Amazon is reverifying the identity and business details of hundreds of thousands of third-party sellers that sell on its U.S. marketplace.
Amazon is asking sellers to reverify their identity because of a new U.S. federal law. On June 27th, the FTC will start enforcing the INFORM Consumers Act to protect online shoppers from unknowingly purchasing counterfeit or stolen goods and stop criminals from exploiting anonymity on marketplaces. Amazon, eBay, Etsy, Walmart, and other marketplaces will be required to “collect, verify, and disclose certain information regarding high-volume third-party sellers of consumer products to inform consumers.” The bill defines high-volume third-party sellers as sellers with 200 or more transactions resulting in $5,000 or more in sales in a 12-month period.
Amazon has hundreds of thousands of sellers with $5,000 or more in sales in a year, and a month before the law goes into effect, all were asked to update and verify their business identity, bank account, phone number, business address, and tax identification number. The federal law affects Amazon’s marketplace in the U.S. and includes all sellers, not just those based in the U.S.
Marketplace Pulse research shows that nearly 100,000 Amazon sellers changed their business name or address over the past few weeks. More sellers didn’t need to change them or are yet to verify their details. That’s 30x more changes than any time in the past - typically, only a few thousand sellers update their business information in a calendar month. That includes minor changes to fix the zip code in the address and complete changes to the business name and address.
Given the colossal number of sellers updating their business information, it’s unclear how thorough Amazon’s verification is. The INFORM Consumers Act now makes Amazon and other marketplaces accountable and liable for ensuring those details are collected and verified. Amazon has a long history of changing and improving the identity verification process, but that never entirely stopped malicious sellers. Amazon also never rigorously rechecked the validity of that information for its vast pool of existing years-old sellers. It has now, and hence the explosion of nearly 100,000 changes recently.
Given the scale of this operation, there are sure to be some sellers that have their accounts deactivated because Amazon fails to verify their information. But overall, the INFORM Consumers Act made marketplaces better protect consumers and small businesses. Amazon was the first marketplace in the U.S. to make sellers’ business details public in 2020; the new federal law will force others to follow and ensure that all marketplaces verify those details.