Bill Text: CA SB1144 | 2023-2024 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Marketplaces: online marketplaces.

Spectrum: Moderate Partisan Bill (Democrat 4-1)

Status: (Introduced) 2024-05-06 - May 6 hearing: Placed on APPR suspense file. [SB1144 Detail]

Download: California-2023-SB1144-Introduced.html

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CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill

No. 1144

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Introduced by Senator Skinner

February 14, 2024

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An act to amend Section 1749.8 of, and to add Sections 1749.8.6, 1749.8.7, 1749.8.8, and 1749.8.9 to, the Civil Code, relating to business.

LEGISLATIVE COUNSEL'S DIGEST

SB 1144, as introduced, Skinner. Marketplaces: online marketplaces.

Existing law generally requires an online marketplace to require a high-volume third-party seller on the online marketplace to make certain disclosures. In this regard, existing law requires a high-volume third-party seller to disclose to the online marketplace certain contact and payment information, and, under certain conditions, to disclose to the online marketplace and to consumers certain additional information about the seller and the party responsible for supplying the product, as provided. Existing law requires an online marketplace to suspend future sales activity of a high-volume third-party seller that is not in compliance with those information sharing requirements, as specified. Existing law imposes certain information retention and security requirements on an online marketplace and prohibits specified uses of that information. Existing law requires a person or entity who violates these provisions to be liable for a civil penalty not to exceed $10,000 for each violation and reasonable attorney’s fees and costs and to be subject to preventive relief, as specified. Existing law limits recovery and relief to a civil action brought by the Attorney General, as specified.

Existing law generally defines a “high-volume third-party seller,” for purposes of the above-described provisions, as a third-party seller who has entered into a certain number of consumer product sales transactions through an online marketplace for which payment is processed by the online marketplace, as specified. Existing law defines an “online marketplace,” for purposes of those provisions, as a consumer-directed, electronically accessed platform that includes features that allow for, facilitate, or enable, and are used by, a third-party seller to engage in the sale, purchase, payment, storage, shipment, or delivery of a consumer product and that has a contractual relationship with consumers.

This bill would revise the types of transactions that qualify a third-party seller as a “high-volume third-party seller,” for those purposes. Specifically, the bill would remove the conditions that the transactions be made through an online marketplace and that the online marketplace process the payment and, instead, would add the condition that the transactions were made utilizing an online marketplace. The bill would also revise the definition of “online marketplace” by removing the conditions that the above-described features be used by third-party sellers, and that the platform have a contractual relationship with consumers.

This bill would require an online marketplace to verify and certify that each consumer product advertised on its platform by a high-volume third-party seller was produced, procured, purchased, or acquired in a lawful manner, as specified. The bill would require an online marketplace to identify, on its internet website, a third-party seller that is certified as operating in a legal and ethical manner. This bill would prohibit an online marketplace from allowing a business or person to utilize its platform or other services if it suspects the business or person is selling stolen goods. The bill would require an online marketplace to alert local, regional, or state law enforcement agencies in California if it suspects that a third-party seller or high-volume third-party seller is selling or attempting to sell stolen goods to a California resident.

The bill would require the Department of Justice to create a searchable database named the California Online Market Anti-Theft (COMAT) system, which would receive, file, and make available specific information to law enforcement, including, among other things, the business names of online marketplaces and high-volume third-party sellers. The bill would require the department to create a licensing system for online marketplaces and high-volume third-party sellers and assess a reasonable license fee, as specified, to cover the reasonable regulatory costs of developing, implementing, and maintaining the COMAT system and the licensing system. The bill would establish the COMAT Fund for these purposes.

Digest Key

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 The Legislature finds and declares all of the following:

(a) It is the intent of the Legislature to curtail the dissemination of stolen property via the internet and to facilitate the recovery of stolen property by means of a uniform, statewide, and state-administered program for the regulation of online marketplaces that allows for the sale or resale of products to Californians.

(b) Vast and highly profitable online marketing companies have a responsibility to prevent the sale of stolen goods through their platforms, and have been making strides to prevent fencing of stolen goods. It is the intent of the Legislature to support that effort though the creation of a searchable database to identify sellers of stolen goods, and to provide a statutory framework for the online marketers to ban illegal sale and illegal sellers from their networks.

(c) It is the intent of the Legislature that the cost of the system be supported by licensing fees paid by online marketplaces and high-volume sellers.

(d) Further, it is the intent of the Legislature that the online system be a valuable and accessible tool to allow law enforcement to identify stolen goods being resold via the internet, and to allow for prosecutions of those who sell stolen property.

SEC. 2.

 Section 1749.8 of the Civil Code is amended to read:

1749.8.

 For purposes of this title:

(a) “Consumer product” means tangible personal property that is distributed in commerce and normally used for personal, family, or household purposes, including property intended to be attached to or installed in real property regardless of whether it is actually attached or installed.

(b) “Department” means the Department of Justice.

(b)(1)

(c) “High-volume third-party seller” means a third-party seller who, in any continuous 12-month period during the previous 24 months, has entered into 200 or more discrete transactions through utilizing an online marketplace for the sale of new or unused consumer products to buyers located in California resulting in the accumulation of an aggregate total of five thousand dollars ($5,000) or more in gross revenues.

(2)The number of discrete transactions referenced in paragraph (1) includes only those transactions through the online marketplace for which payment is processed by the online marketplace directly or through its payment processor.

(c)

(d) “Online marketplace” means a consumer-directed, electronically accessed platform for which all of the following are true: that includes features that allow for, facilitate, or enable a third-party seller to engage in the sale, purchase, payment, storage, shipment, or delivery of a consumer product in this state.

(1)The platform includes features that allow for, facilitate, or enable third-party sellers to engage in the sale, purchase, payment, storage, shipping, or delivery of a consumer product in this state.

(2)The features described in paragraph (1) are used by third-party sellers.

(3)The platform has a contractual relationship with consumers governing their use of the platform to purchase consumer products.

(d)

(e) “Third-party seller” means a person or entity, independent of an online marketplace, who sells, offers to sell, or contracts with an online marketplace to sell a consumer product in the state by or through utilizing an online marketplace.

(e)

(f) “Verify” means to confirm that information provided to an online marketplace pursuant to this title is accurate. Methods of confirmation include the use of one or more methods that enable the online marketplace to reliably determine that the information and documents are valid, correspond to the seller or an individual acting on the seller’s behalf, are not misappropriated, and are not falsified.

SEC. 3.

 Section 1749.8.6 is added to the Civil Code, to read:

1749.8.6.

 (a) The department shall create the California Online Market Anti-Theft (COMAT) system to receive, file, and make available, through a searchable database, to state, regional, and local law enforcement agencies all of the following information:

(1) The business name of each online marketplace.

(2) The business name of each high-volume third-party seller.

(3) Whether the high-volume third-party seller has been certified pursuant to Section 1749.8.9.

(4) The stock keeping unit (SKU) for each consumer product advertised utilizing an online marketplace by a high-volume third-party seller.

(b) An online marketplace or high-volume third-party seller shall upload the SKU to the COMAT system for each consumer product that the high-volume third-party seller advertised utilizing the online marketplace.

SEC. 4.

 Section 1749.8.7 is added to the Civil Code, to read:

1749.8.7.

 (a) (1) The department shall create a system to license online marketplaces and high-volume third-party sellers.

(2) (A) The department shall levy an annual licensing fee on each online marketplace and each high-volume third-party seller.

(B) Fees may be tiered based on annual revenue.

(b) The licensing fee assessed pursuant to subdivision (a) shall be no more than is necessary to cover the reasonable regulatory costs to the department for developing, implementing, and maintaining the licensing system described in this section and the COMAT system described in Section 1740.8.6.

SEC. 5.

 Section 1749.8.8 is added to the Civil Code, to read:

1749.8.8.

 (a) The COMAT Fund, which shall be administered by the department, is hereby established in the State Treasury.

(b) All licensing fees collected by the department pursuant to Section 1749.8.7 shall be deposited into the COMAT Fund.

(c) The moneys in the COMAT Fund shall, upon appropriation by the Legislature, be used for the development, implementation, and maintenance of the COMAT system described in Section 1740.8.6 and the licensing system described in Section 1740.8.7.

SEC. 6.

 Section 1749.8.9 is added to the Civil Code, to read:

1749.8.9.

 (a) An online marketplace shall verify and certify that each consumer product advertised on its platform by a high-volume third-party seller was produced, procured, purchased, or acquired in a lawful manner.

(b) (1) To assist consumers, an online marketplace shall identify, on its internet website, the third-party sellers that are certified as operating in a legal and ethical manner.

(2) An online marketplace shall develop a means of making the certification required by paragraph (1) through which a third-party seller is able to prove that the consumer products that they sell are lawfully produced, procured, purchased, or acquired by the seller. At minimum, a seller shall be able to provide all elements required by Section 1749.8.1, as well as evidence of lawful production, procurement, or purchase in the forms of receipts, invoices, shopkeeping units (SKUs), serial numbers, or other evidence.

(c) An online marketplace shall alert local, regional, or state law enforcement agencies in California if it suspects that a third-party seller is selling or attempting to sell stolen goods to a California resident.

(d) An online marketplace shall not allow a business or person to utilize its platform or other services if it suspects that business or person is selling stolen goods.