Tech

Don’t Harm Online Small-Business Competitiveness in China Competitiveness Bill

From large cities, to small towns, to rural America, the COVID-19 pandemic has inflicted a tough toll on U.S. small businesses. Businesses that remained afloat did so through a combination of grit and ingenuity. Many small retailers pivoted to e-commerce, allowing them to reach new customers, replace lost revenue and keep employees on payroll. Now, as Main Street businesses pick themselves up and look toward the future, it is crucial Congress support their recovery.

 

Unfortunately, the Senate is considering legislation that could do the opposite. S. 936, the INFORM Consumers Act, is being promoted as a measure to prevent counterfeiting and the sale of stolen goods in virtual marketplaces like Amazon, eBay and Etsy. While the intent of the measure is good, this legislation could jeopardize the privacy of small-business owners and create powerful disincentives for them to sell products online.

 

Specifically, S. 936 would require “high volume sellers” to provide personal information — including, in many cases, home addresses and telephone numbers — on all their listings. Requiring a seller to provide this kind of sensitive information to anyone on the internet represents a violation of the individual seller’s privacy rights. Many female entrepreneurs, in particular, have expressed concerns about making this type of information public, forcing them to choose between their safety and their livelihood.

The legislation also includes unreasonable verification requirements and short timeframes for compliance. For example, if a small business seller does not recertify to a virtual marketplace annually that none of its information has changed, within a three-day window, the online store is required to suspend the seller. For an already struggling small retailer or for the self-employed, this disruption and loss of revenue, even if temporary, could be catastrophic.

Moreover, the bill’s definition of a “high volume seller” is expansive: Anyone who conducts 200 discrete sales totalling $5,000 or more over a 12-month period is considered to be “high volume.” Under this measure, when a small-business seller reaches that threshold, the seller must immediately submit this information to the online virtual marketplace or risk losing access to the online store.

Senators are considering tucking this bill into the U.S. Innovation and Competition Act, a broad, bipartisan legislative package aimed at enhancing American competitiveness with China. That bears repeating: In a bill meant to help American businesses succeed and compete, lawmakers are considering adding provisions that would make it harder for American entrepreneurs to sell products online and compete.

While this legislation would likely disincentivize honest entrepreneurs from selling products online, it would do little to stop the resale of stolen goods and counterfeit products. Organized retail crime syndicates are sophisticated organizations that would likely be able to evade these new requirements. 

Certainly, more can and must be done to address this problem in terms of stepped-up enforcement and more resources for law enforcement. Additional verification requirements for online sellers may ultimately be worth consideration, but these changes must be adopted with the input and feedback of small sellers and implemented carefully.

It would be sad indeed if legislation aimed toward boosting American competitiveness ended up undermining competitiveness at home. Counterfeits and stolen goods are serious issues, and Congress must tackle these in a thoughtful and truly informed way. That would involve hearings, listening to the views of small businesses and carefully considering the consequences of proposed actions.

Lawmakers need to proceed cautiously. American small-business owners and entrepreneurs, who have already suffered enormously over the past year or more, are counting on the world’s greatest deliberative body to do just that.

 

Karen Kerrigan is president and CEO of the Small Business & Entrepreneurship Council.

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