How Safe is Your Online Marketplace? Get INFORMed About the USA’s New Anti-Fraud Laws

Discover the impact of the new INFORM Consumers Act on eCommerce marketplaces. Keep reading to learn how Trolley is staying ahead of fraud risks and ensuring trust for its customers.

It’s no secret that eCommerce is booming; with more buying and selling of goods and services  online comes even more concern about *cue scary music* fraud. Marketplace operators have enough to worry about without adding safety risks to the mix, which can come in the form of fake profiles, listings or counterfeit goods. Increased levels of fraud can lead to lower levels of trust in your platform, which tarnishes your brand and turns customers away.

Long story short; fraud is a serious issue. Global governments are noticing this as well, so they’re putting regulations in place to help marketplaces manage the risks. In the United States, a new law called the INFORM Consumers Act is coming into play this month, which will require many marketplaces that operate online to collect information about sellers on their platform, so that the government can more easily investigate fraud cases.

Why are laws like INFORM necessary?

According to our team, regulations like INFORM are a natural next step for lawmakers: “In the past, purchasing counterfeit products may have been done in a physical space, like buying from Canal Street, for example. Now all of these sales have gone online, so this new law is being put in place so that there can be more regulations to prevent this type of fraudulent activity and criminal activity from happening in digital spaces.”

What you need to know about INFORM:

• The law’s full name is the Integrity, Notification, and Fairness in Online Retail Marketplaces Consumers Act. Pretty convenient acronym, right?
• It was introduced in 2021, passed in 2022 and goes into effect on June 27th 2023.
• The official purpose of the law is to require online marketplaces to collect, verify, and disclose certain information regarding high-volume third party sellers of consumer products to inform consumers.

What is a high-volume third party seller? 

High-volume, third-party sellers include online marketplace participants that conduct 200 or more transactions resulting in total revenues of $5,000 or more during a continuous 12-month period. These sellers must have sold new or unused consumer products. 

What information do these sellers need to collect under the INFORM Consumers Act?

Online marketplaces must acquire these sellers’ (1) bank account numbers, (2) government-issued identification, (3) tax identification numbers, and (4) contact information. Online marketplaces must verify this information and annually certify any changes to it.

Further, online marketplaces must make certain information (e.g., sellers’ names and contact information) available to consumers through the sellers’ product listings and provide consumers with methods to report electronically and by telephone any suspicious activity on the marketplace.

What does INFORM mean for Trolley?

It’s super important for us at Trolley to stay up-to-date when it comes to this “new wave” of fraud screenings. During the recipient onboarding process that we offer to our customers and the people they pay, “we are gathering this type of information to validate that the person is indeed the person they say they are. With this tax information, this just validates that even further. And that’s done when the recipient signs up. When payments are going out, we have additional screenings that are in place through our compliance and treasury teams.”

For example, we have transaction monitoring in place, as well as Politically Exposed Persons (PEP) and sanctions screenings, on top of Office of Foreign Assets Control (OFAC) sanction list screenings to verify that the person receiving the payment is not on any watch lists. We use government bodies to validate that no fraudulent activity has been recorded.

At the end of the day, we not only want to offer more security to merchants, but also take it a step further to protect the end user, ie. the buyers that are on their marketplaces, to validate that the person that they’re sending their money to and the products that they’re purchasing are indeed legitimate.

More on that below 👇

What’s next for Trolley’s compliance and anti-fraud features?

We’re going to be giving our merchants the tools they need to be able to meet the requirements of the new INFORM Consumers Act.

“With the Trust product, we’re going to be bringing in a new workflow: identity verification, which can be either done during the onboarding stage or triggered at other stages. For instance in the case of the INFORM Act, this will allow merchants to choose to perhaps only trigger that ID verification, which will prompt the user to scan a piece of their government ID and take a selfie, if a seller passes the threshold laid out by INFORM, 200 sales and $5000 worth of gross revenues.”

“So this is going to be allowing our merchants to choose whose identity they want to be validating and at what point.” 

How can marketplaces prepare for INFORM?

Trolley is offering tools to our merchants so that they will be able to meet all of the requirements of this new act. But marketplace operators should also take the time to “look through and make sure that any internal processes they already have in place are contributing to the new laws and checking those boxes.” 

Looking ahead, it’s normal to feel pressure to become INFORM compliant, and that it may take some time for everyone (including us at Trolley) to get up to par with these new requirements. 

Her advice? Marketplaces should arm themselves with information: “Get as much information as possible on how this impacts your business, how it could be impacting you in the future. If there are any additional resources that you can find, that would be the best thing – just to get as much information as possible in advance and to make a little bit of a game plan for the remainder of the year.”

Want to keep your buyers and sellers even more protected from fraud?

We take data security, risk and fraud very seriously here at Trolley. Don’t fall behind when it comes to new laws and regulations – reach out to a member of our team today to learn more about how Trolley can help your online marketplace satisfy the requirements of the INFORM Consumers Act. We’re happy to help!