Congress is considering legislation that would require online marketplaces to display information about the country of origin of products sold online in an effort to deter counterfeits. Providing consumers more information about products can help them make more informed decisions about their purchases. However, the current legislative proposal would do little to stop counterfeits and unfairly penalize online marketplaces, thereby creating a disincentive for e-commerce that would ultimately make consumers worse off.
Products have many different labels on their packaging, some placed voluntarily and others required by law, to help consumers make more informed decisions and prevent harm. For example, a label may warn consumers about choking hazards and suffocation risks or provide information about the types of fiber used in textiles or potential allergens in food products. When consumers shop in-person in stores, they can read product labels before making a purchase. However, when shopping online, they may not always obtain this information until they receive the product and can inspect these labels.
Some policymakers are especially concerned that online shoppers do not always see where a product is made, information that is included on the country-of-origin label required on products imported to the United States. To address this issue, a bipartisan group of representatives has introduced H.R. 3429, the Stopping Harmful Offers on Platforms by Screening Against Fakes in E-Commerce Act (the SHOP SAFE Act). The legislation would make an online marketplace potentially liable for third parties selling counterfeit products to consumers on its platform unless it, among other actions, “displayed conspicuously in each listing the country of origin and manufacture of the goods.”
While counterfeit goods are a serious problem, requiring online marketplaces to disclose the country of origin of products listed by third-party sellers will do little to stop it. After all, those selling counterfeit goods are already misrepresenting information about the products they are distributing. It should come as no surprise that sellers willing to falsify the authenticity and safety of their wares would not likely hesitate to also fake where these goods originated from. Moreover, it is unreasonable to obligate online marketplaces to provide country-of-origin information about products sold by third-party sellers since they are not in a position to ensure its accuracy.
Notably, a number of the major online marketplaces, including Amazon and Walmart, already provide information about the country-of-origin for many products. Third-party sellers may provide this information in the product listing text or show photos of the product with a visible country-of-origin label. Given the insights online marketplaces have on consumers’ shopping behavior on their respective platforms, Congress should let online marketplaces decide when and how to make this information available to consumers.
After all, many items may have multiple product labels, warnings, or other relevant information of interest to potential buyers. Online marketplaces can see what information shoppers are looking for and decide how to best provide that information. If some online marketplaces fail to provide the product information consumers are looking for, they will turn to other e-commerce sites. Moreover, over time, online marketplaces may be able to work with brands to provide consumers complete and comprehensive data about product listings directly from the authoritative source.
While it is true that online shoppers may not be able to inspect all of a product’s labels before they make a purchase, they can certainly do so when they receive the product. In addition, online shoppers typically have more information at their fingertips about products than when shopping at brick-and-mortar retailers. For example, many e-commerce sites offer consumer reviews that help shoppers evaluate products or disclose other relevant information such as a list of ingredients, directions for use, and safety guidelines that go far beyond what a consumer may discover by examining a product’s package in-person on a store shelf.
The biggest risk of including a country-of-origin requirement in the SHOP SAFE Act is that it would undermine the growth of online marketplaces by unfairly exposing them to contributory liability. Online marketplaces provide opportunities to connect buyers and sellers efficiently, leading to more choices and savings for consumers. Rather than impose special requirements for online marketplaces, Congress should allow these platforms to continue to develop and focus their anti-counterfeiting efforts on building stronger partnerships and cooperation between law enforcement, e-commerce platforms, and affected brands.
Image credit: Flickr user Thomas Hawk