Online seller insurance that meets Amazon's rules.

The INFORM Act at 200 sales

The federal INFORM Consumers Act (15 U.S.C. 45f) has been in effect since June 27, 2023. Most of its duties fall on the online marketplace, not the seller.

• High-volume seller. 200 or more discrete sales or transactions of new or unused consumer products and $5,000 or more in gross revenues in any continuous 12-month period during the previous 24 months. Only sales made through that marketplace, with payment processed by the marketplace or its payment processor, count.
• What the marketplace collects. Within 10 days after you qualify, the marketplace must collect your bank account or payee information, a business tax ID or taxpayer ID, and contact information, including a working email address and phone number. It must verify that information within 10 days after collecting it.
• Annual certification. At least once a year, the marketplace must notify you to keep your information current. Within 10 days of that notice, you electronically certify your changes or that nothing has changed.
• What buyers see. If you have $20,000 or more in annual gross revenues on that marketplace, it must clearly and conspicuously disclose your full name, physical address, and contact information on the product listing page, or in the order confirmation or account transaction history. At your request, a seller with only a residential street address may have just the country and state disclosed, but buyers must still be able to reach you by phone, email, or other electronic messaging.
• Suspension. If you don't provide required information or certification, the marketplace must give you notice and 10 days to comply, then suspend your future sales activity until you do.

A marketplace's violation is treated as a violation of an FTC rule on unfair or deceptive practices, and state attorneys general can sue in federal district court. My practical advice: use the same legal name and address on your marketplace certification, your liability policy, and any certificate of insurance you upload.

What the FTC review rule bans

The FTC's Consumer Reviews and Testimonials Rule (16 CFR Part 465) went into effect October 21, 2024. If you depend on star ratings, it bars:

• Fake reviews. You may not write, create, or sell a review that misrepresents that the reviewer exists, that the reviewer used the product or had experience with the business, or what that experience was. You also may not buy a consumer review, or spread a testimonial, that you knew or should have known misrepresented those things.
• Paying for a sentiment. You may not give compensation or other incentives in exchange for, or conditioned expressly or by implication on, a review expressing a particular sentiment, positive or negative.
• Insider reviews. You may not procure reviews from your officers, managers, employees, agents, or their immediate relatives for posting on a third-party platform when you knew or should have known they misrepresented those things.
• Suppression. No one may use an unfounded or groundless legal threat, a physical threat, intimidation, or a public false accusation made knowingly or with reckless disregard to stop a review or get one removed. You also may not misrepresent that the reviews you display are most or all of those submitted when you hide reviews based on their rating or negative sentiment. Removing defamatory, harassing, or clearly false reviews regardless of sentiment is excepted.

The buying and insider provisions don't apply to reviews that result from a generalized request to your purchasers. The FTC's Q&A says the rule doesn't ban incentives that don't require a particular sentiment, though failing to disclose an incentive could violate the FTC Act. Courts can impose civil penalties for knowing violations. If you use a review service or an agency, get its methods in writing before it posts anything for you.

Official sources

• 15 U.S.C. 45f, INFORM Consumers Act (Cornell LII)
• FTC: Informing Businesses about the INFORM Consumers Act
• 16 CFR 435.1, definitions (Cornell LII)
• 16 CFR 435.2, mail, internet or telephone order merchandise (Cornell LII)
• 16 CFR 465.2, fake or false reviews (Cornell LII)
• 16 CFR 465.4, buying reviews (Cornell LII)
• 16 CFR 465.7, review suppression (Cornell LII)
• FTC: Consumer Reviews and Testimonials Rule Q&A
• California Civil Code 1723 (california.public.law)
• CDTFA Publication 109, Internet Sales