Congress Must Protect Consumers from Unsafe Counterfeit Goods

Criminal networks have long profited from anonymously selling counterfeit toys online. But now, with record numbers of people doing their shopping primarily online amid the pandemic, the risk of families unknowingly purchasing fake toys is even greater. To protect consumers and honest businesses, lawmakers need to cut off their preferred distribution channel: untraceable selling accounts on popular third-party marketplaces.

For toy consumers, including parents buying gifts for their children, counterfeit operations mean a greater risk of inadvertently receiving products that have not been safety tested. In fact, more than a third of toy-buying parents do not know that counterfeit toys are not always tested for safety. For toymakers, whose brands suffer when consumers cannot trust where the product is coming from or if they are getting the real thing, the sale of fake goods is a threat to their brands and businesses at a time of enormous economic uncertainty.

While pirating is getting worse as criminals look to cash in on the online shopping surge, these issues have been intensifying for years due to the ease with which bad actors can set up nameless, faceless storefronts online. Criminal networks used to sell their counterfeit and stolen merchandise in flea markets and pawn shops. But today, they can cut out the middleman and go directly to the consumer on the largest online marketplaces, which, to date, have largely turned a blind eye to these illicit activities.

More than a financial threat to businesses, counterfeiting threatens local communities. Defective products, goods made with unsafe levels of chemical substances and items that do not meet quality and safety standards are often deceptively marketed as “safe” and sold to unwitting consumers through these platforms. Additionally, retail workers are put in harm’s way every time a criminal ring stakes out and enters their store to steal items.

But there is a simple solution. Congress can help solve the counterfeit and other related organized retail crime problems by requiring third-party marketplaces to obtain and verify information from third-party sellers, such as their government ID, tax ID, bank account information and contact information. A recently proposed bill — the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers (INFORM) Act —  accomplishes just that while also mandating that sellers disclose basic identifying information to consumers so that consumers can make informed decisions about who they are purchasing from. Congress should immediately pass this commonsense solution.

Proactively screening sellers by simply collecting verified contact information would help prevent criminals from setting up an account — or sometimes even multiple accounts — to sell stolen or fake goods, rather than constantly playing a game of whack-a-mole to stop bad actors. At the same time, more rigorously screening products for these hazardous chemicals or other health risks will help keep children and consumers safe and improve the overall transparency of online marketplaces.

That is why toymakers from across the country are gathering virtually with Capitol Hill lawmakers this week to share their stories and demonstrate the real impact unsafe counterfeit toys are having on their businesses and communities. By passing the commonsense protections included in the INFORM Act, parents can have peace of mind knowing that they are purchasing toys only from honest, legitimate manufacturers and sellers who work day-in and day-out to produce quality toys and games that are tested to more than 100 rigorous federal safety standards.

With the trend in online shopping likely to trigger permanent changes in consumer behavior, the big business of counterfeits and ORC will only continue to expand without intervention. Congress should pass the INFORM Act now, before criminal groups gain even more power and the risks to consumers, innocent children, and legitimate businesses grow even more severe.

Ed Desmond is executive vice president of external affairs at the Toy Association.

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