To address what it perceived as shortcomings in the federal INFORM Consumers Act, California passed Senate Bill 1144 in 2024 to shore up the gaps and address the selling of stolen goods online.
On April 9, 2025, a lobbying group for the biggest online commerce platforms filed suit in California to keep the law from going into effect on July 1. Netchoice claims that its members will suffer an undue burden from increased responsibility on the digital version of what used to be the classified ads in print newspapers. The suit seeks preliminary and permanent injunctions to keep it from ever being enforced.
The Digital Version of Buying and Selling Real Estate, Electronics, and Household Goods
To say that the ability to make purchases online has forever changed the way people shop would be an understatement. Instead of traveling to vendors in physical locations, pretty much anything under the Sun can be ordered online and delivered to the buyer.
While an incredible boon in many ways, the ease of online commerce has also proved open to exploitation. The relative anonymity of third-party sellers provides fertile hunting grounds for scammers and thieves, with the latter gaining a new market for selling stolen goods.
Part of 2023's Consolidated Appropriations Act, the IMPACT Consumers Act aimed to address online commerce issues. It puts the onus on online marketplaces to police high-volume third-party sellers on their platforms by collecting and verifying information for contacts, bank accounts, and tax identifications. The marketplaces are also required to suspend sellers who either supply false information or fail to comply with information requests.
In addition, online commerce platforms must provide identification information of high-volume sellers for their consumers and provide a mechanism for them to submit reports of suspicious or fraudulent marketplace activities.
California's SB 1144 aims to expand those protections. It calls for online marketplaces to police all sales that go through their site, not just the ones that process payments. This, the state reasoned, is necessary to include many large platforms.
It also adds the requirement for the marketplaces that uncover sales of stolen items to alert law enforcement. Sanctions of up to $10,000 per instance of noncompliance can be imposed not only by the attorney general but district and city attorneys as well.
That's a Really Big To-Do List
Created in 2001, Netchoice is a trade association that has served as a protector for online giants like Google, Amazon, Meta, Lyft, PayPal, Snap, and Craigslist. It's known for countering state-level laws that conflict with the interests of its members.
The lawsuit against SB 1144 is the 16th that Netchoice is currently pursuing. It claims that the pending California law is vague, unreasonably burdensome, in violation of the First Amendment, and superseded by the INFORM Act.
In calling for the permanent blocking of the act, Netchoice insists that forcing online classified marketplaces like Craigslist and Facebook Marketplace to facilitate this level of policing responsibility is an unreasonable obligation that would prove financially catastrophic.
A federal court in California will now seek to determine whether that's true.
Related Resources
- What's the Punishment for Selling Stolen Goods? (FindLaw's Law and Daily Life)
- What Is Internet and Cyberspace Law? (FindLaw's Learn About the Law)
- Problems With Online Shopping (FindLaw's Consumer Protection Law)
