California advances bill to identify online sellers, citing sale of stolen goods

(The Center Square) - California’s legislature advanced a bill that would require identification for third-party sellers of goods online. Proponents argue it only covers sellers who move enough volume across platforms, but business groups say without any way of knowing how much individuals sell on other platforms, each seller of goods to Californians must effectively be forced to comply with the bill’s full disclosure requirements.

As theft spirals out of control, the National Retail Federation claims nearly half of all “shrink” in national retail — shopping industry losses from theft or spoilage or loss — in 2022 was due to “organized retail theft.” In 2022, the California legislature passed SB 301, also introduced by State Sen. Nancy Skinner, D-Berkeley, by requiring “high-volume third-party sellers” who have had 200 or more transactions of new goods with California buyers resulting in aggregate revenue of $5,000 or more to provide contact and financial information to the online platform for verification, or be suspended from the platform.

The new Skinner bill, SB 1144, would specify that sales that do not occur within a marketplace’s own payments system would be included towards the SB 301 verification requirement, and would require disclosure for whether or not a seller is verified.

“Now, like all other shopping, stolen goods are being sold online. What we find is organized retail crime rings use online marketplaces to, in effect, fence stolen goods,” Skinner told the committee.

Under existing law, Skinner says fences “use the marketplace to advertise the good, but then … do the transaction separately.”

However, the California Chamber of Commerce, which represents both retail businesses targeted by thieves and online platforms, says this new definition is too broad.

“It is impossible for any individual platform to determine whether any given seller is “high volume” under this definition, since they have no way to know what activity is occurring on other platforms. In a similar vein, the expansion of this definition aims to include transactions that occur off of the platform,” the Chamber wrote in its opposition. “The only way to comply with the law would be to assume every single seller is 'high-volume,' and subject every business to the heightened requirements.”

Technet’s Dylan Hoffman further testified that the bill would “disadvantage smaller sellers by signaling to a consumer that a high volume seller has complied with, and has a higher quality of good, when that may not necessarily be the case.”

The bill advanced unopposed and moves on to the Senate Appropriations Committee.