Written Testimony of Colleen Daley, Internet Association — In Opposition to HB272 (Ohio House of Representatives)
Summary
Written testimony of Colleen Daley, Midwest Director of State Government Affairs for the Internet Association, to the Ohio House of Representatives Commerce and Labor Committee, Representative Dick Stein, Chairman, in opposition to HB272, dated October 13, 2021. The testimony states that the verification mandates would harm small businesses selling goods online and would force online marketplaces to choose between increased liability exposure and removing small sellers' listings. It also raises compliance problems for marketplaces of all sizes, including capturing and verifying identification and bank account information. It requests that the committee not advance HB 272.
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“Written Testimony of Colleen Daley, Internet Association — In Opposition to HB272 (Ohio House of Representatives).”
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www.internetassociation.org / @internetassn
WRITTEN TESTIMONY OF COLLEEN DALEY
INTERNET ASSOCIATION
OHIO HOUSE OF REPRESENTATIVES
COMMERCE AND LABOR COMMITTEE
REPRESENTATIVE DICK STEIN, CHAIRMAN
IN OPPOSITION TO HB272
Oct 13, 2021
Good afternoon Chairman Stein, Vice Chairman Johnson, Ranking Member Lepore-Hagan, and
members of the House Commerce and Labor Committee, my name is Colleen Daley and I am the
Midwest Director of State Government Affairs for the Internet Association. IA represents over 40 of
the world’s leading internet companies. We are dedicated to advancing public policy solutions that
foster innovation, promote economic growth, and empower people through the free and open
Internet.
I am here today to explain why we oppose HB 272. I sent each of you a letter highlighting our
concerns and I understand that several IA member organizations have contacted you about their
opposition to this bill independently, but I appreciate the opportunity to provide testimony today
on some of the internet industry’s primary concerns with this legislation.
We certainly understand the stated goal of this legislation to identify and capture individuals who
have stolen or counterfeited goods. But this bill does not stop or deter such unlawful activities.
Instead, the bill places a burden on small businesses that are not the targets within the stated
goal.
Our first concern is the negative effect this proposal will have on Ohio small businesses. We are
concerned about how the bill affects small businesses, micro businesses, and solo entrepreneurs
who are already suffering due to the global pandemic. The verification mandates in this bill will
harm small businesses selling goods online. This is because the bill will force online marketplaces
to choose between increased liability exposure or removing listings of small businesses,
microbusinesses, and entrepreneurs - a choice not faced by big box retailers with both in-person
retail space and an online presence that are exempt from this legislation.
Further, this bill’s requirements will raise small businesses start-up costs and increase
administrative burdens associated with registering a third-party and obtaining records they may
not otherwise be required to obtain.
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In Ohio there are over 100,000 businesses who sell products on various platforms. On one
platform over 90% of the women-owned businesses sell products to 10 or more markets globally.
On another platform 4 out of every 5 sellers are women and almost all of them are working out of
their own homes. These are businesses that thrive in the online marketplace.
But, HB 272 assumes that any of these businesses that reach a certain threshold of success
annually are doing so through illicit means, and must therefore turnover sensitive and personally
identifiable information to prove their innocence and legitimacy. For many of the solely-owned or
microbusinesses on these platforms, this means their home address, personal financial
information, personal email address, and home phone number. This leads directly to our next top
concern.
Which is, compliance problems this bill creates for marketplaces of all sizes. Simply put, we find
HB 272 to be unworkable with respect to
1) capturing and verifying identification information and bank account information of high
volume sellers, and
2) increasing liability for privacy risks.
The practical effect for most marketplaces is that they will have to collect all seller’s identification
information when a seller joins the marketplace. This increases privacy risks for all sellers who will
now have to give their home addresses and bank information to marketplaces. The alternative is
suspension from the platform and loss of income.
Providing bank account information to marketplaces is especially concerning because sharing this
sensitive financial information could lead to increased fraudulent activity. The bill does not provide
clear direction on a verification process for bank information or the security of that bank
information when other seller information is publicly available.
Further, the requirements of this bill regarding wide disclosure of sensitive personally identifiable
information runs counter to the current dialogue on consumer privacy and data security laws being
considered here in Ohio right now. While this legislation purports to include exemptions for sellers
operating out of their residences, the exemptions fail to provide sufficient protections. For
example, a marketplace must relinquish any of the limited disclosure requirements for a seller who
simply has not responded to an inquiry from another user of a marketplace in a “reasonable time.”
If you were a sole proprietor, trying to sell your products online do you believe the verification
requirements would do anything to help your business grow? How would you feel about having
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your home address and bank account information available for the world to see? These provisions
only make being a small business more difficult.
Finally, IA believes current practices are addressing marketplace problems - IA member
companies already have in place a number of procedures and practices to combat illegal and
suspicious activities. I would note for you that our member organizations with platforms that allow
these businesses to thrive have their own policies, and terms and conditions to regulate sellers and
the goods they sell. All of them prohibit the sale of stolen and counterfeit goods, and all have a
mechanism in place to report or initiate a report regarding a sale that may violate those policies.
Not to mention, they all have dedicated teams that work with the retail sector and law enforcement
to investigate suspected criminal activity online. We know that our retail partners are the experts
in their operations and product base, and thus coordination with them is critical.
Also, law enforcement already has the authority and means to detect suspicious activity and
enforce intellectual property laws and they should be empowered to address the issue of
Organized Retail Crime at its source, namely the brick-and-mortar locations in which brazen
criminals are strolling into stores, clearing whole shelves worth of product, and calmly walking out.
The fact that some of this product ends up online is inevitable, but giving law enforcement
additional resources to investigate and prosecute ORC rings could prevent many thefts from
happening in the first place.
Lastly, we all agree that Organized Retail Crime is a very serious and complex problem, and that
protecting consumers from illegal products, whether they be stolen or inauthentic - and no matter
how they enter the supply chain - is an important priority.
But as mentioned, to effectively combat the rise in organized retail crime there needs to be close
collaboration between law enforcement, retail stores, and online marketplaces. These criminal
activities are most successfully disrupted when all legs of the stool are working together.
In fact, just last month I stood up at a press conference in Chicago with retailers and law
enforcement in support of Illinois Attorney General Kwame Raoul’s creation of an organized retail
crime task force. That task force will go directly at the heart of organized retail crime. This
approach features enforcement tools that are far less intrusive to honest business owners, and
only disrupts the bad actors who are the true targets of this legislation. This bill does not do that.
Instead, the legislation before you today does nothing to address the issue of ORC at its source,
namely the targeting of brick and mortar retailers and theft of merchandise from store shelves. For
these reasons, we respectfully request that the committee not advance HB 272, but rather to focus
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on solutions supported by law enforcement, the internet industry, and retailers that combat ORC
as a whole through a more collaborative and equitable approach.
Thank you for your time and consideration.
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