The Inform Act takes effect today — here’s how it aims to target organized retail theft

The Inform Act, a new law that aims to curb organized retail theft and the sale of counterfeit and harmful products on online platforms, takes effect on Tuesday as more retailers blame theft as a reason for lower profits. 

The bipartisan legislation, which stands for Integrity, Notification and Fairness in Online Retail Marketplaces, passed in December as part of an omnibus spending bill, more than a year after it was introduced by Reps. Jan Schakowsky, D-Ill., and Gus Bilirakis, R-Fla.

The identity of sellers on online marketplaces is typically unknown, but the new law seeks to change that. Under the Inform Act, web vendors such as Amazon and eBay will be required to verify and share information on third-party sellers that do a high volume of transactions on their platforms.

“The goal of the INFORM Consumers Act is to add more transparency to online transactions and to deter criminals from acquiring stolen, counterfeit, or unsafe items and selling them through those marketplaces,” the Federal Trade Commission, which will be tasked with enforcing the law along with state attorneys general, said on its website. 

“The Act also makes sure online marketplace users have a way to report suspicious conduct concerning high-volume third party sellers.”

Once the bill passed, online marketplaces were given six months to get into compliance. Now that the law has taken effect, they can face steep civil penalties for violations. 

The law comes after trade associations and retailers lobbied Congress about an alarming uptick in retail theft that they say was driven by lax regulations governing third-party sellers and verification processes on online platforms. They claim organized crime groups steal merchandise from stores and then resell it on online marketplaces, typically at a lower amount than the sticker price.

Many experts say organized retail…