New bill would require online sellers to verify identity

Opponents to the bill fear it would force businesses out of California.

California lawmakers are considering a bill that would require online marketplaces like eBay and Nextdoor to collect bank accounts and tax identification numbers from high-volume sellers who advertise online but collect payments offline.

The bill is part of a set of 14 legislative measures designed to combat retail theft in the state, as the California Retailers Association emphasizes the crisis-level situation, although it is challenging to quantify due to lack of data sharing by many stores.

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The big picture: Proponents argue that the data collection proposal will help authorities track down thieves who resell stolen merchandise and shut down organized theft rings seeking to resell stolen goods. 

  • This aims to close a loophole in current laws that do not require platforms to track offline transactions.
  • The bill’s rules would apply to sellers who make at least $5,000 in profit and engage in at least 200 transactions in a year.
  • However, opponents argue that the bill’s new requirements are broad and vague, potentially leading to harm for California’s e-commerce businesses by forcing platforms to collect sensitive information from all users.

Go deeper: Specifically, the bill is criticized for potentially forcing businesses out of California and significantly benefiting big box retailers while harming classified ad sites’ ability to conduct business in the state.

  • Opponents also argue that the bill runs counter to a federal law requiring online marketplaces to verify high-volume sellers and that requiring platforms to monitor all transactions, including those offline, is an impossible task.
  • TechNet’s David Edmonson told the Associated Press that businesses would be forced out of California. 

What we’re watching: Despite the opposition, the bill is part of a legislative package that aims to increase penalties for organized crime rings, expand drug court programs, and close legal loopholes to make it easier to prosecute auto thefts.

  • Lawmakers are hurrying to deliver the bills to Democratic Gov. Gavin Newsom in a few weeks, and once signed, the bills would take immediate effect, reflecting a new get-tough-on-crime strategy in an election year while preserving progressive policies to keep people out of prison.
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