With The INFORM Act, Congress Plans To Empower Ken Paxton To Go After Amazon If It Doesn’t Tell Him Who Sold The Books He Doesn’t Like

Policy

from the make-no-marketplace-law dept

Don’t think this headline is hyperbole; as this post will explain, it is not.

But what follows here isn’t just about books, Amazon, or even Paxton himself. What the headline captures is but one example of the catastrophic upshot to the long-concerning INFORM Act bill, should it get passed, as may now happen, what with it having been shoved into the politically popular (and ridiculously enormous) United States Innovation and Competition Act that awaits passage [skip to Section 20213 in the linked document to find the bits on INFORM], despite the INFORM Act having nothing to do with helping America compete in the global economy (except insofar that a law like it tends to make it more difficult).

In short, it is a law with minimal merit but great potential for mischief given how it is currently drafted.  And in an age where government officials and others are openly eager to go after people for things they have said, it seems a certainty that, if enacted with this language, these concerns will be realized and result in serious expressive harm.

To understand why, it is important to recognize what the INFORM Act is for: to identify marketplace sellers.  To an extent, such a policy might seem to make sense because it helps sellers be held accountable.  As we regularly argue, it is better to hold sellers liable for things that go wrong with their sales than hold marketplaces liable for their sellers.  When law tries to do things the other way around and make marketplaces liable for their sellers, it creates an unmanageable risk of liability, which makes it hard for them to offer their marketplace services to any sellers (including those of perfectly safe products).  And that’s bad for smaller, independent sellers, who need marketplaces to get their products to consumers, as well as consumers who benefit from having more choices of sellers to buy from, which online marketplaces allow them to have.

So if you are going to hold sellers liable, having some way to know whom to hold accountable in the event that liability needs to be pursued could make some logical sense. On the other hand, it is not clear that such a rule mandating the identification of sellers is necessary, because consumers could use their ability to identify a seller as a factor in their purchasing decisions.  Consumers could choose to buy from a seller who voluntarily provided their identifying information over one who didn’t but who may be selling the product more cheaply, and consumers could make that make that purchasing decision based on whether it is worth it to them to pay a little more for more accountability, or to pay less and take the chance that there may be no recourse if something goes wrong.

It is a paternalistic Congress who would insist on taking away that choice entirely, and it effectively reintroduces marketplace liability to have a regulation that puts legal pressure on marketplaces to force sellers to identify themselves, if marketplace platforms are going to be able to support any sellers at all. Even if requiring seller identification might sometimes be a best practice for marketplaces to choose to require (and a basis upon which consumers could choose to shop from marketplaces on that basis), it is something else entirely for law to demand it. There are often chilling consequences when platforms are forced to make their users do something – in general, but especially here, as this bill is currently drafted.

The fundamental problem with a rule that requires all sellers to identify themselves is that it will take away the ability to have anonymous sellers at all. And even if you think removing seller anonymity is a good outcome for when it comes to selling potentially dangerous products, destroying the right to sell things anonymously is an absolutely terrible outcome for myriad products where product safety is never an issue. Especially when these products are expressive. Think books. T-shirts. CDs. Is Congress worried that consumers will have no one to sue if they get a papercut, a rash, or a headache? This bill requires even sellers of those sorts of expressive goods to identify themselves, and such a law is simply not constitutional.

As we’ve discussed many, many times before, there is a right to speak anonymously baked into the First Amendment. And that right isn’t constrained by the medium used. People speak through physical media all the time, which is why they produce expressive things like books, t-shirts, and CDs, which consumers like to buy in order to enjoy that expression. But this law inherently requires anyone who would want to monetize their expression – again, a perfectly legal thing to do, and something that other law, like copyright, even exists to encourage – to identify themselves. And that requirement will be chilling to any of the many speakers eager to spread their message, who simply can’t pay that sort of price to do it.

There is some language in the bill that does sort of narrow the intended law’s applicability, but not adequately. (Or clearly: while it limits it to “high volume sellers,” there is one provision that defines “high volume” as $5000k in annual sales or 200 transactions [§ (f)(3)(A)] and another that defines it as $20,000 [§ (b)(1)(A)(i)], but neither is very high if you are in the business of selling expressive products to make your living, or have any expressive product that happens to achieve significant popularity). There is also a tiny bit of mitigation for sellers that sell out of the home or via personal phone numbers [§ (b)(2)(A)], but it still puts an onus on them to regularly “certify” to the platform that this criteria is applicable and, still, information about them, including name and general location, will be disclosed to the world. In other words, these sellers will have to be identified, and for when they sell any sort of good, because the law’s definition of applicable goods is so broad [§ (f)(2)] and reaches even expressive goods for which there is no valid consumer safety interest for a law like this to vindicate that could survive the constitutional scrutiny needed to overcome the harm to the right of anonymous speech it will cause.

And the concern is hardly hypothetical, which returns us to the headline. The INFORM Act opens the door to state attorney general enforcement against marketplace platforms, with the ability to impose significant sanctions, potentially even if only a few of a marketplace platform’s users fail to identify themselves properly, because it will be easy for them to claim that an online marketplace is out of compliance with this law (there’s no real limiting language in it that might describe what non-compliance would look like) and in a way that “affects one or more residents of that State,” as every online marketplace inevitably does. [§ (d)(1)]. Of course, even as applied to non-expressive products this provision is a problem in how it gives states undue power over interstate commerce, which should be the exclusive domain of Congress. In fact, it’s a significant problem that individual states have already tried to impose their own versions of INFORM. These efforts provide the one legitimate reason for Congress to try to regulate here at all, in order to pre-empt that resulting mess. Yet this bill, as drafted, manages to only double-down on it.

But the concern for the threat to expressive freedom becomes especially palpable when you think about who can enforce it against whom, and for what, and Texas state attorney general Ken Paxton serves as a salient Exhibit A for what a nightmare this law would unleash. Would you like to write a book about any of the subjects states like Texas have tried to ban? If so, good luck with self-publishing it anonymously. How about selling a t-shirt expressing your outrage at any of the policies states like Texas have tried to promote? Better hope your shirt isn’t so popular that you have to identify yourself! Same with CDs: your ability to make money from your music is conditional on you identifying yourself to the world, so you’d better be completely ok with that. Of course, the problem is not just that certain state attorney generals with a tendency to use their powers against people they don’t like can find you, but that, thanks to this law, anyone else who doesn’t like what you’ve said will be able to as well.

Again, even at best this law remains of dubious value as an enforceable policy and unduly burdensome on sellers and marketplaces in a way that is likely to be costly. But if supporting it is the Faustian bargain Congress wants to basically blackmail affected constituencies into making in order to avoid something even worse (like SHOP SAFE, which has also been shoved into the same enormous competition bill and which would wreck e-commerce for everyone except maybe Amazon), then so be it. But not as currently drafted. Especially not with the attorney-general provision (which, even with a less-hairpin trigger and less super-charged enforcement powers, is still a bad idea in how it invites any and every state to mess with online interstate commerce as their own personal whims would dictate), and certainly not with such broad applicability to essentially every seller of every sort of good.

To be constitutional this bill absolutely must, at minimum, exempt any seller of any expressive good from having to identify themselves, and no platform should be forced by this law to require otherwise. When the First Amendment says that Congress shall “make no law” that abridges on free expression it means any law, including Internet marketplace law. Congress needs to abide by that prohibition and not so carelessly do such abridging here.

Filed Under: e-commerce, inform act, liability, marketplaces, shop safe, transparency