Carl Szabo, Vice President & General Counsel

1401 K St NW, Ste 502

Washington, DC 20005

netchoice.org

Assembly Consumer Affairs Committee
New Jersey Legislature

Re: Opposition to AB 3543, regarding online marketplaces

June 1, 2022

We ask you to oppose AB 3543 because it:

• hurts New Jersey’s small businesses;
• undercuts your constituents’ privacy rights;
• requires online marketplaces to assume responsibility for big-box stores’ challenges;
• discriminates against businesses—large and small—that sell online; and
• conflicts with federal law.

AB 3543 basically demands that online marketplaces treat their sellers like criminals. This is neither reasonable nor necessary.  AB 3543 also fails to address the root cause of retail criminal theft: the actual theft itself. Nor does AB 3543 address the theft of goods along the supply chain from distributors to retail stores. And it doesn’t address the ability of criminal enterprises to steal pallets of products from warehouses and loading docks.

Instead, AB 3543 just makes it harder for New Jersey’s small businesses to compete with big-box stores.

1. The bill imposes burdensome requirements on digital marketplaces, small businesses, and even New Jersey residents.

Whether as formal businesses or a modern “yard sale,” many New Jersey residents are engaged in selling goods through online marketplaces such as Etsy, Ebay, or Craigslist. These platforms have made such transactions easier and more trustworthy than ever before and lowered the cost for entrepreneurs to start their own small businesses. Unfortunately, this proposal could change this – online platforms would now have to collect significant personal information including addresses, contact information, and even bank accounts.

The result would be additional burdens for New Jersey entrepreneurs and consumers that will likely force them off digital marketplaces. This is particularly concerning as many small businesses and entrepreneurs have grown to increasingly rely on these online resources during the pandemic and changes in consumer preferences towards online shopping. Larger retailers may have the existing infrastructure to comply with these requirements or alternatives to online marketplaces, but smaller businesses will be forced to make difficult choices or worse yet, forced out-of-business.

2. The bill will force New Jersey residents to choose between protecting their privacy and earning an income.

AB 3543 requires the additional collection of often sensitive personal information for selling online. It doesn’t require too much imagination to see how requiring such sensitive information to be made public or being held by vulnerable third-parties could lead to very dangerous situations. The result would be either increased data privacy concerns or discouraging productive entrepreneurial activity.

While AB 3543 has an exception for those who do not have a business address, it requires platforms to disclose this information as a result. This distinguishes home-based businesses from their large counterparts and could make it more difficult to gain consumer trust.

3. The bill requires online marketplaces to do the job that big-box stores are failing to do.

Organized retail crime is a real concern, but the response should be to address the underlying activity at its source and not to punish everyday New Jersey residents and online marketplaces.

The criminal behavior at issue is not occurring on online marketplaces, but rather is happening in one of two locations: while the goods are in transit to the store or once the goods have arrived. That means the actual issue is better addressed at the big box retail and law enforcement level rather than raising suspicion on the everyday New Jersey residents benefitting from the entrepreneurial opportunities of online marketplaces. Theft is occurring at the points connected to the store’s logistics or by the store’s own workers and the burden should be apportioned appropriately.

Online marketplaces already engage significant resources in responding to alerts around suspected violations related to fraudulent, counterfeit, or stolen items. This proposal places the burden for addressing these concerns on online marketplaces and penalizes honest New Jersey residents for these criminal enterprises by limiting their opportunities to sell their goods online. To maintain their trustworthiness, online marketplaces have a vested interest in making sure their services are used for legitimate sales and not criminal activity.

Already, law enforcement can pursue action against bad actors whether individual sellers or broader criminal enterprises. Stores can provide them with the referrals regarding these concerns.

4. The bill conflicts with federal law.

AB 3543 also runs afoul of federal laws like the Communications Decency Act (CDA) by imposing liability on platforms for content posted by users.   Federal law states that “[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” (47 USC § 230(c)(1))

So even if this bill were enacted, it would not withstand judicial review.

Although we recognize that AB 3543 seeks to remedy commercial problems, this bill does not solve theft problems. And New Jersey residents should not be forced to surrender the privacy of their bank account numbers.

This is a misguided approach that punishes beneficial aspects of the economy. We ask that you not advance AB 3543.

Sincerely,

Carl Szabo

Vice President & General Counsel

NetChoice is a trade association that works to make the internet safe for free enterprise and free expression.