Introduction
In the US and most other countries, when a consumer buys something new, they have the legal right to know where that product was made. This is the reason behind those stickers that say “Made in China”, “Made in Taiwan”, “Hecho en México” etc. However, these days more and more consumers are making purchases online rather than in person, and the laws that protect consumers’ rights are still catching up with the rise of online shopping.
The COOL (Country Of Origin Labeling) Online Act, a bill currently being considered by the US Senate, aims to make sure consumers who make purchases online rather than in person still have access to this important information. The bill is specifically designed to combat resellers who purchase mass-produced items from outside the US in order to dishonestly pass them off to consumers as US handmade goods – an issue that consistently ranks at the very top of the list of sellers’ and buyers’ grievances with Etsy. When resellers aren’t honest about how they source their products, not only does it harm consumers, it also harms legitimate handmade sellers who see their hard work devalued and their prices unfairly driven down.
The ISG worked hard with the office of Senator Tammy Baldwin, the sponsor of the bill, to make sure the new requirement will not hurt any of our members and will only target resellers misleading customers and driving down prices for authentic handmade sellers.
Key Takeaways
- The goal of the COOL Online Act is to provide the same information for online shopping as a buyer would have shopping in person where they can see the “Made in” tag on the product.
- The COOL Online Act applies to anyone selling new products to the United States.
- Vintage sellers and small sellers (under $20,000 and less than 200 sales yearly per marketplace) are exempt.
- The country of origin labeling that would be required by this bill must be displayed conspicuously in the item’s online description.
- As a general recommendation, if you sell a product that has a “Made in” tag on any part of it–whether it’s a craft supply or a component of a handmade item–you would just provide that information in the item description and you’ll be covered for this requirement.
- This bill is not yet law, but will be scheduled for a vote by the US Senate when session reconvenes on September 5th.
Below are answers to frequently asked questions and a section by section analysis of the bill itself.
Sign up here to support the COOL Online Act and stay up to date on news and calls to action.
Please note that this article is based on our research and understanding of the bill, but in no way should be taken as legal advice. The Indie Sellers Guild is not liable for any issues, legal or otherwise, sellers may encounter as the result of following the advice in this article.
Frequently Asked Questions
Text and analysis of the COOL Online Act
Our analysis of the bill is in the blue blocks underneath the text it refers to.
AMENDMENT NO.llll Calendar No.lll Purpose: In the nature of a substitute.
IN THE SENATE OF THE UNITED STATES—118th Cong., 1st Sess.
S. 1421
To require origin and location disclosure for new products of foreign origin offered for sale on the internet.
When you sell something online to the US that is new and made out side the US, you have to disclose where the product was made.
Referred to the Committee on llllllllll and
ordered to be printed
Ordered to lie on the table and to be printed
AMENDMENT IN THE NATURE OF A SUBSTITUTE intended
to be proposed by lllllll
Viz:
Strike all after the enacting clause and insert the following:
Legislative jargon about how the bill was submitted.
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Country Of Origin Labeling Online Act’’ or the ‘‘COOL Online Act’’.
SEC. 2. MANDATORY ORIGIN DISCLOSURE FOR NEW PRODUCTS OF FOREIGN ORIGIN OFFERED FOR SALE ON THE INTERNET.
MANDATORY ORIGIN DISCLOSURE: You have to state where an item was made.
NEW PRODUCTS OF FOREIGN ORIGIN: New products made outside of the United States only.
FOR SALE ON THE INTERNET: Sold online to people in the United States.
(a) MANDATORY DISCLOSURE.—
(1) IN GENERAL.—
(A) DISCLOSURE.—Subject to the succeeding provisions of this paragraph, it shall be unlawful for an online store, an online marketplace, or a seller to introduce, sell, or offer for sale on an internet website a product that is marked or required to be marked under section 304 of the Tariff Act of 1930 (19 U.S.C. 1304) unless the country of origin is disclosed in a conspicuous manner on the online store or on line marketplace’s online description of the product and in a manner consistent with the regulations prescribed under such section 304 at the time of the product’s importation, or anticipated importation, into the customs territory of the United States.
If you sell a product online in a store, marketplace, or website that meets the requirements of US Tariff law (see next comment), the country of origin must be listed in a “conspicious” manner (obvious and easy to find) with the product.
(B) EXCLUSIONS.—
(i) AGRICULTURAL PRODUCTS.—The disclosure requirements under subparagraph (A) shall not apply to
(I) a covered commodity (as defined in section 281 of the Agricultural Marketing Act of 1946 (7 21 U.S.C. 1638));
(II) a meat or meat food product subject to inspection under the Federal Meat Inspection Act (21 U.S.C. 601 et seq.);
(III) a poultry or poultry product 2 subject to inspection under the Poul 3 try Products Inspection Act (21 4 U.S.C. 451 et seq.); or
(IV) an egg product subject to regulation under the Egg Products Inspection Act (21 U.S.C. 1031 et seq.).
This bill would not apply to several food items because they are covered by other laws. These items seem to mostly be nuts, fish, meat, and eggs.
(ii) FOOD AND DRUGS.—The disclosure requirements under subparagraph (A) shall not apply to a food or drug (as those terms are defined in paragraphs (f) and (g), respectively, of section 201 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321)) that is subject to the jurisdiction of the Food and Drug Administration.
This bill would not apply to food and drugs, which are governed by the FDA instead. Food, drug, cosmetic, and vitamin labeling subject to the other mentioned law.
(iii) USED OR PREVIOUSLY OWNED PRODUCTS.—The disclosure requirements under subparagraph (A) shall not apply to any used or previously owned products sold in interstate commerce.
This bill does not apply to used or previously owned products, so it does not apply to vintage sellers at all.
(iv) SMALL SELLER.—The disclosure requirements under subparagraph (A) shall not apply to goods listed by a small seller.
This bill does not apply to small sellers–sellers who had less than $20,000 in revenue and sold less than 200 items per marketplace during any 12 month period in the last two years.
(C) LIMITATION OF LIABILITY.—
(i) ONLINE STORE.—An online store is not in violation of the requirements under subparagraph (A) if the online store provided its third party manufacturer, distributor, supplier, or private labeler with—
(I) a notice of their obligation to provide the country of origin to the store, if applicable; and
(II) the means to list directly, or provide to the online store for listing, the country of origin of the product.
An online store’s responsibility is to:
1) notify where they get their products of the store’s obligation to provide country of origin labeling
2) give a way to provide that information to the online store
(ii) ONLINE MARKETPLACE.—
(I) IN GENERAL.—Subject to subclause (II), an online marketplace is not in violation of the requirements under subparagraph (A) if the online marketplace provided its sellers with—
(aa) a notice of the seller’s obligation to provide country of origin information when selling a product; and
(bb) the means to list the country of origin in the product’s description.
(II) EXCEPTION.—Subclause (I) shall not apply when the online marketplace is selling the product itself, rather than only facilitating a sale by a seller and relying on a seller for that product’s information.
An online marketplace’s responsibility is to:
1) let seller’s know of their obligation to provide country of origin labeling
2) provide a way for sellers to list the country of origin in the product’s description
If a marketplaces is selling the product itself, these rules don’t apply just the regular disclosure rules.
(iii) SELLER.—A seller is not in violation of the requirements under subparagraph (A) if the online marketplace did not provide the seller with—
(I) the notice described in clause (ii)(I)(aa); or
(II) the means to list the county of origin in the product’s description as described in clause (ii)(I)(bb).
A seller did not violate the requirements of this bill if the marketplace did not notify them or give them a way to list the country of origin labeling.
(D) FUNGIBLE GOODS OR MATERIALS.— For the purposes of subparagraph (A) and in accordance with section 102.12(f) of title 19 Code of Federal Regulations, an online store, an online marketplace, or a seller is in compliance with the disclosure requirements under subparagraph (A) if it lists multiple countries of origin for products that are fungible goods or materials. Products shall be considered to be ‘‘fungible goods or materials’’ if the goods or materials, as the case may be, are interchangeable for commercial purposes and have properties which are essentially identical.
Fungible goods or materials refers to the same products being manufactured in different countries. Like how a large clothing retailer might have the same shirt manufactured at factories in more than one country. If that is the case, you need to list all the different countries that product is manufactured in. This does NOT mean that if you buy supplies that come from multiple countries to use in your product that you have to list all of those countries.
(E) SAFE HARBOR.—An online store, an online marketplace, or a seller satisfies the disclosure requirements under subparagraph (A) if the online store, online marketplace, or seller relies on the country of origin representation provided by a third party manufacturer, importer, distributor, supplier, or private labeler of the product.
As long as you provide the country of origin information provided by where you got the product from you are good.
(2) CERTAIN DRUG PRODUCTS.—It shall be unlawful for an online store, an online marketplace, or a seller to offer for sale in commerce to consumers on an internet website a drug that is not subject to section 503(b)(1) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 353(b)(1)) and that is required to be marked under section 304 of the Tariff Act of 1930 (19 U.S.C. 1304) unless the internet website description of the drug indicates in a conspicuous place the name and place of business of the manufacturer, packer, or distributor that is required to appear on the label of the drug in accordance with section 502(b) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 352(b)).
If you are selling drugs online that aren’t subject to the Food, Drug, and Cosmetic Act and but labeling is required under the Tariff Act, you have to provide the labeling that meets the Food, Drug, and Cosmetic Act.
(3) OBLIGATION TO PROVIDE.—A manufacturer, importer, distributor, supplier, or private labeler seeking to have a product introduced, sold, advertised, or offered for sale in commerce shall provide the marking information required by section 304 of the Tariff Act of 1930 (19 U.S.C. 1304) to the relevant online store, an online marketplace, or a seller who wishes to offer the product for sale on an internet website.
The place you buy it from need to provide the country of origin labeling information so you can sell it online.
(b) ENFORCEMENT BY THE COMMISSION.—
(1) UNFAIR OR DECEPTIVE ACTS OR PRACTICES.— A violation of subsection (a) or a regulation promulgated thereunder shall be treated as a violation of a rule defining an unfair or deceptive act or practice under section 18(a)(1)(B) of the Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B)).
Violating these rules counts as an unfair or deceptive act or practice under the FTC. The penalty for such is a civil penalty of not more than $10,000 for each violation.
The Federal Trade Commission Act mentioned says the FTC can write rules for which specific acts or practices count as unfair or deceptive.
(2) POWERS OF THE COMMISSION.—
(A) IN GENERAL.—The Commission shall enforce this section in the same manner, by the same means, and with the same jurisdiction, powers, and duties as though all applicable terms and provisions of the Federal Trade Commission Act (15 U.S.C. 41 et seq.) were in-corporated into and made a part of this section.
The FTC will handle this how they do everything else according to the Federal Trade Commission Act.
(B) PRIVILEGES AND IMMUNITIES.—Any 2 person that violates subsection (a) shall be subject to the penalties and entitled to the privileges and immunities provided in the Federal Trade Commission Act (15 U.S.C. 41 et seq.) as though all applicable terms and provisions of that Act were incorporated and made part of this section.
Violating the labeling display requirements is an FTC violation and you are subject to the FTC’s rules with the penalties and protections that go along with that.
(C) AUTHORITY PRESERVED.—Nothing in this section may be construed to limit the authority of the Commission under any other provision of law.
Nothing in this bill limits the authority of the FTC.
(D) RULEMAKING.—
(i) IN GENERAL.—The Commission shall promulgate in accordance with section 553 of title 5, United States Code, such rules as may be necessary to carry out this section.
The FTC will make any rules needed for this bill following the listed laws about rule making.
Promulgate: to put (a law or rule) into action or force.
(ii) CONSULTATION.—In promulgating any regulations under clause (i), the Commission shall consult with U.S. Customs and Border Protection.
The FTC will consult with US customs and border protection to put those rules into action.
(3) INTERAGENCY AGREEMENT.—Not later than 6 months after the date of enactment of this section, the Commission, the Commissioner for U.S. Customs and Border Protection, the Commissioner of Food and Drugs, the United States Trade Representative, and the Secretary of Agriculture shall—
(A) enter into a Memorandum of Understanding or other appropriate agreement for the purpose of providing consistent implementation of this section; and
(B) publish such Memorandum of Understanding or other agreement in order to provide public guidance.
No later than 6 months after this bill get enacted, the listed agencies and officials will write up an agreement to provide consistency in how this bill is implemented and publish it so the public can use the agreement for guidance.
(c) AUTHORITY PRESERVED.—Nothing in this section may be construed to—
(1) limit the authority of the Department of Agriculture, the Food and Drug Administration, or U.S. Customs and Border Protection under any other provision of law; or
(2) require the Commission to interpret, modify, or enforce regulations promulgated by such agencies unless as provided by the Memorandum of Understanding or other agreement entered into under subsection (b)(3)(A).
Nothing in this bill limits the authority of the listed agencies or requires the FTC to do anything to regulations handled by those other agencies unless that agreement they all write says so.
(d) EFFECTIVE DATE.—This section shall take effect 1 year after the date of the publication of the Memorandum of Understanding or other agreement under subsection (b)(3)(B).
Everything will take affect 1 year after publication of that agreement. So if this bill becomes law, it will still take up to 18 months to go into effect.
(e) RULE OF CONSTRUCTION.—Nothing in this Act shall be construed to require an online store, an online marketplace, or a seller to include a description of a product introduced, sold, or offered for sale in interstate commerce other than a notice of the country of origin as required by subsection (a).
This bill does not require you to provide any other kind of descriptions for a product sold online other than the specific country of origin labeling outlined in this bill. Basically, this bill applies to the one thing talked about here and cannot be used to require anything else.
(f) DEFINITIONS.—In this section:
(1) COMMISSION.—The term ‘‘Commission’’ means the Federal Trade Commission.
(2) ONLINE MARKETPLACE.—The term ‘‘online marketplace’’ has the meaning given such term in section 301(f) of the Consolidated Appropriations Act, 2023 (15 U.S.C. 45f(f)).
Shortened: consumer-driven online platform that allows for third party sellers of consumer products and has a contractual relationship with consumers who use the platform (terms of use)
(3) ONLINE STORE.—The term ‘‘online store’’ means a person or entity that operates a consumer directed, electronically based or accessed website that sells products to consumers over the internet for itself or on behalf of third party sellers.
(4) PRODUCT.—The term ‘‘product’’ has the meaning given the term ‘‘article of foreign origin’’ in section 304 of the Tariff Act of 1930 (19 U.S.C. 1304).
Product in this bill has the same meaning as “article of foreign origin” in the Tariff Act. Foreign origin means outside the US.
(5) SELLER.—The term ‘‘seller’’ has the meaning given such term in section 301(f) of the Consolidated Appropriations Act, 2023 (15 U.S.C. 45f(f)).
“The term “seller” means a person who sells, offers to sell, or contracts to sell a consumer product through an online marketplace’s platform.”
The term “third party seller” means any seller, independent of an online marketplace, who sells, offers to sell, or contracts to sell a consumer product in the United States through such online marketplace’s platform.
(6) SMALL SELLER.—
(A) IN GENERAL.—The term ‘‘small seller’’ means a seller on an online marketplace that, in any consecutive 12-month period during the previous 24 months, has—
(i) annual sales of less than an aggregate total of $20,000 in gross revenues; and
(ii) fewer than 200 discrete sales or transactions (excluding sales of used or previously owned products).
A seller who had less than $20,000 in revenue (sales) and less than 200 sales per marketplace during any 12 months in a row during the last 2 years.
(B) CLARIFICATION.—For the purposes of calculating the number of discrete sales or transactions or the aggregate gross revenues under subparagraph (A), a seller shall only be required to count sales or transactions made through the online marketplace and for which payment was processed by the online marketplace, either directly of through its payment processor.
You only have to count sales made through the online marketplace using the marketplaces payment processor.
(7) USED OR PREVIOUSLY OWNED PRODUCT.— The term ‘‘used or previously owned product’’ means a product that was previously sold or offered for sale in interstate commerce.
SEC. 3. COUNTRY OF ORIGIN LABELING FOR COOKED KING CRAB AND TANNER CRAB AND COOKED AND CANNED SALMON.
Special rules about fish.
Section 281(7)(B) of the Agricultural Marketing Act of 1946 (7 U.S.C. 1638(7)(B)) is amended—
(1) by striking the period at the end and insert ing a semicolon;
(2) by striking ‘‘includes a fillet’’ and inserting the following: ‘‘includes—
‘‘(i) a fillet’’; and
(3) by adding at the end the following:
‘‘(ii) whole cooked king crab and tanner crab and cooked king crab and tanner crab sections; and
‘‘(iii) cooked and canned salmon.’’.