E-Commerce Vulnerabilities Remain Unaddressed as SHOP SAFE Act Fails to Safeguard Consumers
The SHOP SAFE Act, a proposed legislation in the United States, aims to combat counterfeit goods and ensure consumer safety. However, the Act has raised concerns among online marketplaces due to its potential negative impacts and increased compliance burdens.
The SHOP SAFE Act applies to platforms with over $500,000 in annual sales or those served with ten trademark infringement notices in their lifetime. This broad definition could potentially cause confusion and limit the reach of third-party sellers.
One of the key requirements of the SHOP SAFE Act is for platforms to create proactive measures for screening goods before they can be listed for sale. This places significant administrative and legal responsibilities on marketplaces, potentially increasing operational costs and risks of liability. Critics argue this could lead to reduced seller innovation, smaller marketplaces being pushed out due to high compliance costs, and difficulties in policing large volumes of listings effectively.
In comparison, the European Union has implemented helpful policies to regulate online marketplaces. Under the recent Customs Reform (2025), the EU treats online marketplaces as “deemed importers” responsible for customs declarations and payment of customs duties on non-EU goods sold on their platforms. The EU emphasizes transparency in pricing, including customs debts, and requires marketplaces to collect detailed product information such as manufacturer and product safety compliance in advance of sales.
The SHOP SAFE Act and the EU's approach differ significantly in their enforcement models. The SHOP SAFE Act focuses on seller accountability, safety, and counterfeit product removal, often involving penalties and enforcement actions targeted directly at platforms. On the other hand, the EU integrates customs duties, product origin, and safety compliance before sales, shifting legal and financial responsibilities in cross-border e-commerce.
| Aspect | SHOP SAFE Act (U.S.) | EU Customs Reform & Counterfeiting Prevention | |-------------------------------|--------------------------------------------|-----------------------------------------------------| | Marketplace Responsibility | Verify sellers; enforce counterfeit bans; can face fines and legal penalties | Deemed importer status; responsible for customs declarations and duties payment | | Scope of Enforcement | Focus on seller accountability, safety, and counterfeit product removal | Integrates customs duties, product origin, safety compliance before sales | | Potential Issues | High compliance burden; potential chilling effect on sellers, smaller platforms; liability concerns | Increased administrative burden; customs duty collection responsibility; transparency for consumers | | Consumer Protection Focus | Prevent sale of unsafe/counterfeit goods with criminal links, toxic ingredients | Price transparency including customs fees; aligning product safety with customs controls |
The SHOP SAFE Act responds mainly to the public health and criminal implications of counterfeit goods, as highlighted by reports showing high prevalence of dangerous fake cosmetics on online marketplaces. The EU’s approach is more formalized within its broader customs and product safety regulatory frameworks, including treating marketplaces as importers for customs purposes, thus shifting legal and financial responsibilities in cross-border e-commerce.
The SHOP SAFE Act, if included in America COMPETES or USICA, could negatively impact online marketplaces by introducing heightened liability, compliance expenses, and inconsistent guidelines. Critics argue that this could ultimately result in platforms limiting consumer choice by removing third-party sellers. Furthermore, the Act fails to address the need for consistency in counterfeiting prevention practices internationally.
In conclusion, while the SHOP SAFE Act aims to protect consumers against counterfeit products that pose a risk to health and safety, it could potentially impose undue burdens on online marketplaces and lead to unintended consequences such as reduced seller innovation and smaller marketplaces being pushed out. It is essential for Congress to work alongside stakeholders to create targeted legislation that protects consumers from counterfeit goods without undermining the benefits of online marketplaces.
[1] European Commission (2021). Customs Union Reform. Available at: https://ec.europa.eu/taxation_customs/business/customs-union/customs-union-reform_en
[2] U.S. Government Accountability Office (2019). Counterfeit Goods: Additional Actions Needed to Address Risks Posed by Online Marketplaces. Available at: https://www.gao.gov/products/GAO-19-243T
- The SHOP SAFE Act's broad definition could cause confusion and potentially limit the reach of third-party sellers due to increased compliance burdens.
- The EU's approach to regulating online marketplaces emphasizes transparency in pricing, including customs debts, and requires marketplaces to collect detailed product information, such as manufacturer and product safety compliance, in advance of sales.
- Critics argue that the SHOP SAFE Act, if included in America COMPETES or USICA, could ultimately result in platforms limiting consumer choice by removing third-party sellers.
- It is crucial for Congress to work alongside stakeholders to create targeted legislation that protects consumers from counterfeit goods while preserving the benefits of online marketplaces.
