Online Marketplaces

Civil Code Division 3, Part 4, Title 1.4D deals with online marketplaces in California.

Section 1749.8 defines the terms “consumer product,” “high-volume third-party seller,” “online marketplace,” “third-party seller,” and “verify.”

Section 1749.8.1 requires an online marketplace to require each high-volume third-party seller on the online marketplace to provide, not later than 10 days after qualifying as a high-volume third-party seller, all of the five specified items of information to the online marketplace.

An online marketplace is required to verify the information provided within 10 days and verify within 10 days any changes to the information that is provided to the marketplace by a high-volume third-party seller. If a high-volume third-party seller provides a copy of a valid government-issued tax document, information contained within the tax document is presumed to be verified as of the date of issuance of the record or document.

Section 1749.8.2 requires an online marketplace to require a high-volume third-party seller with at least $20,000 of gross annual revenues from transactions with buyers in California through the online marketplace in either of the two prior calendar years to provide specified information to the online marketplace and to disclose the information about the high-volume third-party seller to consumers in a clear and conspicuous manner in the order confirmation message, or other communication made to a consumer after a purchase is finalized, and in the consumer’s account transaction history.

Section 1749.8.3 requires an online marketplace to keep the information provided to comply with the requirements of this title for no less than two years. Information provided solely to comply with the requirements of this title cannot be used for any other purpose unless required by law.

An online marketplace is required to implement and maintain reasonable security procedures and practices appropriate to the nature of the information and the purposes for which the information will be used, to protect the information provided to comply with the requirements of this title from unauthorized use, disclosure, access, destruction, and modification.

A high-volume third-party seller may redact from a document provided solely to comply with a requirement of this title any information that is not necessary for either of two specified requirements.

Section 1749.8.4 explains that a person or entity who violates any provision of this title is liable for a civil penalty not to exceed $10,000 for each violation, which may be assessed and recovered only in a civil action brought in the name of the people of the State of California by the Attorney General, a district attorney in any county, a city attorney in any city or city and county, or a county counsel in any county.

Section 1749.8.5 explains that this title does not apply to or affect the liability of an entity, including an entity that meets the definition of a high-volume third-party seller under this title, for damages caused by a consumer product that is sold online.

Section 1749.8.9 requires an online marketplace to alert local, regional, or state law enforcement agencies in California if it knows or should know that a third-party seller is selling or attempting to sell stolen goods to a California resident, unless the online marketplace has received a notice from the law enforcement agency that the same third-party seller is suspected of selling or attempting to sell the same stolen goods on the online marketplace to a California resident.

An online marketplace is required to do all of the five specified actions. The policy and mechanism required by this subdivision must be publicly posted and readily accessible to users.