implement protocols to identify and remove counterfeit goods from their platforms.
The INFORM Act gives enforcement authority to state attorneys general and other officials authorized by the state.
Where you can report online fraud
If you received counterfeit goods from a seller, alert the online marketplace and report this issue to the FTC at reportfraud.ftc.gov.
If you believe you’ve purchased a counterfeit or knockoff product, report it to the U.S. Consumer Product Safety Commission at www.SaferProducts.gov or call 800-638-2772.Problems with counterfeit medications, food and other products overseen by the Food and Drug Administration can be reported to the FDA.
The StopFakes.gov site is the government's umbrella site for reporting an online vendor selling fake goods.
