Shop Safe Act threatens small businesses out of e-commerce

[Megan, Christopher Ford, Debevoise & Plimpton LLP Counsel, Kate Saba, Debevoise & Plimpton LLP Associate, Hannah Beattie, Debevoise & Plimpton LLP Associate, 4/20/2024, World Trademark Review, “Does the US SHOP SAFE Act go too far in shifting liability? ”, https://www.worldtrademarkreview.com/article/does-the-us-shop-safe-act-go-too-far-in-shifting-liability, accessed 7/11/2024, LR]

Changing the landscape for social media marketplaces and small businesses

A number of social media platforms have launched their own marketplaces in recent years. In 2016, Meta launched Facebook Marketplace, which is now used by approximately 250 million sellers every month. In September 2023, TikTok launched TikTok Shop, a dedicated e-commerce site. Other social media sites, like Pinterest, YouTube and Instagram, allow sellers to integrate their social media accounts with their storefronts and host live sales, so consumers can shop and pay without leaving the platform.

These social media marketplaces are very different from traditional online marketplaces like Amazon or eBay. And though there are legitimate concerns about the proliferation of counterfeit sales on social media, applying the current version of the SHOP SAFE Act to these social media marketplaces could stifle small businesses, jeopardise individual privacy, and raise free expression concerns.

Because so many social media accounts are personal, social media marketplaces naturally attract more individual sellers and small businesses. But the SHOP SAFE Act does not distinguish between sellers who make only occasional sales, such as through their individual accounts on these social media platforms, and more robust businesses. Platforms are likely to pass at least some of the cost of compliance with the act along to sellers, which on social media are more likely to be individuals and small businesses. These increased costs could heavily burden people who are selling locally to recoup the cost of an unused item or make a modest profit. Though the act reasonably requires platforms to know who their sellers are, it also requires platforms to give brand owners a way to directly contact any third-party seller the brand owner believes is selling counterfeits. The threat of being forced to share their personal information widely (and the possibility of receiving overzealous takedown notices), may dissuade individual sellers from participating.

Social media marketplaces, unlike traditional online marketplaces like eBay, blur the line between selling products and sharing expressive content, and applying the current version of the SHOP SAFE Act to them could raise free expression concerns. Social media marketplaces, fearful of liability under the SHOP SAFE Act, may remove content which is expressive and does not actually enable the sale of counterfeit items. For example, a makeup influencer might post a TikTok video that includes expressive content (eg, a video blog about their day), but in this video, they describe a cheaper, genuine makeup product as a “dupe” – a product that performs the same – of a more expensive version made by a large fashion brand and link to a listing for the product on TikTok Shop (or allow the viewer to purchase it with one click on the video). If the brand tells TikTok the “dupe” is a counterfeit, TikTok may be forced to delete the entire video despite its expressive content\