Schakowsky Joins Pallone, Walden in Telling USTR to Drop Section 230
U.S. Trade Representative Robert Lighthizer should leave Section 230-like protections out of future trade deals, House Consumer Protection Subcommittee Chair Jan Schakowsky, D-Ill., said during a hearing Wednesday. She wrote a letter to Lighthizer last week, joining House Commerce Committee Chairman Frank Pallone, D-N.J., and ranking member Greg Walden, R-Ore., with the same request (see 1908060064).
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The administration needs to communicate with the committee first before enshrining provisions like Section 230 of the Communications Decency Act in trade deals, subcommittee ranking member Cathy McMorris Rodgers, R-Wash., told us after Wednesday’s hearing. “I was disappointed the administration didn’t talk with us first, and in the future, I would ask them to keep the lines of communication open.”
Platforms are using the section to shield themselves from liability for fraudulent and counterfeit products sold online by third-party sellers, Schakowsky said during the hearing. Amazon, eBay, Apple and Specialized Bicycles executives defended industry efforts to curb illegal products and false reviews. Public Citizen and Consumer Reports officials slammed the platforms for turning a blind eye to illegal and fraudulent activity in the name of profit.
Platforms don’t have an incentive to police false consumer reviews, said CR Vice President-Advocacy David Friedman. The better the reviews, the more products they sell and the more they earn, he testified. The business models are designed so platforms can evade responsibility for sellers’ bad claims, testified Public Citizen Director-Global Trade Watch Lori Wallach.
If Amazon loses consumer trust, it loses business, said Vice President-Worldwide Customer Trust Dharmesh Mehta. He cited the $500 million the platform spent in 2019 to focus on fraud and abuse. That's a rounding error in yearly revenue, Friedman countered.
Associate General Counsel Amber Leavitt distinguished eBay from Amazon, calling her company a pure marketplace that connects buyers and sellers directly. Unlike Amazon, it doesn’t compete with its third-party sellers, she said. The lawyer responded to Rep. Anna Eshoo, D-Calif., whose district includes eBay. Eshoo said it’s important to understand profit methods to know differences among platforms.
Apple monitors all marketplaces, including Amazon, but doesn’t look closely at reviews, said Apple Senior Director-Intellectual Property Jeff Myers. His company's focus is identifying counterfeit products.
Rodgers questioned Amazon’s response to false claims involving the coronavirus. The platform has removed more than a million related products making false claims and tens of thousands trying to price gouge consumers, Mehta said, calling it a fast-evolving issue. The e-tailer needs to thwart price-gouging on hand sanitizer and facial masks amid the coronavirus crisis, Sen. Ed Markey, D-Mass., wrote the company (see 2003040053).
Rep. Jerry McNerney, D-Calif., hammered Mehta about Amazon’s Amazon Choice badges awarded to products. The executive conceded Amazon doesn’t verify authenticity of products with the badges, which are based on customer reviews about price and delivery. McNerney raised concern that consumers think the badges mean Amazon is endorsing the products. Amazon Choice products are littered with fake reviews, said Friedman, arguing Amazon isn’t policing enough.
The administration is leading the way in combating counterfeit products, said Rodgers, claiming it’s a priority for President Donald Trump. She cited his repeated threats against China, which along with Hong Kong, accounts for more than 85% of all contraband seized at U.S. borders.
Pallone disagreed the administration is leading on this. He agreed with Rodgers that industry could be doing more and that China is very much to blame for the counterfeiting and outright fraud. It’s a hybrid marketplace where sites act as sellers and platforms for third parties, he said. Some screen and curate, while others don’t, decreasing credibility of the third parties, he said.
Pallone raised concerns about Amazon commingling products from various sellers and allowing products to be delivered to customers even though the buyer didn’t select a specific seller. The company tracks identical products and ships the ones closest to the customer, said Mehta. It’s designed to deliver identical products faster, and sellers can opt out, he said.
Consumers should exercise common sense when buying, said Specialized Bicycles Head-Brand Security Andrew Love. If a $200 bike helmet is on sale for $50, be skeptical, he advised would-be buyers.
Industry clearly knows its own shortcomings, said Rep. John Shimkus, R-Ill. The best response is for the private sector to work together rather than leaving it to the political process to solve problems, he said.