Retail theft costs retailers over $94.5 billion annually, according to the National Retail Federation’s 2022 National Retail Security Survey. Theft and high-risk transactions also impact online marketplaces that connect individual buyers to sellers by disrupting the customer experience and potentially increasing fraud. And until recently, there was little being done at the federal level to battle organized retail crime (ORC).

Now, starting in June 2023, the INFORM Consumers Act will require online marketplaces to annually collect and verify identification information of high-value sellers on their platforms, and make select data points available to buyers and law enforcement.

High-volume, third-party sellers, defined as those with more than 200 transactions or $5,000 in revenue in a 12-month period, will now have to provide the following information to marketplaces no later than 10 days after qualifying as a high-volume seller — or be suspended from the marketplace until the information is received:

• Bank account number or name of the payee for payments issued by the online marketplace
• Contact information:
  • For an individual seller: name and a copy of valid, government-issued identification
  • For a high-volume, third-party seller that’s not an individual:
    • A copy of valid, government-issued identification for an individual acting on behalf of seller, or
    • A copy of valid, government-issued record or tax document that includes the business name and physical address of seller
• Tax ID – Business tax identification number or taxpayer identification number
• Working email and phone number

Seller verification and impacts for online marketplaces

Marketplaces’ verification processes must “reliably determine that any information and documents provided are valid, corresponding to the seller or an individual acting on the seller’s behalf, not misappropriated and not falsified.” Most marketplaces will need to update their existing policies for collecting, storing and verifying seller information, and be ready to implement processes to annually verify the provided information.

Marketplaces will also be required to disclose contact information to consumers for any third-party sellers or sub-sellers with over $20,000 in annual gross revenue.

The INFORM Act is likely to have downstream impact on ORC behaviors and trends, particularly the creation of multiple small reseller accounts that do not hit the threshold, placing added importance on linking emails, phone numbers, devices and relationships to suspects. Marketplaces should prepare now to implement solutions that help them uncover connections between small reseller accounts.

Organized retail crime (ORC) impacts for retailers

Suspicious seller behavior or the data provided to marketplaces can be used to gain insights on theft suspects, build stronger cases for law enforcement, and reduce retail shrink. Retail loss prevention teams must be ready to harness the power of this data to combat ORC and the resale of stolen goods through online marketplaces, such as Amazon, eBay and Etsy.

The INFORM Act will have a significant impact on both a retailer’s and a marketplace’s ability to identify and link known theft and ORC suspects to accounts selling on an online marketplace. Contact information will be displayed for high-value accounts, which can decrease the investigation time if the retailer can positively identify the suspect or known associates. This can lead to an increase in active prosecutable cases, case closure rate, recovered merchandise and more. Online marketplaces will be required to collect and verify identification information on all high-volume sellers, and retailers can leverage this to establish a working relationship with online marketplaces to help identify bad actors selling online.

In addition, we anticipate the types of targeted merchandise could shift to higher-value items, and ORC groups using online platforms to resell stolen merchandise may turn to more traditional methods, such as refund/gift card fraud and pawn shops.

How TransUnion can help

TransUnion was named a Leader in The Forrester Wave™ Identity Verification Solutions, Q4 2022, and is therefore well positioned to help marketplaces and retailers in the wake of the INFORM Act. Ahead of the INFORM Act implementation, marketplaces should consider solutions that verify sellers’ identities, emails, phone numbers and documents, as well as device histories and reputation. With these solutions in place, marketplaces can quickly verify sellers of all sizes, preparing themselves for when small sellers hit the INFORM Act thresholds. TransUnion enables marketplaces and retailers to:

• Verify identities using a robust global network of credit, non-credit, device data, and suspected and known fraud
• Confirm the authenticity of government-issued documents to distinguish between legitimate and tampered/fake documents
• Gain insights about device reputation, device-to-identity linkages and user behavior to distinguish genuine customers

Marketplaces and retailers will also need to investigate existing sellers, verify data and uncover connections between individual accounts to prevent ORC. TransUnion solutions can turn disparate data into actionable insights that aid in investigations and location of individuals. Reduce retail shrink, improve relationships with law enforcement, and build and close strong, prosecutable cases with insights on individuals and businesses:

• Discover connections between individuals, assets and businesses, allowing fraud, global investigation, and retail loss prevention teams to more quickly and efficiently conduct investigations and due diligence
• Receive alerts about changes in an individual’s information, such as a new address, phone number or place of employment, and gain insight into vehicles, social media and connections between relatives and associates

For more information about how TransUnion can help your team fight organized retail crime, visit TruValidate | TransUnion or complete the form below.

Contact an expert to learn more about the INFORM Act and implications on your business.