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.

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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

In the US, when you buy an item in person you can see a “Made in _____” country of origin label on it somewhere. This is required by US customs law for items made outside the US. But there is currently no such requirement for items sold online. This bill aims to close that loophole and provide online shoppers with the same information they would have when shopping in person.

It should be listed on the product or product packaging as a “Made in _____” label put on by the manufacturer. As long as you provide this information clearly in a listing, you are good to go. The limitations of liability in the bill means that you are only responsible for providing the information given to you by the manufacturer, and not liable if the manufacturer’s listing was wrong or false.

For a seller that creates their products (a handmade seller), the country the seller made it in would be the country of origin.

You have created a new product, with the country of origin now where you are, if you substantially transformed the item. “Substantial transformation means that the good underwent a fundamental change (normally as a result of processing or manufacturing in the country claiming origin) in form, appearance, nature, or character, which adds to its value an amount or percentage that is significant in comparison to the value which the good (or its components or materials) had when exported from the country in which it was first made or grown.”

So if you take fabric, thread, a zipper and buttons and make an item of clothing, you have substantially transformed those supplies into a new product.

That does change the t-shirts appearance and add value. Our contact at Senator Baldwin’s office said that would be a new product. But our advice is to be transparent about any country of origin labeling leftover in your handmade product. The goal of this bill is to provide the information you would see if you shopped in a physical store to online shopping. So if the handmade product you send out has a “Made in ____” labeling from one of the components you used (like a t-shirt), you’ll just share that information in the online listing.

Actually, that is different. The “Made in USA” labeling is regulated by different marketing laws, not customs law. This bill is specifically for products made outside of the US, so US sellers do not need to provide country of origin labeling under the COOL Online Act. If you want to learn more about the “Made in USA” marketing laws you can do so here..

Yes, it will apply to any products you sell to consumers in the US.

If you are a handmade seller, then you are producing the new products and the country of origin would be where you live. Some countries have specific laws about labeling products as “Made in your country”, so please check the applicable laws for the best way to phrase your country of origin labeling. If you can’t find anything else more applicable, we recommend “Country of origin for US import law _______” as something to cover you for the COOL Online Act if it passes without going against any labeling laws in your country.

If you are a craft supply seller, this would be the country the item was manufactured in, so check the “Made in _____” labeling on the product and list that. If you are a vintage seller this bill does not apply to you.

The COOL Online Act has an exception for small sellers. If you make less than $20,000 revenue and sell less than 200 items in a year for each marketplace you sell on, this bill would not apply to you if it becomes law.

The each marketplace part of that means each place you sell would count towards its own total. So if you sell 150 items/$15,000 on Etsy and 75 items/$4000 on Facebook marketplace and 10 items/$2000 on Ebay, you would still be exempt as a small seller because your total at one marketplace never crossed the threshold.

Nope! It only applies to new products, anything sold that is used or pre-owned is exempt. So our vintage sellers don’t need to make any changes.

For any products sold to the US you will need to list the country of origin provided by the manufacturer. This should be found on the product in the “Made in _____” labeling.

You could say “Designed in” whatever country you live in, and then would need to list whatever country the print on demand company manufactures the products in as the country of origin. The print on demand company will need to provide this information if they want to sell to the US themselves, so you should be able to get it from them. This is pretty much the same as Etsy’s already-existing requirement to list production partners. We think this will overall help our sellers, who tend to already be transparent about their process, by penalizing sellers that try to hide where their products are made. It will hopefully also make it easier for sellers to indicate when they use local print shops.

If you are creating a new product from those materials then no. You have created a new product and the country of origin is where you are. You do not need to provide country of origin information for all of the components used. If part of your handmade product has a clear “Made in ______” label of its own, for example a t-shirt you dyed, you could provide that information to customers if you want for full transparency, but it is not required by this bill. It would just be so that customers wouldn’t get confused upon seeing that tag.

Marketplaces are required to notify sellers of the new country of origin labeling requirements. They are also required to provide a way to list that information in the product’s description.

Anyone who violates this rule is subject to Federal Trade Commission’s regulations about unfair and deceptive business practices. But this is a civil violation, not criminal. The process can involve a hearing or interviews, or even formal subpoenas for information from the company. The FTC then brings the complaint to a judge, who either issues a cease and desist order or dismisses the complaint. Only if the company violates a cease and desist order are they liable to penalties.The penalty is up to $10,000 per violation. FTC cases tend to result in financial penalties paid back to consumers. The FTC can also forward a case on to law enforcement agencies if they believe a crime has been committed. Source 1, Source 2

First off, if the COOL Online Act becomes law, that kind of false labeling of an item as handmade would specifically be unlawful and a violation of the unfair and deceptive practices regulations. If that happened again you could file a complaint with the FTC. More generally, it should increase the overall level of transparency from sellers about where their products come from and so make it easier to spot when a seller is being shady.

The FTC does not open cases for individuals. Rather, they use complaints to help identify patterns of unfair or deceptive practices from businesses. The FTC can bring enforcement action against businesses and one of the things that influence that is the number and severity of consumer complaints against a business. Source

As far as we can tell, a single complaint against a small business is unlikely to do anything, unless it is for an issue specifically being investigated by the FTC. The FTC does not open cases for individuals, but instead pursues companies or industries based on public interest. So a single complaint of a single violation that did not cause much harm to the consumer may not get much attention.

According to our contacts, if the FTC does follow up with a complaint, they usually reach out to the business for more information, either informally or formally with civil investigative demand or subpoena. The FTC then takes the complaint and information to a judge, who either issues a cease and desist order or dismisses the complaint. Only if you violate a cease and desist order are you liable for civil penalties.

The bill calls for an interagency agreement to be publicly published that will give more guidelines on how this new requirement will be handled, so that should help provide more specific information.Source 1, Source 2, Source 3, Source 4

It’s hard to predict exactly how much the COOL Online Act would change things, especially with enforcement through the FTC. What it will do is offer a clear legal requirement to provide country of origin labeling and a clear place to report violations. We hope it does a lot to reduce the problem of dishonest resellers on handmade platforms, but at the very least it will make it easier for customers to avoid resellers and make it more obvious when a seller is not being transparent. And it will be a clear win for creative indie sellers and consumers against the interests of large e-commerce platforms and retailers who don’t want this bill, which is a huge victory on its own!

They are lobbying hard against it by saying that us, the makers, don’t want it. They say that it will be overly complicated and place a burden on handmade sellers, but we went over the whole bill carefully and found nothing to back that up. We think Etsy is resisting the bill because even though resellers are making Etsy a more difficult place for honest sellers to do business, the reselling and dropshipping industry still generates a lot of money for Etsy.

The bill is targeted at resellers dishonestly passing off foreign mass produced items as handmade while not causing a problem for genuine handmade sellers, and we were able to directly give feedback on how to make sure that happened. It is more important than ever now to make sure our voices are heard loud and clear, so that Etsy and other large e-commerce platforms can’t use us as puppets to protect their special interests.

First off, sign up to support the bill and receive updates! That way if there are any developments or calls to action, you will know right away. Then join the Guild if you haven’t yet! It’s free and anyone can join as an ally member. We are speaking on behalf of creative indie sellers for their interests, and the more members we have, the louder our voice will be as we continue to work with the Senate on this bill.

When the Senate reconvenes on September 5th, the next step will be to schedule a vote and to put it in a package with other legislation. We will be keeping a close eye on things to make sure it continues to move forward, and we’ll watch for any procedural road blocks opponents might put up. So please sign up to support and watch your email! If we need your help, we’ll need it fast, and we’ll email out a call to contact your Senator with a link to an email template.

Here is the link to the US congress official site to track the progress of the Online COOL Act.

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.

Section 304 of the Tariff Act of 1930: “requires that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked with its country of origin”

(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.

(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.

(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.’’.

Analysis of the COOL Online Act – A bill to crack down on resellers

Introduction

Key Takeaways

Frequently Asked Questions

Text and analysis of the COOL Online Act