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California expands online marketplaces’ information collection requirements
August 2024
In brief
What happened?
Legislation enacted in California on August 16, 2024, expands existing requirements for marketplace facilitators to collect certain information from high-volume third-party sellers utilizing online marketplaces, requires certain notifications of an attempt to sell stolen goods, and expands the law enforcement agencies authorized to enforce the requirements.
[S.B. 1144, enacted 8/16/24]
Why is it relevant?
California statute requires an online marketplace to suspend sales activity of a high-volume third-party seller that is not in compliance with certain information retention and security disclosure requirements.
S.B. 1144 expands the types of transactions that qualify a seller as a high-volume third-party seller and removes the condition that the platform must have a contractual relationship with consumers, requiring marketplace facilitators to collect information on an increased number of sellers. Additionally, the bill requires a marketplace facilitator to notify the online marketplace and alert law enforcement agencies of stolen goods.
Actions to consider
Online marketplaces should evaluate whether process updates and technology upgrades are needed to comply with the new requirements.
In detail
Background
California enacted legislation in September 2022 that requires marketplace facilitators to collect from high-volume sellers certain information, including the high-volume seller’s name, physical location, banking information, a valid tax document or record that demonstrates that they are a lawfully authorized business, and other key information to address the resale of stolen goods [S.B. 301]. For more information see PwC’s California will require marketplace facilitators to collect information from high-volume sellers.
Observation: At the end of 2022, the US Congress passed the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act (INFORM), which imposes, on a nationwide basis, largely the same requirements as S.B. 301.
Transactions must be made utilizing an online marketplace
Effective July 1, 2025, S.B. 1144 revises the “high-volume third-party seller” definition to mean a third-party seller on an online marketplace. The definition removes the conditions that discrete transactions be made “through” an online marketplace and that the online marketplace processes the payment and, instead, adds the condition that the transactions were made “utilizing” an online marketplace.
Observation: According to the bill’s analysis, it is intended to expand the scope of S.B. 301 to make it more difficult for stolen goods to be sold online by modifying certain definitions within current law to cover all platforms that connect buyers and sellers, even if the sale is not conducted through the platform’s payment processor.
An online marketplace no longer requires a contractual relationship
S.B. 1144 revises the “online marketplace” definition by removing the condition that the platform has a contractual relationship with consumers governing their use of the platform to purchase consumer products.
Observation: With this revised definition, marketplace facilitators must collect the required information for an increased number of sellers that now qualify as high-volume third-party sellers.
Online marketplace notification requirements for stolen goods
S.B. 1144 requires an online marketplace to establish and maintain a policy prohibiting the sale of stolen goods on the marketplace that must include consequences for knowingly selling stolen goods on the online marketplace, including, but not limited to, suspension or termination of the seller’s account.
Additionally, the bill requires a marketplace facilitator to provide a mechanism on the online marketplace that allows any individual to notify the online marketplace that a seller is, or may be, selling stolen goods.
Observation: The bill analysis states that S.B. 1144 “will mandate that online marketplaces create a consumer-friendly means of identifying which online sellers are in compliance with California law.”
Online marketplace required to communicate with law enforcement
S.B. 1144 requires an online marketplace to alert local, regional, or state law enforcement agencies in California if it knows or should know that a third-party seller is selling or attempting to sell stolen goods to a California resident (unless the marketplace already has received notice from a law enforcement agency).
Observation: The bill analysis states that S.B. 1144 allows district attorneys, county counsel, and city attorneys to enforce violations of the bill.
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