The SHOP SAFE Act, which was introduced in the House of Representatives by Representatives Darrell Issa (R-CA), Jerry Nadler (D-NY), Ben Cline (R-VA), and Hank Johnson (D-GA) on June 11, is an important bill that would help protect consumers and businesses from harmful counterfeit products by making e-commerce platforms responsible for vetting products’ legitimacy. Despite this, some have argued that the bill is not necessary and would do more harm than good for consumers.
A policy analyst at the Center for Data Innovation made several claims along these lines after the legislation was initially introduced in the Senate. However, those claims about the bill do not hold up to scrutiny.
| Claim: “Provisions in the SHOP SAFE Act would make online shopping more of a hassle [for consumers].” |
| In reality: This claim is nonsensical. The reforms in the SHOP SAFE Act would make online shopping easier for consumers by requiring third-party e-commerce platforms to play a part in ensuring consumers’ safety. Currently, the high prevalence of counterfeit goods in the marketplace burdens brand owners and consumers with determining whether a given product is legitimate, which can be a daunting task given that counterfeiters often copy images, product descriptions, and other copyrighted material to present their products as authentic. Under the SHOP SAFE Act, e-commerce sites would be required to provide consumers with key information about sellers’ legitimacy, reducing this research burden on the part of brand owners and consumers and reducing part of the stress of online shopping. |
| Claim: The SHOP SAFE Act is not necessary because “[p]rotections outlined in [it] already exist.” |
| In reality: The Center for Data Innovation’s statement identifies the INFORM Act as a piece of legislation whose provisions make SHOP SAFE redundant. While the INFORM Act does include measures to increase transparency on the part of online sellers, the SHOP SAFE Act’s establishment of liability for platforms that facilitate counterfeit sales would create stronger incentives for e-commerce platforms to actively prevent counterfeiters from taking root on their websites. This would benefit not only consumers but also businesses, who would be able to focus their resources on new product R&D instead of hunting down trademark infringers. Additionally, continuing high rates of counterfeit sales demonstrate the inefficacy of existing laws aimed at preventing them. One recent study found that nearly seven in 10 global consumers had unknowingly purchased a counterfeit item within the past year, while dangerous counterfeit products such as airbags and Ozempic continue to make headlines. This is proof that more stringent measures are required to stem the flow of counterfeits. |
| Claim: The SHOP SAFE Act would “ultimately reduc[e] consumers’ options for online shopping“ |
| In reality: This claim is based on the fact that the SHOP SAFE Act would establish stricter requirements for e-commerce platforms to vet third-party sellers, which could in theory reduce the number of active online marketplaces. However, this is highly misleading, as what matters for consumers is not the total number of e-commerce sites but rather the number of safe, reliable sites. SHOP SAFE would increase the latter number by requiring sites to take basic preventative measures, such as providing relevant information to consumers, and would grant a safe harbor to any site complying with its requirements. Additionally, SHOP SAFE would ultimately help expand product offerings for consumers by strengthening the enforceability of IP rights. Counterfeit sales detract from the sales of legitimate businesses and can cause reputational damage to those brands if products prove to be dangerous or defective. Preventing counterfeiting would ensure that businesses that develop useful, quality products earn the revenue they need to continue investing in product innovation. |