California lawmakers are considering legislation that would impose requirements on marketplaces in their dealings with sellers. The bill AB-1790 was introduced in February, has been amended several times, and appears to have passed the Senate committee on Tuesday.
The Fox and Hounds Daily, a publication that combines the news of business and politics in California, summarized the assembly bill
in June as follows: "This bill would require a marketplace to ensure that their terms and conditions regarding commercial relationships with marketplace sellers meet specified requirements, including that the terms and conditions are drafted in plain and intelligible language."
Ed Rosenberg of the ASGTG Amazon Sellers Group
called out several highlights of the bill today (notice that he mentions Amazon, but the bill would apply to all marketplaces):
- Amazon will need to explain with more details why a seller is suspended.
- Liability insurance would be required by the 3P seller (enforced by Amazon).
- Clearer guidelines for when Amazon can withhold funds from sellers.
- TOS needs to be drafted in plain and intelligible language.
We would add to that list of highlights the provision that would require greater transparency in search rankings - many a seller would love to know why their listings may appear further down in search than other listings.
As Rosenberg mentioned, the assembly bill requires marketplace sellers to have liability insurance, which many business sellers have. However, consumer sellers do not, such as the person selling a used handbag on Poshmark, a comic book on eBay, or a handmade or vintage item on Etsy.
In perusing the bill and its various drafts, it appears the current version would apply to marketplaces (and apps) whether or not they are located in California, but with regard to the requirement that sellers obtain liability insurance, it appears that would apply to sellers located in California.
When introduced in February, AB-1790 called out Amazon by name, and drafts also contained language about marketplaces having to pay interest related to holding sellers funds for over 90 days should the seller prevail in an action regarding the withheld funds, but the current bill is more streamlined than previous drafts.
You can dig into AB-1790 yourself on this page on Legislature.ca.gov
- it would be a significant development in ecommerce if passed. Let us know what you like and don't like about the proposed legislation.