This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h1227.RRS
DATE: 1/25/2022
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 1227 Online Marketplace Transparency
SPONSOR(S): Toledo and others
TIED BILLS: IDEN./SIM. BILLS: SB 944
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Regulatory Reform Subcommittee Wright Anstead
2) Judiciary Committee
3) Commerce Committee
SUMMARY ANALYSIS
As e-commerce grows, the sale of counterfeit and stolen goods alongside authentic products continues to be a
concern. E-commerce platforms may enable counterfeiters or thieves to produce or sell products at lower
prices, while also reaching a larger number of potential customers.
The bill creates s. 559.953, F.S., which establishes that an online marketplace must require high-volume third-
party sellers (HVTPS) to provide the online marketplace with verification and disclosure information.
Additionally, an online marketplace must require HVTPS with an aggregate total of $20,000 or more in annual
gross revenues on its online platform to provide consumers with disclosure information.
The bill requires an online marketplace to provide consumers with a reporting mechanism that allows for
electronic and telephonic reporting of suspicious marketplace activity to the online marketplace and a message
encouraging individuals seeking to purchase products to report suspicious activity to the online marketplace.
The bill provides that a violation of s. 559.953, F.S., constitutes a violation of the Florida Deceptive and Unfair
Trade Practices Act, and the Department of Legal Affairs (DLA) may adopt rules to collect and verify the
required information. Additionally, regulation under s. 559.953, F.S., is preempted to DLA.
The bill takes effect July 1, 2022.
The bill does not appear to affect local governments and may have an indeterminate fiscal impact on state
government. STORAGE NAME: h1227.RRS PAGE: 2
DATE: 1/25/2022
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Florida Deceptive and Unfair Trade Practices Act (FDUTPA)
The Florida Deceptive and Unfair Trade Practices Act (FDUTPA) became law in 1973.
1
The FDUTPA is
a consumer and business protection measure that prohibits unfair methods of competition,
unconscionable acts or practices, and unfair or deceptive acts or practices in trade or commerce.
2
The
FDUTPA is based on federal law, and s. 501.204(2), F.S., provides that it is the intent of the Legislature
that due consideration and great weight must be given to the interpretations of the Federal Trade
Commission and the federal courts relating to section 5 of the Federal Trade Commission Act.
3
The State Attorney or the Department of Legal Affairs (DLA) under the Attorney General may bring
actions when it is in the public interest on behalf of consumers or governmental entities.
4
The Office of
the State Attorney may enforce violations of the FDUTPA if the violations take place in its jurisdiction.
5
DLA has enforcement authority if the violation is multi-jurisdictional, the state attorney defers in writing,
or the state attorney fails to act within 90 days after a written complaint is filed.
6
Consumers may also
file suit through private actions.
7
DLA and the State Attorney, as enforcing authorities, may seek the following remedies:
Declaratory judgments;
Injunctive relief;
Actual damages on behalf of consumers and businesses;
Cease and desist orders; and
Civil penalties of up to $10,000 per willful violation.
8
Remedies for private parties are limited to the following:
A declaratory judgment and an injunction where a person is aggrieved by a FDUTPA violation;
and
Actual damages, attorney fees and court costs, where a person has suffered a loss due to a
FDUTPA violation.
9
1
Ch. 73-124, Laws of Fla.; codified at part II of ch. 501, F.S.
2
See ss. 501.202 & 501.203, F.S.
3
See s 501.204(2), F.S.
4
See ss. 501.203(2), 501.206, and 501.207, F.S.
5
S. 501.203(2), F.S.
6
Id.
7
S. 501.211, F.S.
8
Ss. 501.207(1), 501.208, and 501.2075, F.S. Civil Penalties are deposited into general revenue. Enforcing authorities
may also request attorney fees and costs of investigation or litigation. Section 501.2105, F.S.
9
Section 501.211(1) and (2), F.S. STORAGE NAME: h1227.RRS PAGE: 3
DATE: 1/25/2022
Federal Unfair and Deceptive Trade Practices
The Federal Trade Commission’s (FTC’s) unfair and deceptive trade practices regulations prohibit
unfair
10
or deceptive
11
acts or practices in or affecting commerce.
12
To enforce these regulations, the
FTC takes law enforcement actions, provides consumer and business education, issues reports and
policy guidance, leads workshops, and participates in other forums.
13
The FTC provides “online shopping” guidance to consumers.
14
The guidance includes how to confirm
an online seller’s physical address and phone number, scrutinize details provided about a product,
paying with credit card, keep records of any transaction, and protect personal information.
15
Additionally, the FTC offers resources on how to compare products online, as well as where to go to
report online shopping fraud.
16
E-commerce Marketplace
As e-commerce grows, the sale of counterfeit goods alongside authentic products continues to be a
concern.
17
In 2020, the Department of Homeland Security published a report detailing potential
strategies and policies to combat the trade of counterfeit goods.
18
According to the report, e-commerce
platforms enable counterfeiters to produce products at lower prices, while also reaching a larger
number of potential customers.
19
The report points to a scenario where third-party marketplace
websites contain photos of the real product, fake reviews of the counterfeit product, and other
information designed to mislead consumers.
20
The report also discusses how the online marketplace is changing consumer attitudes and
perceptions.
21
For instance, shopping online makes it harder for consumers to identify what the report
calls traditional “red flag” indicators, which has the potential to cause safety risks when consumers rely
on false claims that certain products have health or safety certificates.
22
The report points out that this
dynamic creates a lack of consumer trust, as well as harming the reputation of brands or businesses.
23
In 2019, the Organization for Economic Cooperation and Development (OECD) in partnership with the
EU Intellectual Property Office also published a study detailing trends in counterfeit and pirated
10
An “unfair” practice is unfair if it causes or is likely to cause substantial injury to consumers which is not reasonably
avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition. See
15 U.S.C. Sec. 45(n).
11
A “deceptive” practice involves a material representation, omission or practice that is likely to mislead a consumer
acting reasonably in the circumstances. See FTC Policy Statement on Deception (Oct. 14, 1983) available at
https://www.ftc.gov/system/files/documents/public_statements/410531/831014deceptionstmt.pdf (last visited Jan. 14,
2022). See also Federal Trade Commission, A Brief Overview of the Federal Trade Commission's Investigative, Law
Enforcement, and Rulemaking Authority (revised, May 2021) available at https://www.ftc.gov/about-ftc/what-we-
do/enforcement-authority (last visited Jan. 14, 2022).
12
15 U.S.C. s. 45(a)(1).
13
Federal Trade Commission, Protecting Consumers from Fraud and Deception, available at https://www.ftc.gov/news-
events/media-resources/truth-advertising/protecting-consumers (last visited Jan. 14, 2022).
14
See Federal Trade Commission, Shopping Online, available at https://www.consumer.ftc.gov/articles/0020-shopping-
online (last visited Jan. 14, 2022).
15
Id.
16
Id. See also Federal Trade Commission, Comparison Shopping, available at https://www.consumer.ftc.gov/shopping
(last visited Jan. 14, 2022).
17
See Department of Homeland Security, Combating Trafficking in Counterfeit and Pirated Goods (Jan. 24, 2020),
available at https://www.dhs.gov/sites/default/files/publications/20_0124_plcy_counterfeit-pirated-goods-report_01.pdf
(last visited Jan. 14, 2022).
18
Id.
19
Id. at 21.
20
Id. at 22.
21
Id. at 14.
22
Id. at 15.
23
Id. STORAGE NAME: h1227.RRS PAGE: 4
DATE: 1/25/2022
goods.
24
According to the OECD, trade in fake goods infringe on trademarks and copyright, while also
potentially harming the health and safety of consumers.
25
The OECD reported that counterfeit and
pirated goods were steadily rising, and in March of 2019, accounted for 3.3 percent of global trade.
26
Industry Self-Regulation
Because there is documented consumer harm from third-party sellers on online marketplaces, some
online marketplaces have started new programs and requirements for verifying third-party sellers in the
interests of self-regulation. For example, Amazon is testing using video calls to verify third-party sellers
as it attempts to minimize the amount of fraudulent accounts and listings on its platform. The live
verification initiative initially used in-person meetings when it began, but pivoted to video conferencing
as the COVID-19 pandemic made social distancing measures necessary. Amazon says its existing
verification process for third-party sellers uses a combination of machine learning and human review to
remove suspected bad actors. The company said these processes stopped 2.5 million accounts from
listing items for sale in 2019.
27
Preemption
Local governments have broad authority to legislate on any matter that is not inconsistent with federal
or state law. A local government enactment may be inconsistent with state law if (1) the Legislature has
preempted a particular subject area or (2) the local enactment conflicts with a state statute. Where
state preemption applies, it precludes a local government from exercising authority in that particular
area.
28
Florida law recognizes two types of preemption: express and implied. Express preemption requires a
specific legislative statement; it cannot be implied or inferred.
29
Express preemption of a field by the
Legislature must be accomplished by clear language stating that intent.
30
In cases where the
Legislature expressly or specifically preempts an area, there is no problem with ascertaining what the
Legislature intended.
31
In cases determining the validity of ordinances enacted in the face of state preemption, the effect has
been to find such ordinances null and void.
32
Implied preemption is actually a decision by the courts to
create preemption in the absence of an explicit legislative directive.
33
Preemption of a local government
enactment is implied only where the legislative scheme is so pervasive as to evidence an intent to
preempt the particular area, and strong public policy reasons exist for finding preemption.
34
Implied
preemption is found where the local legislation would present the danger of conflict with the state's
pervasive regulatory scheme.
35
24
See Organization for Economic Cooperation and Development, Trends in Trade in Counterfeit and Pirated Goods
(2019), available at https://read.oecd-ilibrary.org/trade/trends-in-trade-in-counterfeit-and-pirated-goods_g2g9f533-
en#page1 (last visited Jan. 24, 2022).
25
See Organization for Economic Cooperation and Development, Trade in Fake Goods is now 3.3% of World Trading and
Rising (March 18, 2019), available at www.oecd.org/newsroom/trade-in-fake-goods-is-now-33-of-world-trade-and-
rising.htm (last visited Jan. 24, 2022).
26
Id.
27
John Porter, Amazon testing video calls to verify third-party sellers, TheVerge.com,
https://www.theverge.com/2020/4/27/21238026/amazon-seller-verification-video-calling-fraud-third-party-sellers (last
visited Jan. 25, 2022).
28
See James R. Wolf and Sarah Harley Bolinder, The Effectiveness of Home Rule: A Preemptions and Conflict Analysis,
83 Fla. B.J. 92 (June 2009).
29
See City of Hollywood v. Mulligan, 934 So.2d 1238, 1243 (Fla. 2006); Phantom of Clearwater, Inc. v. Pinellas County,
894 So.2d 1011, 1018 (Fla. 2d DCA 2005), approved in Phantom of Brevard, Inc. v. Brevard County, 3 So.3d 309 (Fla.
2008).
30
Mulligan, 934 So.2d at 1243.
31
Sarasota Alliance for Fair Elections, Inc. v. Browning, 28 So.3d 880, 886 (Fla. 2010).
32
See, e.g., Nat’l Rifle Ass’n of Am., Inc. v. City of S. Miami, 812 So.2d 504 (Fla. 3d DCA 2002).
33
Phantom of Clearwater, Inc., 894 So.2d at 1019.
34
Id.
35
Sarasota Alliance for Fair Elections, Inc., 28 So.3d at 886. STORAGE NAME: h1227.RRS PAGE: 5
DATE: 1/25/2022
Effect of the Bill
The bill provides the following definitions:
"Consumer product" means a product that is used or bought for use primarily for personal,
family, or household purposes.
"High-volume third-party seller" (HVTPS) means a participant in an online marketplace that
is a third-party seller and that, in any continuous 12-month period during the previous 24
months, has entered into 200 or more discrete sales or transactions of new or unused
consumer products resulting in the accumulation of an aggregate total of $5,000 or more in
gross revenues. Only sales or transactions made through the online marketplace for which
payment was processed by the online marketplace, either directly or through the seller's
payment processer, count towards the calculation for the number of discrete sales or
transactions or the gross revenues.
"Online marketplace" means any consumer-directed electronically based or accessed
platform that:
o Includes features that allow for, facilitate, or enable third-party sellers to engage in the
sale, purchase, payment, storage, shipping, or delivery of a consumer product in the
U.S.;
o Is used by one or more third-party sellers for such purposes; and
o Has a contractual or similar relationship with consumers governing their use of the
platform to purchase consumer products.
"Seller" means a person who sells, offers to sell, or contracts to sell a consumer product
through an online marketplace.
"Third-party seller" means any seller, independent of an operator, a facilitator, or an owner of
an online marketplace, that sells, offers to sell, or contracts to sell a consumer product in the
United States through an online marketplace. The term does not include, with respect to an
online marketplace:
o A seller that operates the online marketplace;
o A business entity that has made available to the general public the entity's name,
business address, and working contact information;
o A business entity with an ongoing contractual relationship with the online marketplace to
provide the online marketplace with the manufacture, distribution, wholesaling, or
fulfillment of shipments of consumer products; or
o A business entity that has provided to the online marketplace identifying information that
has been verified.
"Verify" means to confirm information and documentation provided to an online marketplace by
the use of one or more methods that enable the online marketplace to reliably determine that
any information and documents provided which correspond to the seller or an individual acting
on the seller's behalf are valid, not misappropriated, and not falsified.
The bill requires an online marketplace to:
Require that any HVTPS provide it with all of the following information within 10 business days
after qualifying as a HVTPS:
o Deposit account information from a financial institution, or if none, such seller must
provide the name of the payee for payments issued by the online marketplace to the
HVTPS, and the information must be confirmed by the online marketplace or by another
third party contracted by the online marketplace.
o Contact information, including all of the following:
A valid e-mail address and working phone number.
If the HVTPS is an individual, a copy of a valid government-issued photo
identification for the individual which includes the individual's name and physical
address.
If the HVTPS is not an individual, either a copy of a government-issued photo
identification for an individual acting on behalf of such seller which includes such
individual's name and physical address or a copy of a government-issued record STORAGE NAME: h1227.RRS PAGE: 6
DATE: 1/25/2022
or tax document that includes the business name and physical address of the
HVTPS.
o A business tax identification number or, if the HVTPS does not have a business tax
identification number, a taxpayer identification number.
Verify the information the HVTPS provides under this subsection within 10 business days after
receiving such information.
o If the HVTPS provides any changes to the information, the online marketplace must
verify such changes within 10 business days after receiving the information.
o If a HVTPS provides a copy of a valid government-issued tax document, the information
contained within such tax document shall be presumed verified as of the date of
issuance of such document.
Notify each HVTPS on the online marketplace, on at least an annual basis, that such seller
must inform the online marketplace of any changes to the information previously provided by
the seller within 10 business days after receiving the notification. The notification must require
the HVTPS to either electronically certify that the HVTPS's information is unchanged or provide
changes to the information as necessary.
o If the online marketplace becomes aware that a HVTPS has not certified that such
information is unchanged or provided such changed information within 10 business days
after receiving such notification, the online marketplace must suspend the selling
privileges of the HVTPS until such seller provides such certification or changed
information.
Disclose to consumers in a conspicuous manner on the product listing, through a conspicuously
placed link on the product listing, or in the order confirmation message or other document or
communication made to the consumer after the purchase is finalized and in the consumer's
account transaction history, all of the following information of any HVTPS with an aggregate
total of $20,000 or more in annual gross revenues on its online platform:
o The full name of the HVTPS.
o The full physical address of the HVTPS.
If the full physical address of the HVTPS is the primary residential address of
such HVTPS, only the city, state, and country of the HVTPS is required to be
disclosed.
o Contact information for the HVTPS, including a working telephone number and working
e-mail address to allow for direct, unhindered communication with the HVTPS.
If the only telephone number of the HVTPS is the personal telephone number of
the HVTPS, then only the working e-mail address is required to be disclosed or
the online marketplace must provide other means of electronic messaging to
contact such seller.
o The identification of any seller that supplies the consumer product to the consumer upon
purchase, if such seller is different than the HVTPS listed on the consumer product
listing before the purchase.
If an online marketplace becomes aware that a HVTPS seller has made a false representation to the
online marketplace in order to restrict access to their full physical address, telephone number, or e-mail
address, the bill requires the online marketplace to, after providing the seller with written or electronic
notice, require the full disclosure of the HVTPS’s full physical address, telephone number, and e-mail
address.
If such information is not disclosed within 10 business days after notification, the online
marketplace must suspend the selling privileges of the HVTPS on the online marketplace until
the required information is disclosed.
The bill requires an online marketplace to provide to consumers, in a conspicuous manner on the
consumer product listing of any HVTPS, a reporting mechanism that allows for electronic and
telephonic reporting of suspicious marketplace activity to the online marketplace and a message
encouraging individuals seeking goods for purchase to report suspicious activity to the online
marketplace.
STORAGE NAME: h1227.RRS PAGE: 7
DATE: 1/25/2022
The bill does not prevent an online marketplace from providing any additional measures, electronic or
otherwise, that it deems necessary to prevent the sale of fraudulent, stolen, or counterfeit consumer
products on its platform.
The bill provides that a person who violates the bill violates of FDUTPA, and is subject to FDUTPA
penalties and remedies.
The bill provides that the regulation of the requirement for online marketplaces to verify information
from HVTPS on a one-time or ongoing basis and to verify disclosure of information to consumers is
preempted to DLA, and it allows DLA to adopt rules with respect to collecting and verifying information
under the bill, provided that such rules are limited to what is necessary to collect and verify such
information. A local governmental entity may not establish, mandate, or otherwise require the
verification or disclosure of such information.
The bill provides an effective date of July 1, 2022.
B. SECTION DIRECTORY:
Section 1: Creates s. 559.953, F.S.; providing requirements for online marketplaces with respect to
their relationships and dealing with certain third-party sellers.
Section 2: Provides an effective date.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
The bill may increase the number of FDUTPA actions taken by DLA, which may increase civil
penalties collected by DLA.
2. Expenditures:
The bill may increase the number of FDUTPA actions taken by DLA, which may increase the
related FDUTPA workload of DLA.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill may provide buyers with increased security during online sales transactions through online
marketplaces. This may be beneficial to consumers and save consumers money by preventing
consumers from being deceived into purchasing fake or counterfeit products.
The bill will require online marketplaces to implement procedures to add and verify certain third party
identifying information to their platforms, as well as provide a consumer reporting mechanism. This may
save online marketplaces time and money related to investigating fraudulent sellers.
D. FISCAL COMMENTS: STORAGE NAME: h1227.RRS PAGE: 8
DATE: 1/25/2022
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not appear to require counties or municipalities to spend funds or take
action requiring the expenditure of funds; reduce the authority that counties or municipalities have to
raise revenues in the aggregate; or reduce the percentage of state tax shared with counties or
municipalities.
2. Other:
Although the Act allows individuals and DLA to bring an action under FDUTPA, it is uncertain
whether they would be able to successfully bring such an action because Florida courts may not
have jurisdiction over such bad actors or respondents.
For a court to exercise jurisdiction over a respondent, it must have subject matter jurisdiction and
personal jurisdiction, which is determined by the court based on the respondent’s contacts with the
state.
36
A non-resident respondent may have sufficient contacts with Florida if he or she commits
acts expressly enumerated in Florida’s long-arm statute.
37
Alternately, the non-resident respondent
may be subject to a Florida court’s personal jurisdiction because he or she has minimum contacts
with the state that are otherwise unrelated to the matter that brings him or her into court.
38
Whether
a non-resident online marketplace that shows certain third-party sellers into Florida has sufficient
minimum contacts with the state is a fact-specific question that would likely need to be addressed on
a case-by-case basis by a court.
B. RULE-MAKING AUTHORITY:
The bill provides that DLA may adopt rules with respect to collecting and verifying information under the
bill, provided that such rules are limited to what is necessary to collect and verify such information.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
36
Caiazzo v. American Royal Arts Corp., 73 So. 3d 245, 250 (Fla. 4
th
DCA 2011).
37
Id; S. 48.193, F.S.
38
Caiazzo, 73 So. 3d 245, 250.