[House Report 117-555]
[From the U.S. Government Publishing Office]
117th Congress} { Report
2d Session } HOUSE OF REPRESENTATIVES { 117-555
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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.
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