The Online Sellers’ Bill of Rights Sounds Good. Sellers Should Look More Closely.

A “Bill of Rights” for online sellers sounds like something every small business should support.

If you sell on an online marketplace, you should know why your account was suspended, have a meaningful opportunity to appeal a decision, and get clear information when marketplace policies change. No legitimate seller should be left wondering what happened to their business or how to fix a problem.

Those are reasonable goals.

But the Online Sellers’ Bill of Rights, introduced in Congress this summer, goes much further. In trying to protect sellers from unfair marketplace enforcement, the bill could make it harder for marketplaces to quickly stop counterfeiters, scammers, unsafe products, and other bad actors. It could also impose new costs and legal risks that ultimately fall on the legitimate small businesses the bill is supposed to help.

For sellers, that warrants a much closer look.

Online Selling Has Changed

The bill is based on the premise that small sellers are largely dependent on a single marketplace and need Congress to rebalance that relationship.

That premise does not reflect how many small businesses operate today.

Small sellers are increasingly sophisticated, multichannel businesses. 3C research found that small businesses sell across an average of four online marketplaces and advertise on five platforms, while more than three-quarters combine online and in-store sales. Sellers make daily decisions about which marketplaces, tools, and services deliver the greatest value for their businesses. 

Marketplace practices have evolved as well. Many large marketplaces already provide sellers with advance notice of policy changes, information about violations, appeals processes, resolution timelines, and account-health resources. 

That does not mean those systems are perfect. Sellers absolutely should continue pushing marketplaces to improve them. But Congress should understand what protections already exist before replacing flexible systems with rigid federal requirements.

Seller Protection Works Both Ways

This is where the bill becomes especially concerning for legitimate small businesses.

When sellers hear “seller protection,” we naturally think of protecting ourselves from an unfair suspension or an incorrect enforcement decision.

But legitimate sellers also rely on marketplace enforcement to protect us.

If someone begins selling a counterfeit version of your product, steals your intellectual property, lists an unsafe product, or sets up a fraudulent seller account, you want the marketplace to be able to investigate and act quickly.

The Online Sellers’ Bill of Rights could make that harder.

Among other requirements, the legislation would limit marketplaces’ ability to suspend accounts, hold inventory, or freeze funds based solely on suspicion. It would place the burden on the marketplace to demonstrate a violation and generally require that held inventory or funds be released after 30 days unless certain evidentiary requirements are met. 

That sounds like due process until you consider how fraud actually works.

A marketplace investigating a suspected counterfeiter may not have every piece of evidence on day one. A product-safety investigation may take time. Law enforcement may be involved. Fraudsters may operate multiple accounts simultaneously.

Requiring a marketplace to effectively prove its case before it can take certain actions could give sophisticated bad actors more time to keep selling while an investigation continues. 

For legitimate sellers, that is not more protection.

A Roadmap for Bad Actors

Transparency is another good idea that can go too far.

The bill would require marketplaces to provide individualized information about alleged violations, supporting facts, penalties, appeal procedures, and expected timelines. 

A legitimate seller deserves enough information to understand what went wrong and how to respond.

But marketplaces also have to be careful about revealing how they detect fraud, counterfeiting, coordinated abuse, or other suspicious activity. Providing too much investigative detail can teach bad actors how they were caught, allowing them to change tactics, open replacement accounts, or avoid detection the next time.

It could also risk revealing information about brands or businesses that reported suspected infringement in the first place. 

Imagine spending years building a product and a brand, discovering someone selling counterfeits, and reporting them to the marketplace, only to have federal law make the enforcement process more cumbersome or potentially expose information that helps the counterfeiter respond.

That is not the kind of seller protection small businesses need.

More Lawsuits Mean More Costs

There is another provision sellers should pay attention to: the bill creates a private right of action allowing sellers to sue covered platforms in federal court, seek treble damages and attorneys’ fees, and bypass mandatory arbitration agreements. 

For an individual seller who believes they were treated unfairly, that may sound appealing.

But apply that rule across millions of marketplace enforcement decisions.

Every suspension, inventory hold, or investigation could carry greater litigation risk. That means more lawyers, more compliance systems, and potentially more hesitation before platforms intervene against suspicious sellers. Those costs do not simply disappear. They can ultimately be reflected in the fees and costs paid by the businesses using those platforms. 

There is also a broader consequence. Consumers buy from small businesses they have never heard of because they trust the marketplace they are shopping on. If marketplaces become less effective at keeping scams, counterfeit goods, and unsafe products off their sites, that trust suffers.

And when shoppers become less willing to take a chance on an unfamiliar seller, small businesses lose.

This Bill Is About Much More Than Marketplaces

Perhaps the strangest part of the legislation is how far beyond online marketplaces it could reach.

The bill applies to a broadly defined “critical trading partner,” which can include platforms that can restrict or impede a business’s access to customers or digital tools.

That could sweep in app stores, payment processors, advertising platforms, and business software providers, simply because those companies can restrict an account when someone violates their terms of service.

For small businesses that rely on dozens of digital tools, that creates an entirely new layer of legal uncertainty, far beyond the marketplace disputes this legislation is supposedly designed to address.

Sellers Deserve a Seat at the Table

None of this means marketplaces should get a free pass.

When enforcement systems fail, sellers should say so. When appeals take too long, explanations are inadequate, or legitimate businesses are caught in automated enforcement systems, marketplaces should fix those problems.

But good policymaking requires understanding both sides of seller protection.

Sellers need fair treatment when a marketplace takes action against their accounts. We also need marketplaces to act quickly when counterfeiters, scammers, and unsafe products threaten our businesses and customers.

Those goals do not have to conflict.

Congress should focus on policies that help small businesses compete, adopt new technologies, reach customers, and navigate the digital economy, rather than imposing rigid rules that could make the platforms and tools we rely on less effective.

Online commerce moves incredibly fast. Policy rarely does.

Before Congress rewrites the rules governing how marketplaces protect sellers and consumers, lawmakers should listen to the small businesses operating in those marketplaces today, not legislate based on how online selling worked years ago.

A bill with “seller rights” in its name should ultimately make legitimate sellers better off. This one could do the opposite.

By Kristin Rae, 3C Seller Policy Expert