What is the SHOP SAFE Act?

The United States’ SHOP SAFE Act of 2020 impacts online marketplaces like Shopify across America and worldwide. Learn about its objectives and effects.

What Is the SHOP SAFE Act?

It’s not something we want to consider all too often, but fraud and counterfeiting do happen on online marketplaces like Shopify, along with Etsy and Amazon. While your company may be authentic in its item delivery, the presence of fraudulent sellers impacts the e-commerce community as a whole. One example of this is the United State’s recent SHOP SAFE Act of 2020.

The SHOP SAFE Act is an American set of laws, where SHOP SAFE is actually an acronym: Stopping Harmful Offers on Platforms by Screening Against Fakes in E-Commerce. While laws that apply only to the United States, the SHOP SAFE Act affects more sellers on Shopify than you’d imagine. As of May of 2020, Shopify had just over 1.2 million merchants across the world. Of that 1.2 million, around 950,000 are American — nearly 80%.

SHOP SAFE Act Objectives

SHOP SAFE was established with the goal to police and halt counterfeit sales. Counterfeit sales generally covers two categories of products: those sold under a brand name though they have no connection to it, or purchases made and authorised with no follow-through on product fulfillment. Both of these situations can be extremely frustrating for consumers, and may add to a distrust in e-commerce. Because e-commerce has a growing presence and online shopping is a booming industry, customers’ faith in e-commerce — especially with respect to deliverables and follow-through — is essential.

However, fighting counterfeit sales isn’t always the easiest process. For smaller merchants and platforms, the resources to ensure fair and legitimate products aren’t always available.

Establish Trademark Liability

The SHOP SAFE Act works to enforce liability for when third parties sell counterfeit products. This is especially important when the products pose a risk to a consumer’s health or well-being. To exemplify the importance of this point, think of e-commerce goods like electronics or safety devices. One analysis found that an e-commerce counterfeit children’s car seat failed to provide any protection during a 30-mph crash test and did not meet any federal regulatory requirements.

Incentivise Standards

Another of the SHOP SAFE Act’s initiatives encourages online platforms to improve their standards for items sold via e-commerce avenues. In doing so, it sets precedent for standards like vetting sellers for legitimacy, removing counterfeit listings, and banning platforms that won’t comply with the former.

Require Marketplace Help

The last of the SHOP SAFE Act’s points is one that requires marketplaces to take necessary steps for preventing the continued safe of counterfeits. If online sellers refuse, not only are they at risk for being banned, but they may also be subject to contributory liability.

SHOP SAFE Act’s International Implications

The issue with counterfeit products is that their supply chains can become muddied, and determining the source of a counterfeit is difficult as products cross international borders. Additionally, counterfeiters may have multiple merchant accounts without adequate personal identifiable information.

The SHOP SAFE Act of 2020 ultimately affects sellers in every country, whether directly or indirectly. It incentivises platforms — especially larger conglomerates like Shopify — to set best practices, and penalises repeat offenders in order to protect consumers. By following SHOP SAFE’s best practices, stores add to the legitimacy of not only their own products but to the e-commerce community as a whole. It also protects brands who are often counterfeited, as the SHOP SAFE Act is working on a more ideal avenue for brand owners to take action against third-party e-commerce market platforms.

Enhance Your Customer’s Shopify Experience

While counterfeit and fraud are simply an unfortunate part of commerce, we’re proud to say that our agency works alongside some of the best sellers on Shopify, improving their sites to best represent their expertise and legitimacy. One way of fighting customers’ fears of fraud is by ensuring your site looks and functions flawlessly, which Radiant can help with. To help your store stand out among the rest, get in touch with us today! Radiant has rebuilt and rebranded Shopify storefronts for the better, and our decades of combined experience can help guide you through e-commerce via our consultancy and optimisation services. Fill out our contact form now, or explore our portfolio to see how we’ve improved e-commerce for businesses just like yours.