As an organization representing a wide range of U.S. taxpayers and consumers, the American Consumer Institute has analyzed and highlighted numerous times the negative ramifications the INFORM Act would have on small online vendors, especially on women-owned businesses. We are extremely concerned of any possibility or proposal to add the INFORM Act to the Endless Frontier Act, and we urge you to oppose any effort to do so on the following considerations:
- The INFORM Act is not suitable and relevant to the Endless Frontier Act. The public disclosure set forth in the INFORM Act targets domestic sellers, and it is not specific to the Chinese sellers. Hence, the Inform Act requirements would only layer on additional burdensome regulations on American small sellers.
- There are some serious concerns with the INFORM Act’s content that require further review. At only 200 transactions each year or a total of $5,000 in gross revenue, the low bar established for “high-volume sellers” classification would draw thousands of small businesses into complying with these onerous provisions the bill sets forth. With an average of just a few hundred dollars in revenue each month, any small vendor is unlikely to be able to absorb the cost of complying with this high-volume seller designation. Our research shows that women-owned small businesses would be disproportionately harmed.
- The INFORM Act’s stipulations need to show more flexibility of verification and disclosure in order to represent the various business models. In its current form, the fact that a seller can be suspended from conducting business if they are unable to gather the requested verification and disclosure documentation within an unreasonable short amount of time is extremely burdensome and would not do anything to stop “criminal actors” from selling counterfeits. Instead, the burdensome requirements will only stop the small legitimate vendors from engaging in online commerce because it sets up these unreasonable roadblocks that would only end up costly for the small businesses.
- The INFORM Act was just introduced and so far there has been no hearing or markup. The no review process is extremely concerning given the numerous ramifications it could project.
For the reasons discussed above we urge you to be cautious about any proposal to rush the bill through the Endless Frontier Act without any opportunity for review and discussion. We’re concerned that in its current form the bill would only create hurdles for small businesses, and given the its provisions there will be fewer small businesses able to sell online. That means less selection, less competition, and higher prices for consumers.
|Krisztina Pusok, Ph. D.|
Director of Policy and Research