For The Umpteenth Time, The INFORM Act Is Still Unconstitutional And Has No Business Being Attached To Any Bill Congress Needs To Pass

from the taps-the-sign-again dept

Writing about the terrible ideas Congress has is often like babysitting a toddler bent on sticking his finger in a socket. At a certain point there is the temptation to say, “Fine! Learn the hard way!”

But in the case of the INFORM Act it won’t be Congress who learns the hard lesson but all the Americans whom these bad, undercooked laws will hurt.

What is especially frustrating is that the INFORM Act is not a new bill. It has been lurking for a while in the corridors of the Capitol with political support so tepid that the only way it ever seems to have any chance of passage is if it can get glued to a different bill that Congress has the political will – and, indeed, the political need – to pass, like the annual NDAA (National Defense Authorization Act). We’ve seen the bill’s sponsors try to slip it past their colleagues like this before – in fact, just last year! But nothing about the bill has gotten better with age: it still is of dubious merit, and in its current form an unconstitutional incursion on rights of free expression protected by the First Amendment. So dubious and so unconstitutional is it that it is shocking that any member of Congress would want to be associated with it. And maybe they wouldn’t, if they’d actually had the chance to read it and not had it shoved down their legislative throats in the waning days of a lame duck session.

True, they may not be aware of the problems because superficially the bill may seem like a good idea: consumers buy things, sometimes they get hurt by these things, and when that happens it may be appropriate to bring a lawsuit against the party who sold the thing – law has long supported this sort of accountability. It does get tricky, however, when the things were purchased through an online marketplace and the identity of the seller may not be apparent to the buyer. It’s hard to bring a lawsuit against someone whose identity you don’t know. The INFORM Act is all about trying to make sure that buyers can always know who the seller is.

Which may sound innocuous enough, or even a potentially good idea. Accountability is a fine thing to encourage, but to actually require it is something else entirely – and not actually necessary. After all, consumers regularly make purchasing choices based on the identity of who is selling them a product when that reputation matters to them – it’s why we have the entire field of trademark law, so that consumers can identify the source of their goods. And they can choose, as they always can choose, whether to give their business to the business they can identify and trust, when being able to identify them is important to them. In other words, consumers can protect themselves: when it’s important for them to know who is selling them the good they want to buy they can pick the online vendor who supplies it over one who doesn’t.

So at best this law is superfluous to actual consumer need, creating needless compliance costs for online marketplaces that will ultimately be passed along to consumers already unhappy about higher prices. But the reality is much worse, because it essentially prohibits anonymous selling, and that is an enormous constitutional problem given all the things that do get sold online, including books, music, posters, t-shirts and all sorts of goods where the expression they convey is a significant factor driving the purchase. Because that means that people can no longer communicate online anonymously if they want to sell a good embodying that message.

And that matters, because one thing online marketplaces have helped foster is the democratization of commerce. It’s no wonder that some big companies have come out in support of the bill (see, e.g., the Home Depot, Walgreens, 3M, CVS Health, Nordstrom, Dick’s Sporting Goods, Gap Inc., HP, Levi Strauss & Co., Phillips, Rite Aid), because they know that it hurts the small, independent vendors whose competition undercuts their market share. But it makes no sense for the online marketplaces (e.g., eBay, Etsy, Poshmark, Pinterest, Redbubble), whose business is about supporting smaller, independent vendors, to also back it, except to the extent that it may be seen as a political compromise to forestall an even worse bill (see, e.g., SHOP SAFE, which is another ill-considered legislative idea of potentially catastrophic effect on American commerce that refuses to die). But no matter what the political expediency, the INFORM Act is simply not benign enough to support.

To see why it is such a bad idea, consider some examples. Want to publish a politically provocative book? You’ll have to do it under your own name. How about a CD or DVD? Same thing. How about pro-choice t-shirt? You’ll have to out yourself, which means that Texas Attorney General Ken Paxton is going to know who you are.

The bill could, of course, be fixed. It could, for instance, exempt expressive goods, for which there is unlikely to be any risk of physical harm to consumers and thus no justification for this incursion on seller privacy. But fixing it would involve actually reading the bill, studying the underlying policy challenge, and caring about whether and how a proposed regulatory solution might or might not be appropriate. Whereas the sponsors of the INFORM Act only care about scoring political points for “doing something,” regardless of how dumb and dangerous that something is, and getting their Congressional colleagues to go along by putting them in the position where they can’t say no, no matter how much they need to.

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Comments on “For The Umpteenth Time, The INFORM Act Is Still Unconstitutional And Has No Business Being Attached To Any Bill Congress Needs To Pass”

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18 Comments
TKnarr (profile) says:

The problem that needs addressed isn’t so much that consumers need to know who’s selling the goods, it’s more that online marketplaces are deceptive about who’s selling the goods. In a physical store there’s no question but that the store is the seller. If you walk into a Walmart and buy X and it’s defective or dangerous, Walmart can’t turn around and say it was a distributor who sold the item, not Walmart, and the consumer can’t sue Walmart over it. On Amazon, though, it’s often not clear whether an item is being sold by Amazon, sold by a third party and only warehoused and shipped by Amazon, or sold and shipped by a third party with Amazon only handling the payment processing. We have businesses that do third-party sales in the physical world, but normally they don’t mix selling their own goods alongside third-party items.

Solving the problem with any subtlety is hard because marketplaces like Amazon have a vested interest in the confusion so phrases like “clearly state” get interpreted in convoluted ways and consumers end up spending too much time in court arguing about exact phrasing and presentation.

N0083rp00f says:

Re:

You point to retail locations where the consumer knows exactly from whom they are purchasing yet I will point to those retailers masquerading as something they are not.

For example that retail chain with a 4 letter name pretending to be Japanese and selling uniquely Japanese products. Dig deep enough and it’s Chinese owned and operated and selling cheap knockoffs of questionable quality and safety.

PaulT (profile) says:

Re:

“If you walk into a Walmart and buy X and it’s defective or dangerous, Walmart can’t turn around and say it was a distributor who sold the item, not Walmart, and the consumer can’t sue Walmart over it”

No, because in order to be in that store, someone employed by Walmart will have had to approve the item, sign contracts to buy stock, etc.

“On Amazon, though, it’s often not clear whether an item is being sold by Amazon, sold by a third party and only warehoused and shipped by Amazon, or sold and shipped by a third party with Amazon only handling the payment processing”

I don’t know why people claim this, it’s fairly clearly represented by the status telling you if it’s shipped by Amazon, through Amazon Warehouse or Marketplace, etc. Some sellers clearly try to confuse people, but I’ve never had any doubt which items are first and third party supplied.

rasz_pl says:

a lot of words

Thats a lot of words just to avoid saying Amazon.

(e.g., eBay, Etsy, Poshmark, Pinterest, Redbubble)

haha no, AMAZON. This bill is meant to stop Amazon from pretending they didnt sell you hoverboard with no safety certifications that burned your house and they reply “LOL sucks to be you go ahead and sue this XYZ noname that registered with us in Shenzhen”.

It only took 4 years for Amazon to settle out of court for undisclosed amount after hoverboard almost burned alive two children in a house fire.

LostInLoDOS (profile) says:

Really?

There’s no surprise why ebay supports it: they already do this. The full information of the seller is supplied to the buyer upon request.

I still don’t see anything bad with this. If you are willing to sell a dildo, you should be willing to do so publicly, at the very least to the person buying it.

If your product is illegal (Texas pro choice shirts) and you are selling from within Texas your are a criminal (at this point).
It’s that simple!

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