Act No. 2022-441
by Rep. Gil Isbell, R-Gadsden
and Sen. J.T. “Jabo” Waggoner, R-Vestavia Hills
As of Jan. 1, 2023, high-volume online marketplaces must obtain and verify straightforward, common-sense information from third-party sellers. The Alabama law mirrors proposed federal legislation. The intent of both is to dam the flood of counterfeit products and stolen merchandise on e-commerce sites.
High-volume, third-party sellers selling consumers goods on online marketplaces will have to disclose to the marketplace: the bank account number or name of who is getting paid by the marketplace, contact information, its tax identification number and a working email address and phone number. The marketplace then must verify the provided information. Legitimate sellers already disclose most of that information on their business license or to the IRS.
Third-party sellers with more than $20,000 in annual gross sales on a marketplace platform additionally are required to disclose to consumers the sellers’ name, physical address as well as a working phone number, email address or other means of direct electronic messaging. These requirements don’t prohibit the marketplace from preventing fraud, abuse or spam through its communications.
The law excludes sellers of used or reused goods and casual sellers with under 200 transactions and $5,000 in annual sales.
A violation of Act No. 2022-441 will be considered a deceptive trade practice, enforceable by the attorney general or any district attorney.
Criminals are increasingly turning to online marketplaces to move mass quantities of stolen merchandise quickly and discretely. One of the more popular items to steal and sell online is baby formula, which can be harmful to infants if the thieves do not store the formula properly. A recent study places the lost economic impact to Alabama alone at $123 million. The goal is to close that window for organized actors who are hiding behind fake business accounts and screennames to compete with legitimate businesses.
That is also the goal of the Integrity, Notification and Fairness in Online Retail Marketplaces for Consumers, or INFORM, Act – H.R. 5502. Alabama joins the Colorado and Arkansas legislatures in passing legislation matching the federal proposal to get ahead of the issue while they wait for a national solution.
Alabama’s law clearly states that the legislation’s provisions do not limit or keep high-volume online marketplaces from participating in the state’s Simplified Sellers Use Tax Remittance Program.
This article is part of the Alabama Retail Report, a communication for Alabama Retail Association members. Not a member? Join us!
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