Marketplaces must get info from sellers to California buyers: PwC

In brief

California on September 30 enacted S.B. 301, requiring the collection of certain information from “high-volume third-party sellers” which, in any continuous 12-month period during the previous 24 months, have 200 or more sales of “new or unused consumer products” and at least $5,000 in gross revenue from marketplace sales to California residents. The legislation is intended to identify stolen goods resold through marketplaces. “Consumer product” means tangible personal property that is distributed in commerce and normally used for personal, family, or household purposes.

Be aware: California is not the first state to enact legislation to address organized retail crime. In 2021, Arkansas enacted similar provisions, and in 2022, Colorado, Illinois, and Ohio enacted similar legislation requiring disclosure of information by online marketplaces. Other states, including Massachusetts and Washington, also have proposed legislation to address the resale of stolen goods.

In detail

Effective July 1, 2023, an online marketplace (i.e., marketplace facilitator) must collect from sellers on the marketplace:

the seller’s name if an individual; if a business - a copy of valid government identification for an individual acting on behalf of the business seller or tax document of the business seller
bank account number or payment information
business/taxpayer identification number
a valid email address and telephone number.

Sellers with at least $20,000 of gross revenues into California in either of the two prior calendar years through the marketplace must provide, in addition to the information above, to the marketplace facilitator and customers on their order confirmations (or similar transaction communications):

the seller's full name or company name used on the marketplace and physical address
contact information, including a current working telephone number, email address, or any other means of direct electronic messaging, to allow users of the online marketplace to have direct and unhindered communication with the seller
the party used to fulfill an item purchased by a customer, and contact information for the different party (upon a customer’s request).

S.B. 301 requires a marketplace facilitator to (1) verify the seller information within 10 days, (2) maintain such information for at least two years, (3) provide a reporting mechanism that allows for electronic and telephonic reporting of suspicious activity by the high-volume third-party seller to the online marketplace, and (4) suspend future sales activity of a high-volume third-party seller that is not in compliance with information requirements within 10 days of providing notice to the seller. Violations of these requirements can subject a marketplace facilitator to a civil penalty not to exceed $10,000 for each violation, administered through the California Attorney General.