SSB 3142 (LSB 6219XC (2) 89)

SENATE FILE _____ 

BY  (PROPOSED COMMITTEE ON JUDICIARY BILL BY CHAIRPERSON ZAUN)

A BILL FOR

An Act  relating to the sale of certain consumer products by high-volume third-party sellers using online marketplaces and including effective date provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  554E.1  Definitions.
   As used in this chapter, unless the context otherwise requires:
   1.  “Consumer product” means any tangible personal property, including property that may be attached to real property, that is distributed in commerce and that is normally used for personal, family, or household purposes.
   2.  “High-volume third-party seller” means a third-party seller that, in any twelve-month period during the previous twenty-four months, meets all of the following criteria:
   a.  Has entered into at least two hundred discrete sales or transactions on the online marketplace.
   b.  Has generated at least five thousand dollars of gross revenue on the online marketplace.
   3.  “Online marketplace” means an internet site that includes features that allow, enable, or otherwise facilitate the ability of one or more third-party sellers to engage in the sale, purchase, payment, storage, shipping, or delivery of a consumer product in the United States.
   4.  “Online marketplace facilitator” means a person or an affiliate of a person who owns or operates any online marketplace.
   5.  “Seller” means a person who sells, offers to sell, or contracts to sell a consumer product through an online marketplace.
   6.  “Third-party seller” means a seller that, independent of an online marketplace facilitator, sells, offers to sell, or contracts to sell a consumer product through an online marketplace. “Third-party seller” does not include a seller that meets all of the following criteria:
   a.  Is a corporation, limited liability company, business trust, estate, trust, partnership or association, or any other legal entity that has made available to the general public the entity’s name, business address, and contact information.
   b.  Has a currently effective agreement with the online marketplace facilitator to provide for the manufacture, distribution, wholesale, or fulfillment of shipments of consumer products.
   c.  Has provided the online marketplace facilitator with all information required under section 554E.2, subsection 1.
   7.  “Verify” means to confirm the information provided by a high-volume third-party seller by the use of any of the following:
   a.  A third-party or proprietary identity verification system that has the capability to confirm a high-volume third-party seller’s name, electronic mail address, physical address, and telephone number.
   b.  A combination of two-factor authentication, public records search, and the presentation of government-issued identification.
    Sec. 2.  NEW SECTION.  554E.2  Verification of information related to a high-volume third-party seller —— ongoing verification.
   1.  An online marketplace facilitator shall require a high-volume third-party seller that uses the online marketplace facilitator’s online marketplace to provide the online marketplace facilitator with all of the following information within twenty-four hours after becoming a high-volume third-party seller: 
   a.  The high-volume third-party seller’s bank account information for the bank account into which payments issued by the online marketplace facilitator to the high-volume third-party seller will be or are deposited, or, if the high-volume third-party seller requires the online marketplace facilitator to issue payments to a third-party payee, the high-volume third-party seller shall provide the online marketplace facilitator with the name of the third-party payee. An online marketplace facilitator may require a high-volume third-party seller to provide the high-volume third-party seller’s bank account or third-party payee information to a payment processor or other person contracted by the online marketplace facilitator to maintain such information if the online marketplace facilitator may obtain the information from the payment processor or person upon request.
   b.  The high-volume third-party seller’s contact information, including functioning electronic mail address, telephone number, and either of the following, as applicable:
   (1)  If the high-volume third-party seller is an individual, the high-volume third-party seller shall also provide the online marketplace facilitator with a copy of a form of current government identification issued to the individual that includes a photograph of the individual, the individual’s name, and the individual’s physical address.
   (2)  If the high-volume third-party seller is not an individual, the high-volume third-party seller shall also provide the online marketplace facilitator with any of the following:
   (a)  A copy of a form of current government identification issued to an individual acting on behalf of the high-volume third-party seller that includes the individual’s name and the individual’s physical address.
   (b)  A copy of a government record or tax-related document that includes the high-volume third-party seller’s name and physical address.
   c.  The high-volume third-party seller’s business tax identification number or, if the high-volume third-party seller does not have a business tax identification number, the high-volume third-party seller’s taxpayer identification number.
   d.  Whether the high-volume third-party seller advertises or offers for sale on any other internet site the consumer products that the high-volume third-party seller advertises or offers for sale on the online marketplace facilitator’s online marketplace.
   2.  An online marketplace facilitator shall verify the information provided by a high-volume third-party seller pursuant to subsection 1 within three days after the online marketplace facilitator’s receipt of the information. A copy of a tax-related document provided pursuant to subsection 1, paragraph “b”, subparagraph (2), subparagraph division (b), shall be presumed to be verified upon the online marketplace facilitator’s receipt of the document.
   3.  An online marketplace facilitator shall, at least annually, notify all high-volume third-party sellers that use the online marketplace facilitator’s online marketplace to inform the online marketplace facilitator of any change to the information provided by the high-volume third-party seller pursuant to subsection 1, or electronically certify that there are no changes to the information.
   4.  Within three days after receipt of the notification provided by subsection 3, a high-volume third-party seller shall inform the online marketplace facilitator of any change to the information provided by the high-volume third-party seller pursuant to subsection 1, or electronically certify that there are no changes to the information.
   5.  An online marketplace facilitator shall suspend the ability of a high-volume third-party seller to use the online marketplace facilitator’s online marketplace if the high-volume third-party seller violates this section. An online marketplace facilitator shall allow a high-volume third-party seller whose ability to use the online marketplace facilitator’s online marketplace has been suspended to use the online marketplace facilitator’s online marketplace within a reasonable amount of time after the high-volume third-party seller provides the online marketplace facilitator with the information or certification required by this section.
    Sec. 3.  NEW SECTION.  554E.3  Required disclosures.
   1.  An online marketplace facilitator shall require a high-volume third-party seller that uses the online marketplace facilitator’s online marketplace to disclose to consumers the name of the high-volume third-party seller in a conspicuous manner in the high-volume third-party seller’s product listings on the online marketplace.
   2.  An online marketplace facilitator shall require a high-volume third-party seller that uses the online marketplace facilitator’s online marketplace to disclose to consumers in a conspicuous manner, either in the high-volume third-party seller’s product listings on the online marketplace or through a conspicuously placed hyperlink in the high-volume third-party seller’s product listings on the online marketplace, all of the following:
   a.  The high-volume third-party seller’s physical address.
   b.  Whether the high-volume third-party seller also engages in the manufacturing, importing, or reselling of consumer products.
   c.  The high-volume third-party seller’s functioning electronic mail address and telephone number.
   3.  Notwithstanding subsection 2, if requested by a high-volume third-party seller, an online marketplace facilitator may modify the disclosures required by a high-volume third-party seller in accordance with paragraph “a”, “b”, or “c”.
   a.  An online marketplace facilitator may authorize a high-volume third-party seller to not disclose the high-volume third-party seller’s physical address if the high-volume third-party seller demonstrates to the online marketplace facilitator that the high-volume third-party seller only has a residential address, and if the high-volume third-party seller discloses the country and, if applicable, the state in which the high-volume third-party seller is located. If a high-volume third-party seller does not disclose its physical address pursuant to this paragraph, the high-volume third-party seller may inform consumers in the high-volume third-party seller’s product listings on the online marketplace that there is no business address available and inquiries should be submitted to the high-volume third-party seller by telephone or electronic mail.
   b.  An online marketplace facilitator may authorize a high-volume third-party seller to not disclose the high-volume third-party seller’s physical address if the high-volume third-party seller demonstrates to the online marketplace facilitator that the high-volume third-party seller has a physical address for the return of consumer products. If a high-volume third-party seller does not disclose its physical address pursuant to this paragraph, the high-volume third-party seller may inform consumers in the high-volume third-party seller’s product listings on the online marketplace of the high-volume third-party seller’s physical address for the return of consumer products.
   c.  An online marketplace facilitator may authorize a high-volume third-party seller to not disclose the high-volume third-party seller’s telephone number if the high-volume third-party seller demonstrates to the online marketplace facilitator that the high-volume third-party seller only has a personal telephone number. If a high-volume third-party seller does not disclose its telephone number pursuant to this paragraph, the high-volume third-party seller may inform consumers in the high-volume third-party seller’s product listings on the online marketplace that there is no telephone number available and inquiries should be submitted to the high-volume third-party seller by electronic mail.
   4.  Notwithstanding subsection 3, an online marketplace facilitator shall require a high-volume third-party seller to disclose all information required under subsection 2 within three days after the online marketplace facilitator provides notice to the high-volume third-party seller if any of the following occur:
   a.  The online marketplace facilitator determines the high-volume third-party seller made a false representation to the online marketplace facilitator under subsection 3.
   b.  A high-volume third-party seller that uses modified disclosures pursuant to subsection 3 has not provided responsive answers to consumer inquiries submitted to the high-volume third-party seller through telephone or electronic mail within a reasonable amount of time.
   5.  An online marketplace facilitator shall disclose to consumers in a conspicuous manner on a high-volume third-party seller’s product listing on the online marketplace facilitator’s online marketplace a mechanism that allows for the electronic and telephonic reporting of suspicious activity to the online marketplace facilitator and a statement encouraging consumers to report suspicious activity to the online marketplace facilitator.
    Sec. 4.  NEW SECTION.  554E.4  Fulfillment of shipment by a different person.
   An online marketplace facilitator that warehouses, distributes, or otherwise fulfills a consumer’s order for a consumer product supplied by a high-volume third-party seller shall disclose to the consumer the identity of the high-volume third-party seller if the online marketplace facilitator’s online marketplace indicated the consumer product was supplied by a different seller.
    Sec. 5.  NEW SECTION.  554E.5  Enforcement —— penalties.
   1.  The office of the attorney general shall enforce the provisions of this chapter.
   2.  A violation of this chapter is an unlawful practice pursuant to section 714.16, and all remedies of section 714.16 are available for such action.
    Sec. 6.  NEW SECTION.  554E.6  Preemption.
   1.  The provisions of this chapter shall be implemented uniformly throughout the state and shall preempt any county or municipal ordinance, rule, or regulation related to the verification of information related to a high-volume third-party seller or the disclosure of information by a high-volume third-party seller.
   2.  Notwithstanding any law to the contrary, political subdivisions shall not adopt or enforce any ordinance, rule, or regulation that conflicts with this chapter.
    Sec. 7.  NEW SECTION.  554E.7  Rules.
   The office of the attorney general shall adopt rules pursuant to chapter 17A to administer and interpret this chapter.
    Sec. 8.  EFFECTIVE DATE.  This Act takes effect January 1, 2023.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to the sale of certain consumer products by high-volume third-party sellers using online marketplaces.
   The bill defines “consumer product” as any tangible personal property that is distributed in commerce and that is normally used for personal, family, or household purposes. The bill defines “high-volume third-party seller” as a participant in an online marketplace that is a third-party seller and that, in any 12-month period during the previous 24 months, has entered into at least 200 discrete sales or transactions on the online marketplace and has generated at least $5,000 of gross revenue on the online marketplace. The bill defines “online marketplace” as an internet site that includes features that facilitate the ability of one or more third-party sellers to engage in the sale, purchase, payment, storage, shipping, or delivery of a consumer product in the United States. The bill defines “online marketplace facilitator” as a person or an affiliate of a person who owns or operates any online marketplace. The bill defines “seller” as a person who sells, offers to sell, or contracts to sell a consumer product through an online marketplace. The bill defines “third-party seller” as a seller that, independent of an online marketplace facilitator, sells, offers to sell, or contracts to sell a consumer product through an online marketplace. The bill establishes that “third-party seller” does not include a seller that is a legal entity that has made available to the general public the entity’s name, business address, and contact information; has a currently effective agreement with the online marketplace facilitator to provide for the manufacture, distribution, wholesale, or fulfillment of shipments of consumer products; and that has fully complied with new Code section 554E.2. The bill defines “verify” to mean to confirm the information provided by a high-volume third-party seller by the use of certain methods enumerated in the bill.
   The bill provides that an online marketplace facilitator shall require a high-volume third-party seller using the online marketplace facilitator’s online marketplace to provide the online marketplace facilitator with certain information, including the high-volume third-party seller’s bank account information, contact information, business tax identification number or taxpayer identification number, and whether the high-volume third-party seller advertises or offers for sale on any other internet site the consumer products that the high-volume third-party seller advertises or offers for sale on the online marketplace facilitator’s online marketplace. The bill requires an online marketplace facilitator to verify this information. Additionally, the bill requires an online marketplace facilitator and a high-volume third-party seller to keep the information up to date. The bill authorizes an online marketplace facilitator to suspend the ability of a high-volume third-party seller to use the online marketplace facilitator’s online marketplace if the high-volume third-party seller fails to keep the information up to date.
   The bill provides that an online marketplace facilitator shall require a high-volume third-party seller that uses the online marketplace facilitator’s online marketplace to disclose to consumers the name of the high-volume third-party seller in a conspicuous manner in the high-volume third-party seller’s product listings. Additionally, the bill provides that an online marketplace facilitator shall require a high-volume third-party seller to disclose to consumers in a conspicuous manner, either in the high-volume third-party seller’s product listings or through a conspicuously placed hyperlink in the high-volume third-party seller’s product listings, the high-volume third-party seller’s physical address; whether the high-volume third-party seller also engages in the manufacturing, importing, or reselling of consumer products; and the high-volume third-party seller’s functioning electronic mail address and telephone number. The bill authorizes an online marketplace facilitator to modify these disclosures in certain enumerated cases.
   The bill requires an online marketplace facilitator to disclose to consumers in a conspicuous manner on a high-volume third-party seller’s product listing a mechanism that allows for the electronic and telephonic reporting of suspicious activity to the online marketplace facilitator.
   The bill requires an online marketplace facilitator that warehouses, distributes, or otherwise fulfills a consumer’s order for a consumer product supplied by a high-volume third-party seller to disclose the identity of the high-volume third-party seller if the online marketplace facilitator’s online marketplace indicated the consumer product was supplied by a different seller.
   The bill provides that the office of the attorney general shall enforce the provisions of the new Code chapter. Additionally, the bill provides that a violation of the new Code chapter is an unlawful practice pursuant to Code section 714.16. Several types of remedies are available if a court finds that a person has committed an unlawful practice, including injunctive relief, disgorgement of moneys or property, and a civil penalty not to exceed $40,000 per violation.
   The bill provides that the provisions of the new Code chapter shall preempt any county or municipal ordinance, rule, or regulation related to the verification of information related to a high-volume third-party seller or the disclosure of information by a high-volume third-party seller. The bill prohibits a political subdivision from adopting or enforcing any ordinance, rule, or regulation that conflicts with the new Code chapter.
   The bill requires the attorney general to adopt rules to administer and interpret the bill.
   The bill takes effect January 1, 2023.