Congress Tries To Ram The Ill-informed INFORM Bill Into The Must-pass NDAA

from the ill-considered-with-ill-effect dept

Congress is at it again, trying to legislate without bothering to understand the problems they are ostensibly trying to fix. This time it's with the INFORM Consumers Act, S.B. 936, which, instead of debating further, some of its sponsors are trying to ram through as an amendment to the must-pass NDAA. Which itself is a clue that there's something wrong with this bill, because if the only way to become law is to avoid further scrutiny, then that's exactly when such scrutiny is needed.

At least this time the proposed bill doesn't take direct aim at Section 230 or antitrust, and unlike some other bills this one is at least trying to target something resembling an actual policy problem. But as is so often the case with these "let's make Internet platforms responsible for everything wrong with the world" bills, it still doesn't actually fix the problem it's trying to solve.

The problem that this bill is supposedly tackling is that sometimes the products people buy online can be defective or dangerous, but then sometimes consumers can have difficulty finding the seller responsible to try to hold liable for any resulting harm. The apparent goal of the INFORM Consumers Act is to make such sellers more findable and thus more accountable, but (a) it won't really, and (b) it will create all sorts of other problems that ultimately will hurt consumers (and others) instead.

The bill is flawed both in its concept and its execution. At its core, the essential failing is that instead of directly targeting the wayward vendors concerning Congress, the bill instead aims to conscript online marketplaces into formally policing online sellers, which is itself of dubious effectiveness as a regulatory strategy, let alone of dubious doctrinal consistency regarding how tort law works or of dubious constitutionality regarding how state action works. In particular, the bill wants to obligate all online marketplaces, of every size and stripe (see the definition at Section (2)(e)(4)), to collect seller information (Section (2)(a)(1)), verify it (Section (2)(a)(2)), display it (Section (2)(b)(1)), and then terminate any seller's account if they are out of compliance (see Section (2)(b)(4)). To the drafters these requirements may seem like small asks, but in practice they are far from it, especially as wrapped up in this overall legislative language.

For one thing, even just asking for all this seller information creates all sorts of privacy problems, particularly for sellers who are individual people, who would have to supply all sorts of personal details, including tax IDs (Section (2)(a)(1)(A)(iii)), which may well be their social security numbers. And then the marketplaces would have to somehow safely store this government-demanded honeypot of deliciously sensitive of personal information that other regulation has actively been trying to deter them from collecting at all. (The House version of the bill, H.R. 5502, at least addresses this concern, albeit with a handwavy, "Nerd harder," sort of demand of the platforms (see Section (1)(a)(4)).)

Next, policing this information is not something that a marketplace would necessarily have either the resources or competency to do, especially not at the scale the law would demand. Being forced to terminate accounts for inadequate compliance also raises due process concerns for both the marketplace and any legitimate seller so affected. And such terminations are not without consequence, including for consumers who will now have to face higher prices, lack of supply for the products they seek as vendors are driven offline entirely, or even more risk as everyone is now forced to turn to offshore marketplaces not subject to laws like these and ultimately even less accountable to American consumers than the online marketplaces bills like this are obviously intending to target.

Meanwhile, even the part of the bill that forces platforms to display seller information creates a problem with compelled speech (Section (2)(b)(1)(A)(ii)). While commercial speech can sometimes be proscribed in certain ways without offending the First Amendment, a law drafted as broadly as this one is unlikely to be able to demonstrate the narrow tailoring required to surmount that constitutional hurdle. Especially when it acknowledges with its own exceptions how unnecessary some of its requirements are. Fortunately, it avoids an additional privacy problem by allowing vendors who only have a personal phone number or residential address to not have that information posted publicly (Section (2)(b)(2)(A)(i) and (iii)). Which is good, because if bills like these were to make it functionally impossible for entrepreneurial Americans to avail themselves of ecommerce, it wouldn't be good for them, the economy, or consumers who would have liked to buy their products. But, then again, since, by its own terms, the bill acknowledges that there may be more pragmatic ways of addressing vendor accountability, its overly prescriptive approach, which still lumps far too many dissimilar vendors together with identical requirements, is unlikely to pass constitutional muster. And its practical effect will still amount to being a gratuitous burden on vendors and the online marketplaces they depend on to conduct their businesses, needlessly making it more difficult and expensive to do so.

Then, on top of these drafting infirmities, the House version of this bill would also give state attorney generals enforcement powers (Section (1)(d)), which is always a fraught exercise when it comes to Internet commerce, because it allows some states to exert an effective veto power over online platforms that other states might prefer to benefit from. But even the FTC enforcement power the bill proposes raises issues as well (Section (2)(c)(1)). It may be proper for the FTC to go after any vendor who dupes consumers into purchasing from them, including with the illusion of accountability. But as long as consumers are on notice that they may not be able to track down the vendor later, and not deceived into believing otherwise before making their purchase, then they are as empowered to make their purchasing decisions as the FTC has any business requiring. If consumers need more information before making their purchasing decisions, then that is a pressure they can put on the vendors or online marketplaces to deliver. We don't need a law to force it, especially not one as blunt in its effects as this one.

In fact, everything about this bill is fatally blunt. Although it in theory only applies to "high volume" sellers, the definition of high volume can reach all sorts of casual sellers.

The term “high-volume third party seller” means a participant on an online marketplace's platform who is a third party seller and who, in any continuous 12-month period during the previous 24 months, has entered into 200 or more discrete sales or transactions of new or unused consumer products resulting in the accumulation of an aggregate total of $5,000 or more in gross revenues. (Section (2)(e)(3)*

Also, even if some sort of law might be required to address the sales of dangerous or defective goods, there is nothing in this bill to restrict it to the sales of just these sorts of items. The requirements of the INFORM Act could just as easily reach vendors who sell books, CDs, or t-shirts, even if they only sell them periodically.

The term "consumer product" means any tangible personal property which is distributed in commerce and which is normally used for personal, family, or household purposes (including any such property intended to be attached to or installed in any real property without regard to whether it is so attached or installed). (Section (2)(e)(2) (citing 15 USC Section 2301(1)))

Given the expressive nature of these products, the mandatory identification requirements of a seller is something that directly offends the First Amendment's right of anonymous speech. But even less dramatically, it's still a bill that is utterly pointless, yet no less cumbersome, for vendors who sell all sorts of non-dangerous goods.

Or for any possible platform that might enable any sort of sales. While the drafters of this bill might have had certain online marketplaces and certain products in mind when they drafted it, neither its specific details, nor its general regulatory approach of burdening platforms with all responsibility for making sure bad things never happen through the Internet, are nearly so limited.

And that itself is a bad thing.

* The House version of the bill limits disclosure requirements to "any high-volume third party seller with an aggregate total of $20,000 or more in annual gross revenues on such online marketplace," but since the statutory definition is still the lower amount, this alternate term ends up adding in more confusion, rather than relief.

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Filed Under: inform act, information, marketplaces, privacy


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  • icon
    That One Guy (profile), 8 Nov 2021 @ 1:24pm

    'I support this bill and even I can't defend it.'

    Simple rule of thumb: Any politician who attempts to slip one of their bills into a 'must pass' piece of legislation should be treated as having publicly admitted that they cannot honestly defend that bill on it's own merits.

    (Even better would be prohibiting any such bills from being tacked onto unrelated legislation entirely so such a stunt isn't possible, but one step at a time.)

    reply to this | link to this | view in chronology ]

    • identicon
      Sharur, 8 Nov 2021 @ 3:02pm

      Re: 'I support this bill and even I can't defend it.'

      I like that; I'd go further, considering how many times politicians themselves have admitted to not actually reading the bills that they are voting on: All bills are limited to 10 single sided pages of size 12 font text.

      If you need more, pass a follow up bill to amend the statue.

      No more slipping things in, no more omnibus bills. Actually look at things and vote them up and down.

      reply to this | link to this | view in chronology ]

      • icon
        That One Guy (profile), 8 Nov 2021 @ 3:49pm

        'Now reading page 5 of 78...'

        Why not have some fun with it? No size restriction but any bill is required to be publicly read in it's entirety by those who are proposing it with no changes allowed to it after that point.

        Someone wants to pass a bill dozens of pages long or more because the nice lobbyist in a suit handed it to them then they will have to publicly read the entire thing themselves so everyone knows what's in it and who's proposing it.

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 8 Nov 2021 @ 4:45pm

          Re: 'Now reading page 5 of 78...'

          Just because someone (or some computer) reads it aloud does not mean that the people who vote on it LISTEN to that reading.

          reply to this | link to this | view in chronology ]

          • icon
            That One Guy (profile), 8 Nov 2021 @ 5:23pm

            Re: Re: 'Now reading page 5 of 78...'

            They might very well space out and ignore what's being said but by having it read out loud like that you completely remove any plausible deniability should they try to claim that they didn't know that a particular clause was in the bill, and in fact should they try to do so they'd just expose that they were ignoring their job.

            reply to this | link to this | view in chronology ]

            • identicon
              Anonymous Coward, 8 Nov 2021 @ 8:06pm

              Re: Re: Re: 'Now reading page 5 of 78...'

              It is unfortunate, then, that what we want out of our legislators isn't a yes or no to "did you know this clause was in the bill", but instead a yes (or no) to "did you know what the implications of this clause in the bill were likely to be".

              And reading the text of the bill out loud in the chamber only provides the gotcha moment of "you should have known that was in there". But then, I don't have a solution to improving the quality of answers to the second question any more than you do.

              Except, perhaps, "keep a bill from coming to a vote until the legislators are able to cast an informed vote." The ones who are not willing to put the time in to become informed, well....

              reply to this | link to this | view in chronology ]

          • icon
            sumgai (profile), 8 Nov 2021 @ 5:47pm

            Re: Re: 'Now reading page 5 of 78...'

            Oh, there'll be somebody listening for things like this, you can bet on it. Sort of like a Toastmaster's "Ah" counter (they listen for how many times you say "Ah" during your presentation), someone's going to be playing "Bullshit Bingo" every time a fresh bill is introduced. And it will find it's way to the innerwebs almost before the yo-yo is finished speaking.

            I'm setting up a search engine macro, and Task Manager will fire it off every 4 hours, 'cause I'm gonna archive these little bon mots. For future reference, of course. ;)

            reply to this | link to this | view in chronology ]

      • identicon
        Fizzlepop Berrytwist, 8 Nov 2021 @ 4:30pm

        Re: Re: 'I support this bill and even I can't defend it.'

        Unless... Uhhh.... Ok, i can't even think of a problem with this.

        reply to this | link to this | view in chronology ]

  • This comment has been flagged by the community. Click here to show it
    identicon
    Anonymous Coward, 8 Nov 2021 @ 2:58pm

    NDAA? Remember when actual journalist knew you're support to define a term the first time you use it in a piece? They never do that anymore. I shouldn't have to google and look things up to read your article. That's Journalism 101.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 8 Nov 2021 @ 3:20pm

      Re:

      Are you the same broken record always harping on about this?

      It has a bloody link.

      Reading for the willfully stupid, possibly with an agenda, 101.

      reply to this | link to this | view in chronology ]

    • identicon
      Rocky, 8 Nov 2021 @ 3:24pm

      Why are some words in a different color?!

      I remember when people actually used their brain. They never do that anymore. I shouldn't have to point out basic contemporary computer usage. Here's basic computer usage 101: If you click NDAA you'll get your definition. If you don't know how to click a link, there's no help for you.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 8 Nov 2021 @ 5:02pm

        Bit rot happens.

        I remember when you did not have to click on a link to find the definition of a term in an article or book. Including the definition of an uncommon term or acronym is a courtesy to your readers, to not make them work to read your piece. Perhaps you failed to consider that.

        And some web sites even have definitions as pop-up text. How about that for fancy?

        As well: the moment you rely on some other web page to define your terms for you, you're setting up a point of failure. Other web pages, even on the same frickin' web site, go down all the time. Think, for example, of all the images disappearing from G/O media web sites. Or links on pages from this very site vanishing. Just go back a few years, you'll find 'em.

        Having said that, Cathy Gellis is a lawyer, then a blogger. Not a person trained to print media journalistic standards.

        And, y'know, stay away from those ad hominem responses. It's not a good look.

        reply to this | link to this | view in chronology ]

        • icon
          Cathy Gellis (profile), 8 Nov 2021 @ 5:14pm

          Re: Bit rot happens.

          ACTUALLY...

          While I appreciate the defense, the reality is that I have had training in print media. Then later became a blogger. THEN later became a lawyer...

          Should NDAA have been spelled out? Maybe. But not necessarily. The article isn't about the NDAA, and I didn't want to down out the technical details I did want to explain about INFORM with additional technical details that weren't necessary to understanding what's wrong with this bill. Plus when people do refer to the NDAA they often do by acronym, rather than by its full name. The only reason to mention it here is so people recognize it as one of these must-pass bills once news about it comes to the fore. But otherwise the NDAA is of little importance to this post.

          reply to this | link to this | view in chronology ]

          • identicon
            Anonymous Coward, 8 Nov 2021 @ 7:54pm

            Re: Re: Bit rot happens.

            <pause><deep breath>
            Now that I've gotten over my fanboy squee (off page), I apologize, Ms Gellis, for my incorrect assumptions.

            And I agree, the NDAA is, as you say, unrelated to the unINFORMed bill that the post is about. It could have been any of several "must pass" bills without changing the story.

            Pardon me, I'd best end this now. I feel another squee coming on.

            reply to this | link to this | view in chronology ]

        • identicon
          Rocky, 9 Nov 2021 @ 3:06am

          Re: Bit rot happens.

          I remember when you did not have to click on a link to find the definition of a term in an article or book. Including the definition of an uncommon term or acronym is a courtesy to your readers, to not make them work to read your piece. Perhaps you failed to consider that.

          Things change with time, what once was common practice isn't necessarily what is common practice today and clicking an obvious link isn't that hard to learn what an acronym means.

          And some web sites even have definitions as pop-up text. How about that for fancy?

          And some web sites doesn't even provide links. Can things improve, sure, but information is hardly a difficult thing to obtain today.

          As well: the moment you rely on some other web page to define your terms for you, you're setting up a point of failure. Other web pages, even on the same frickin' web site, go down all the time. Think, for example, of all the images disappearing from G/O media web sites. Or links on pages from this very site vanishing. Just go back a few years, you'll find 'em.

          Which is mostly an irrelevant argument when you are reading an article that's at most hours old.

          And, y'know, stay away from those ad hominem responses. It's not a good look.

          When someone complains that they have to google an acronym that is actually linked to what it's all about, I'll point out the ridiculousness of that complaint. Since the post was snarky I responded in kind.

          reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 9 Nov 2021 @ 3:41am

          Re: Bit rot happens.

          I remember when you did not have to click on a link to find the definition of a term in an article or book.

          That was because paper does not support active links, but often you had to turn to the footnotes to look up a reference, or suffer text cluttered with definitions and references for those that needed them. Active links keep the text free of clutter while also allowing easy access to references and definitions.

          reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 9 Nov 2021 @ 11:28am

      Re:

      "knew you're support"

      No I didn't knew, please tell me all about it.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 8 Nov 2021 @ 3:00pm

    How likely is the amendment to be added to the bill? also when is the NDAA going to be voted on?

    reply to this | link to this | view in chronology ]

  • icon
    freakanatcha (profile), 8 Nov 2021 @ 5:03pm

    INFORM Bill

    Politicians always screaming Amazon is a monopoly, but the house version is supported by Amazon exactly because this is the type of thing Amazon can afford to do, while a small e-retailer will go nuts in trying to implement it. This is state sales tax part deux.

    reply to this | link to this | view in chronology ]

    • icon
      Scary Devil Monastery (profile), 9 Nov 2021 @ 2:58am

      Re: INFORM Bill

      "...this is the type of thing Amazon can afford to do, while a small e-retailer will go nuts in trying to implement it..."

      Or, summarized, Amazon agreeing to pay a set fee to the nice government so they'll keep viable competitors and startups out of Amazon's markets.

      It really doesn't get any better no matter how many times they reformulate it. The shamelessness in this type of grift is astonishing.

      reply to this | link to this | view in chronology ]


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