By unfairly putting the onus of the counterfeit goods problem squarely on the shoulders of online marketplaces, Shop Safe could effectively reshape the way more than 263 million Americans shop — and harm small businesses in the process.
If you felt strongly about a policy, would you push it several thousand pages into a bill? That’s exactly what Congress just did when it quietly folded the Shop Safe Act — anti-counterfeit legislation that failed to pass the House last year — into the recently passed America Competes Act.
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While the America Competes Act does promise key investments in scientific research, semiconductor-chip manufacturing and supply-chain strengthening, buried on pages 1672-1686 of the bill is a noble attempt to stifle the sale of counterfeit goods at the unintended potential detriment of small American businesses selling online.
Ensuring Americans are protected from counterfeit goods, especially when it comes to our health and safety, should always be a priority. But by unfairly putting the onus of the counterfeit goods problem squarely on the shoulders of online marketplaces, Shop Safe could effectively reshape the way more than 263 million Americans shop.
Shop Safe gives global brands more power over small businesses
If enacted, it would embolden big-name, global brands to wield more power over small businesses and the online marketplaces we sell on. It effectively gives brands total control over the sale of their goods online — empowering trademark rights holders to have a larger say in what constitutes “counterfeit” at no cost to them.
Small businesses, like mine, selling via online marketplaces could be on the hook to meet convoluted compliance standards and pass a subjective pre-screening process. Online sellers will be forced to fumble through a largely subjective set of anti-counterfeit regulations that most will find discouraging, if not unworkable. Even the pictures I post of my products online could be subject to scrutiny.
I make custom-designed woodworking products for homes and businesses. How am I supposed to anticipate whether or not a client’s specific design request will be deemed a trademark infringement?
Compliance also means putting my privacy at risk by being required to submit my government-issued ID to post a listing. Storing thousands of IDs with one marketplace platform is a hacker’s dream. I could be putting myself and my family in danger of identity theft, fraud or worse.
Small businesses and online sellers have a lot to lose
Thousands of Americans rely on these platforms to make a living. Policies like this could put us out of work.
And the language is so vague that everyday Americans who might not even consider themselves online sellers could be compelled to comply. People using the internet — potentially even their Gmail or social media — to resell and consign clothes, get rid of old furniture or host a virtual yard sale all stand to be affected by these regulations. Should my mom really have to provide her government ID just to list a used bike on Craigslist or set up an email account?
The unintended targets of this policy have a lot to lose. As proposed, it could make it very difficult for small businesses and people selling online to keep their virtual doors open. Despite its name, America Competes as-is could also harm customers by curbing competition among sellers by making it more difficult for them to potentially sell their own used goods online. It’s unclear, however, how effective it would actually be against professional counterfeiters.
Solutions already exist. Online marketplaces are heavily incentivized to weed out bad actors, as counterfeited or fraudulent goods and services yield fewer returning customers. The virtual marketplace already employs robust, constantly evolving technology and policies to prevent and screen bad business.
It certainly would be a sad irony if legislation aimed at enhancing America’s competitiveness served as a vehicle for an amendment that hamstrings the ability of American entrepreneurs to sell products online. As Congress moves America Competes forward, it should not include this controversial provision in the broader competitiveness bill that has the potential to garner widespread, bipartisan support.