California’s legislature has taken a step forward in proposing a bill that would mandate identification for third-party sellers conducting online transactions. Supporters of the bill claim that it specifically targets sellers who engage in substantial sales across various platforms. However, critics argue that since there is no mechanism to determine the sales volume of individuals on other platforms, all sellers catering to Californians would be compelled to comply with the bill’s comprehensive disclosure requirements.
According to the National Retail Federation, almost half of all losses in the retail industry in 2022 were attributed to organized retail theft, as theft continues to escalate. To address this issue, the California legislature passed SB 301 in 2022, which was introduced by State Sen. Nancy Skinner from Berkeley. Under this law, high-volume third-party sellers who have conducted 200 or more transactions of new goods with California buyers, resulting in a total revenue of $5,000 or more, must provide their contact and financial information to the online platform for verification. Failure to comply with this requirement may result in suspension from the platform.
The proposed SB 1144, known as the Skinner bill, aims to clarify the inclusion of sales outside of a marketplace’s own payments system towards the SB 301 verification requirement. Additionally, the bill would mandate disclosure regarding the verification status of sellers.
Skinner informed the committee that nowadays, stolen goods are being sold online just like any other merchandise. He pointed out that organized retail crime rings utilize online marketplaces to effectively fence stolen goods.
According to Skinner, fences under existing law utilize the marketplace to promote the product or service, but they conduct the transaction separately.
The California Chamber of Commerce, a representative body for retail businesses that are frequently targeted by thieves as well as online platforms, argues that the newly proposed definition is overly expansive.
According to the Chamber, it is not feasible for any specific platform to determine if a seller is considered “high volume” as they do not have access to information regarding the seller’s activity on other platforms. The Chamber also argues that the expanded definition of “high volume” aims to include off-platform transactions, making it even more challenging for platforms to comply with the law. The Chamber suggests that in order to comply, platforms would have to treat every seller as “high volume” and subject all businesses to the increased requirements.
According to Dylan Hoffman from Technet, the bill could potentially harm smaller sellers as it might mislead consumers into believing that a high-volume seller is compliant and offers better quality goods, even if that may not be true in reality.
The bill effortlessly progressed and will now proceed to the Senate Appropriations Committee.
