Amazon and eBay fight contributory liability – less vetting allows a larger seller base

Congress introduced a bill that would hold online marketplace operators, such as Amazon.com Inc., eBay Inc. and Walmart Inc., responsible for counterfeit products—particularly unsafe items—sold on their websites. This is an issue U.S. marketplaces have faced for some time.

A bipartisan group of four U.S. House of Representatives members co-sponsored the legislation— called the The Stopping Harmful Offers on Platforms by Screening Against Fakes in E-Commerce (or Shop Safe) Act—to stop online sales of counterfeit products. The group says counterfeit goods sold on online marketplaces is a growing problem because there is no law that adequately requires multi-merchant platforms to vet who is selling and what they’re selling on their sites.

“The Shop Safe Act would make families safer by requiring online sellers to help prevent the sale of counterfeit products to consumers,” Georgia representative Doug Collins, one of the bill’s authors, said in a statement.

The bill outlines criteria the marketplace operators must follow when vetting third-party sellers on their sites.

“An electronic commerce platform shall be contributorily liable for infringement by a third-party seller participating on the platform for use in commerce of a counterfeit mark in connection with the sale, offering for sale, distribution, or advertising of goods that implicate health and safety, unless following requirements are met,” the legislation says.

Some examples of the requirements the bill outlines include: verifying with reliable identification who the seller is, the seller’s place of business and contact information; requirement of the third-party seller to verify the authenticity of goods to the marketplace; and proof the marketplace took reasonable steps to prevent any alleged infringement from a third-party seller.

For large marketplaces like Amazon and eBay, this is a tough ask. Take Amazon, for example, which has nearly 600 million SKUs listed on its site and more than half of those are from marketplace sellers, according to Digital Commerce 360 estimates. Amazon has millions of sellers and millions of items available on the site because it doesn’t have an extensive vetting process when a merchant signs up to be an Amazon seller. There’s little-to-no barrier to entry, and this allows Amazon to continually grow its seller base.