[House Report 117-555]
[From the U.S. Government Publishing Office]


117th Congress}                                            { Report

  2d Session  }        HOUSE OF REPRESENTATIVES	           { 117-555   

======================================================================
 
TO REQUIRE ONLINE MARKETPLACES TO VERIFY CERTAIN INFORMATION REGARDING 
  HIGH-VOLUME THIRD PARTY SELLERS OF CONSUMER PRODUCTS ON SUCH ONLINE 
  MARKETPLACES AND TO DISCLOSE TO CONSUMERS CERTAIN CONTACT AND OTHER 
       INFORMATION REGARDING SUCH HIGH-VOLUME THIRD PARTY SELLERS

                                _______
                                

 November 14, 2022.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

 Mr. Pallone, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 5502]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 5502) to require online marketplaces to verify 
certain information regarding high-volume third party sellers 
of consumer products on such online marketplaces and to 
disclose to consumers certain contact and other information 
regarding such high-volume third party sellers, having 
considered the same, reports favorably thereon without 
amendment and recommends that the bill do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Summary..............................................1
 II. Background and Need for the Legislation..........................2
III. Committee Hearings...............................................3
 IV. Committee Consideration..........................................4
  V. Committee Votes..................................................4
 VI. Oversight Findings...............................................4
VII. New Budget Authority, Entitlement Authority, and Tax Expenditures4
VIII.Federal Mandates Statement.......................................5

 IX. Statement of General Performance Goals and Objectives............5
  X. Duplication of Federal Programs..................................5
 XI. Committee Cost Estimate..........................................5
XII. Earmarks, Limited Tax Benefits, and Limited Tariff Benefits......5
XIII.Advisory Committee Statement.....................................5

XIV. Applicability to Legislative Branch..............................5
 XV. Section-by-Section Analysis of the Legislation...................5
XVI. Changes in Existing Law Made by the Bill, as Reported............6

                         I. PURPOSE AND SUMMARY

    H.R. 5502, the ``Integrity, Notification, and Fairness in 
Online Retail Marketplaces for Consumers Act,'' establishes a 
national standard that directs online platforms that allow for 
third party sellers of consumer products to verify the identity 
of high-volume third party sellers, enabling consumers to 
obtain basic identification and contact information for certain 
high-volume third party sellers.

                II. BACKGROUND AND NEED FOR LEGISLATION

    Over the past several years, Americans have been spending 
more time on online marketplaces. For instance, in 2016, 79 
percent of Americans reported making a purchase online compared 
to just 22 percent in 2000.\1\ When Americans were no longer 
able to leave their homes for essential goods during the COVID-
19 pandemic, online marketplace activity surged again. By 2024, 
online marketplace sales are projected to increase to nearly 
$600 billion.\2\
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    \1\Pew Research Center, Online Shopping and E-Commerce (Dec. 19, 
2016) (pewresearch.org/internet/2016/12/19/online-shopping-and-e-
commerce/).
    \2\Congressional Research Service, International Trade and E-
commerce (July 23, 2020) (IF11194).
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    With greater activity in online marketplaces, bad actors 
saw a newer ecosystem ripe for abuse. In the last few years, 
counterfeit and stolen products have become pervasive on major 
online marketplaces, endangering consumers and harming the 
integrity of e-commerce sites. In 2018, as part of a review of 
intellectual property rights enforcement at America's ports of 
entry, the Government Accountability Office (GAO) found that 20 
of 47 items it purchased from third-party sellers on popular 
consumer websites were counterfeit.\3\ According to the United 
States Customs and Border Protection, 16 percent of counterfeit 
products seized in Fiscal Year 2018 posed a direct risk to 
health, safety, and security.\4\
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    \3\Government Accountability Office, Intellectual Property: 
Agencies Can Improve Efforts to Address Risks Posed by Changing 
Counterfeits Market (Jan. 2018) (GAO-18-216).
    \4\Customs and Border Protection, Intellectual Property Rights 
Fiscal Year 2018 Seizure Statistics (Aug. 9, 2019) (www.cbp.gov/sites/
default/files/assets/documents/2019-Aug/IPR_Annual-Report-FY 2018.pdf).
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    Online marketplaces have also become conduits for the 
resale of shoplifted goods.\5\ Criminals can offload stolen 
goods on online marketplaces, where they have been able to 
remain relatively anonymous and close accounts quickly and 
easily.\6\ The anonymity has allowed these criminals to more 
easily evade enforcement.\7\ Such anonymity also allows 
criminals to create multiple profiles or accounts under 
different names in order to continue selling stolen goods after 
being removed from one online marketplace. According to a study 
by the Retail Industry Leaders Association and Buy Safe 
America, nearly 70 percent of large retailers have reported an 
increase in retail theft, and an even larger percentage of 
retailers expect it to get worse.\8\ Such activities not only 
harm consumers, but also raises costs to retailers due to the 
financial loss of goods and the increased security to protect 
employees. This legislation is designed to protect consumers 
and legitimate business activity with a uniform national 
standard.
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    \5\FBI, Organized Retail Theft: New Initiative to Tackle the 
Problem (Apr. 6, 2007) (archives.fbi.gov/archives/news/stories/2007/
april/retail040607).
    \6\How Online Markets May Be Contributing to Organized Retail 
Crime, NPR (Dec. 7, 2021) (www.npr.org/2021/12/07/1062016956/how-
online-markets-may-be-contributing-to-organized-retail-crime).
    \7\Shoplifting syndicates are costing retailers billions every 
year. Industry insiders are pointing to the ease of online reselling 
for helping crime rings thrive, Business Insider (Aug. 22, 2021) 
(www.businessinsider.com/shoplifting-thieves-professional-organized-
retail-crime-home-depot-2021-7).
    \8\Retail Industry Leaders Association and Buy Safe America, The 
Impact of Organized Retail Crime and Product Theft in the United States 
(Nov. 18, 2021) (www.rilastagemedia.blob.core.windows.net/rila-web/
rila.web/media/media/campaigns/buy%20safe%20america/fact%20sheets/the-
impact-of-organized-crime-and-theft-in-the-united-states.pdf).
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                        III. COMMITTEE HEARINGS

    For the purposes of section 3(c) of rule XIII of the Rules 
of the House of Representatives, the following hearings were 
used to develop or consider H.R. 5502:
    The Subcommittee on Consumer Protection and Commerce held 
an informational hearing on Wednesday, March 4, 2020, entitled, 
``Buyer Beware: Fake and Unsafe Products on Online 
Marketplaces.'' The Subcommittee received testimony from the 
following witnesses:
           Dharmesh Mehta, Vice President of Worldwide 
        Customer Trust and Partner Support, Amazon;
           Amber Leavitt, Associate General Counsel and 
        Head of IP, eBay;
           Jeff Myers, Senior Director for Intellectual 
        Property, Apple;
           Andrew Love, Head of Brand Security/
        Investigations/Global Enforcement, Specialized 
        Bicycles;
           David Friedman, Vice President, Advocacy, 
        Consumer Reports; and
           Lori Wallach, Direct, Global Trade Watch, 
        Public Policy.
    The Subcommittee on Consumer Protection and Commerce held 
an information hearing on Thursday, July 9, 2020, entitled, 
``Consumers Beware: Increased Risks During the COVID-19 
Pandemic.'' The Subcommittee received testimony from the 
following witnesses:
           Kevin Anderson, Senior Deputy Attorney 
        General, Director, Consumer Protection Division, North 
        Carolina Department of Justice;
           Sally Greenberg, Executive Director, 
        National Consumers League; and
           Thomas Quaadman, Executive Vice President, 
        Center for Capitol Markets Competitiveness, Chamber 
        Technology Engagement Center, Global Innovation Policy 
        Center, U.S. Chamber of Commerce.
    The Subcommittee on Consumer Protection and Commerce held 
an informational hearing on Thursday, February 4, 2021, 
entitled, ``Safeguarding American Consumers: Fighting Scams and 
Fraud During the Pandemic.'' The Subcommittee received 
testimony from the following witnesses:
           Bonnie Patten, Executive Director, 
        TruthinAdvertising.org;
           Jessica Rich, Distinguished Fellow, 
        Institute for Technology Law and Policy, Georgetown Law 
        School;
           Hon. William E. Kovacic, Global Competition 
        Professor of Law and Policy, Professor of Law, 
        Director, Competition Law Center, George Washington 
        University School of Law; and
           Traci Ponto, Spokane COPS Crime Victim 
        Advocate, Spokane Community Oriented Policy Services.
    The Subcommittee on Consumer Protection and Commerce held a 
legislative hearing on Thursday, October 14, 2021, entitled, 
``Investing in American Jobs: Legislation to Strengthen 
Manufacturing and Competitiveness.'' The Subcommittee received 
testimony from the following witnesses:
           Caolionn O'Connell, Ph.D., Senior Physical 
        Scientist, RAND Corporation;
           Scott Paul, President, Alliance for American 
        Manufacturing;
           Eric Sills, CEO, Standard Motor Products; 
        and
           Scott Lincicome, Senior Fellow, Economic 
        Studies, CATO Institute.

                      IV. COMMITTEE CONSIDERATION

    H.R. 5502, the ``Integrity, Notification, and Fairness in 
Online Retail Marketplaces for Consumers Act,'' was introduced 
on October 5, 2021, by Representatives Schakowsky (D-IL) and 
Bilirakis (R-FL) and was referred to the Committee on Energy 
and Commerce. Subsequently, on October 6, 2021, the bill was 
referred to the Subcommittee on Consumer Protection and 
Commerce.
    On November 16, 2021, H.R. 5502 was discharged from the 
Subcommittee on Consumer Protection and Commerce. On November 
17, 2021, the full Committee met in open markup session, 
pursuant to notice, to consider H.R. 5502 and 11 other bills. 
No amendments were offered during consideration of the bill. 
Upon conclusion of consideration of the bill, the full 
Committee agreed to a motion on final passage offered by 
Representative Pallone, Chairman of the Committee, to order 
H.R. 5502 reported favorably to the House, without amendment, 
by a voice vote.

                           V. COMMITTEE VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list each record vote 
on the motion to report legislation and amendments thereto. The 
Committee advises that there were no record votes taken on H.R. 
5502, including a motion by Mr. Pallone ordering H.R. 5502 
favorably reported to the House, without amendment.

                         VI. OVERSIGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII and clause 2(b)(1) 
of rule X of the Rules of the House of Representatives, the 
oversight findings and recommendations of the Committee are 
reflected in the descriptive portion of the report.

 VII. NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    Pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives, the Committee adopts as its own the 
estimate of new budget authority, entitlement authority, or tax 
expenditures or revenues contained in the cost estimate 
prepared by the Director of the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1974.
    The Committee has requested but not received from the 
Director of the Congressional Budget Office a statement as to 
whether this bill contains any new budget authority, spending 
authority, credit authority, or an increase or decrease in 
revenues or tax expenditures.

                    VIII. FEDERAL MANDATES STATEMENT

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

       IX. STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII, the general 
performance goal or objective of this legislation is to require 
online marketplaces to verify certain information regarding 
high-volume third party sellers of consumer products on such 
online marketplaces and to disclose to consumers certain 
contact and other information regarding such high-volume third 
party sellers.

                   X. DUPLICATION OF FEDERAL PROGRAMS

    Pursuant to clause 3(c)(5) of rule XIII, no provision of 
H.R. 5502 is known to be duplicative of another Federal 
program, including any program that was included in a report to 
Congress pursuant to section 21 of Public Law 111-139 or the 
most recent Catalog of Federal Domestic Assistance.

                      XI. COMMITTEE COST ESTIMATE

    Pursuant to clause 3(d)(1) of rule XIII, the Committee 
adopts as its own the cost estimate prepared by the Director of 
the Congressional Budget Office pursuant to section 402 of the 
Congressional Budget Act of 1974.

    XII. EARMARKS, LIMITED TAX BENEFITS, AND LIMITED TARIFF BENEFITS

    Pursuant to clause 9(e), 9(f), and 9(g) of rule XXI, the 
Committee finds that H.R. 5502 contains no earmarks, limited 
tax benefits, or limited tariff benefits.

                   XIII. ADVISORY COMMITTEE STATEMENT

    No advisory committee within the meaning of section 5(b) of 
the Federal Advisory Committee Act was created by this 
legislation.

                XIV. APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

           XV. SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Collection, verification, and disclosure of information by 
        online marketplaces to inform consumers.

    Subsection (a) mandates that online marketplaces require 
high-volume third party sellers to provide information to the 
online marketplace, including a bank account number, contact 
information, a business tax identification number or a taxpayer 
identification number, and a current working email address and 
phone number. Online marketplaces are required to periodically 
notify high-volume third party sellers of the requirement to 
keep and update such information. Online marketplaces are also 
required to verify the accuracy of such information and suspend 
any future sales activity of such seller until such seller 
provides such information.
    Subsection (b) mandates that an online marketplace require 
high-volume third party sellers with an aggregate total of 
$20,000 or more in annual gross revenues on such online 
marketplace to disclose to consumers the seller's or its 
supplier's name or company name, physical address, and contact 
information. Online marketplaces may provide for partial 
disclosure of the information required under this subsection 
under certain situations but must suspend any future sales 
activity of sellers failing to comply with the requirements of 
this subsection. Online marketplaces are required to disclose 
to consumers a reporting mechanism that allows for electronic 
and telephonic reporting of suspicious marketplace activity to 
the online marketplace.
    Subsection (c) states that a violation of subsection (a) or 
(b) by an online marketplace shall be treated as an unfair or 
deceptive act or practice subject to civil penalties. 
Subsection (c) also provides that the Federal Trade Commission 
may promulgate regulations under the Administrative Procedure 
Act with respect to the collection, verification, and 
disclosure of information under this section provided that such 
regulations are limited to what is necessary to collect, 
verify, and disclose such information.
    Subsection (d) provides for enforcement by state attorneys 
general.
    Subsection (e) allows for severability of provisions found 
to be invalid.
    Subsection (f) defines multiple terms used throughout the 
legislation, including ``Commission,'' ``Consumer Product,'' 
and ``Online Marketplace,'' among others.
    Subsection (g) preempts any State, political subdivision of 
a State, or territory of the United States laws, regulations, 
rules, requirements, or standards that conflict with the Act.
    Subsection (h) states this section shall take effect 180 
days after the date of the enactment of this Act.

       XVI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    There are no changes to existing law made by the bill H.R. 
5502.

                                  [all]