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Lawmakers are pushing for a crackdown on online marketplaces, such as eBay, Yahoo, Overstock.com and others, for inadequate efforts to block the sale of stolen products on their platforms. Retailers say the resale of stolen goods costs them and consumers as much as $30 billion a year.
The Organized Retail Crime Act of 2008, introduced July 15 in the House of Representatives, would make the Internet auction houses liable for stolen goods that pass through their sites. If an Internet marketplace does not take appropriate steps to weed out fraud, then the auction house could be charged with participating in organized retail crime, which the new legislation qualifies as a federal offense. On July 31, the E-Fencing Enforcement Act of 2008 followed in the House. That bill would specifically require online marketplaces to track suspicious, high-volume sellers on their sites and to hand over the information to retailers.
The Internet auction companies will mount a spirited and likely successful counterattack. They've quashed similar attempts by state lawmakers and say this bill doesn't combat the real problem, which is the original theft of the products.
But manufacturers, brand owners and bricks-and-mortar retailers increasingly are becoming fed up. Sales of black market goods are soaring as transactions morph from cash-only, back-of-the-truck deals to easy online purchases with credit cards and overnight, at-your-doorstep delivery.
The proposed legislation is the latest skirmish in an ongoing battle over Internet intermediaries' responsibility for their customers' actions. Supporters of the bill want online marketplaces to more closely monitor transactions on their sites. They say the technology exists for the sites to track stolen goods sales, whether through targeting sellers who are known for proffering the products or hunting down frequently stolen goods.
Internet firms, though, say such efforts would put up barriers to online commerce. In fact, a related tug-of-war about users selling counterfeit goods on online marketplaces has gone all the way to federal courts. Ebay won one of the battles in early July, when a U.S. district court judge in New York ruled in the platform's favor in a lawsuit filed by jewelry icon Tiffany & Co.
However, eBay has not been so lucky in Europe, where courts are more protectionist than in the U.S. when it comes to trademark law. On June 30, a French court ordered the online marketplace to pay luxury conglomerate Moët Hennessy Louis Vuitton (LVMH) $61 million for failing to cull the platform of fake LVMH accessories and perfumes. LVMH's lawsuit is notable for targeting eBay Inc. and not just the French arm of the company. The Internet's global reach means that more U.S. companies could expect the same sort of outcomes.
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