Online marketplaces boost small businesses. Congress wants to overregulate them

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Our economy is struggling to recover from the pandemic. Companies are understaffed, and the cost of doing business is rising. Against this backdrop, Congress is advancing its latest anti-tech legislation, the INFORM Consumers Act, which threatens to stifle small businesses’ recovery by introducing new regulations on online sellers and marketplaces.

During the pandemic, online marketplaces such as Amazon, eBay, and Etsy helped millions of small businesses stay alive. For some, this was their existing e-commerce activity and, for others, a new necessity. But for all that took advantage, online marketplaces were a lifeline. In 2018 alone, online marketplaces provided more than $145.1 billion in economic value to small businesses — a number that certainly increased during the pandemic.

The INFORM Consumers Act was introduced to combat online counterfeiting. Proponents argue that anonymous accounts are enabling online sales of counterfeit and stolen goods. As a resolution, the bill would require “high-volume” sellers, defined as those with 200 transactions a year and $5,000 in sales, to disclose personal data in their public listing — including their full legal names and business address.

The new law would also require marketplaces to collect and verify this data, including collecting a government-issued photo ID, a government-issued record verifying business information, and a business tax identification number. Failure by a seller to provide this information will result in the marketplace suspending the seller’s account.

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