The Federal Trade Commission (FTC) created the INFORM Consumers Act in 2022. But what does this law mean, and how can businesses stay compliant?
It’s no secret that online shoppers turn to Amazon to purchase the products they want and need. And now, Amazon makes it more accessible for users to shop.
89% of consumers are more likely to purchase products from Amazon than a competitor, and 98.07 million users access the Amazon app once a month.
While Amazon is convenient for both buyers and sellers, there are issues with the platform–and online selling, in general. In 2022, the FTC received 2.4 million fraud reports, with online shopping scams being the second-most prevalent crime.
This is one of the many reasons the FTC created the INFORM Consumers Act, which takes effect on June 27th, 2023.
What Is the INFORM Consumers Act?
The Integrity, Notification, and Fairness in Online Retail Marketplaces (INFORM) for Consumers Act will require all marketplaces (including Amazon) to authenticate various business information.
- Tax ID
- Government ID
- Contact Details
- Bank Account Data
All of this will confirm the legitimacy of a business and make the online shopping process more transparent.
Remember that the INFORM Consumers Act doesn’t apply to all businesses. You only need to verify your information if you had over 200 sales in a 12-month period that amounted to over $5,000.
Why Is the INFORM Act Important?
Since consumers aren’t shopping in-store and speaking to a salesperson, it’s difficult to know the accuracy of a product and the listing information.
Proving the legitimacy of a business is one way for online marketplaces to prove trust among their audience, especially since Amazon spent $1.2 million in 2022 fighting fraudulent e-commerce products. Some examples of fraud include selling stolen, counterfeit, and unsafe items.
Related content: Amazon Project Zero
How Does the INFORM Consumers Act Affect Amazon Sellers?
While the law is overall positive, there are pros and cons that reputable sellers will face after the INFORM Consumers Act takes effect. Here’s how INFORM will affect sellers.
The Positives
Legitimate sellers should have nothing to worry about. In fact, the INFORM Act will likely benefit your business even more. Before the act, reputable sellers were competing with fraudsters.
Since problematic sellers can hide behind anonymity on online marketplaces, listing counterfeit and illegal products is all too common. In fact, Amazon blocked 800,000 fraudulent selling accounts at one point.
With Amazon seller verification, legitimate sellers will see a fairer marketplace and healthy competition.
Related content: How to Use Amazon Transparency
The Negatives
The biggest downside to the INFORM Consumers Act is the Amazon seller account verification, mainly because businesses must provide sensitive information.
If some of this information, such as your bank account information and tax ID number, lands in the hands of a hacker, it can be disastrous for your business.
Fortunately, your financial information won’t be publicly made available. However, Amazon must disclose other information to buyers, such as your name and address.
This shouldn’t be a big deal for large businesses, since most already make this information public. But 19 million businesses are based in the owners’ homes. If the owner has to make their personal home address public, this can create different privacy concerns.
What Happens If You’re Non-Compliant
If you need Amazon seller identity verification to comply with the INFORM Consumers Act, you likely already received an email from Amazon with instructions to verify your data.
What if you don’t verify this information by the deadline? You could face Amazon account suspension and/or withheld payments until you verify the required information.
How to Verify Data for Compliance
As stated previously, if you need to verify your information for the INFORM Consumers Act, you likely already received an email from Amazon. This email will detail the steps you need to take.
For most sellers, you must go to your Seller Central account. You’ll likely see a banner alert to confirm your data. You can also go to either the Settings or Account Health pages. You’ll see the prompt you need to follow to verify your information.
FAQs
How can I prepare for the INFORM Consumers Act?
Always have your business information on hand. In addition to your location and contact information, Amazon will need to verify your bank account information and tax ID.
There’s a chance Amazon already verified the data it made available, so keep any other business information close by that may not be included in your Seller Central account. Amazon also recommends reading the information available on your account and ensuring it’s accurate.
Amazon already verified my information when I signed up. Is any of this changing?
No. Amazon has always had processes set in place to verify business information. This occurs during and after registration, to ensure your information remains accurate. The only thing that’s changing is Amazon has to take extra steps to verify more information, specifically for high-volume sellers.
Will Amazon protect my information?
Absolutely. Amazon takes data protection extremely seriously, especially since a large chunk of sellers are small and medium-sized businesses. You can rest easy knowing Amazon implements high-security measures to protect confidential data. Read Amazon’s Privacy Notice to learn more about how they protect your data.
I already verified my information, but I received a notification saying my account is at risk for deactivation. What’s going on?
Updates for account verification can take 24 hours, so try logging onto your Amazon account the next day. If you’re still receiving the deactivation warning after verifying your information, contact seller support.
What can I expect in the future?
After you complete the initial data verification process, Amazon may reach out if you need to confirm additional data. They may also send you annual notifications to re-verify any existing data. If any of your information changes, you may need to complete verification again.
Do You Need Help With Compliance?
The INFORM Consumers Act ensures shoppers have transparency when buying online. To verify legitimate businesses, online marketplaces such as Amazon must verify your information.
While the INFORM Consumers Act is integral to consumer trust and transparency, navigating these new legal changes can be difficult for sellers. Fortunately, we can help.
If you’re overwhelmed by all these new e-commerce regulations, we can help sellers work with the new legislature while increasing sales. Schedule a call with us today.
Author
Stephanie Jensen has been writing e-commerce content for seven years, and her copy has helped numerous stores rank on Amazon. Follow her on LinkedIn for more insight into freelance writing and creating high-quality content.
