NetChoice Sues to Block Enforcement of Ga. Law Regarding Online Sales

NetChoice seeks an injunction blocking Georgia Attorney General Christopher Carr (R) from enforcing Georgia Act 564, an amendment to the state’s Inform Consumers Act, when it takes effect July 1, said NetChoice’s complaint Thursday in U.S. District Court for Northern Georgia in Atlanta.

Act 564, which was signed into law May 6, would impose “unprecedented and unconstitutional burdens” on widely used online services by requiring them “to communicate about potential in-person, offline sales,” said the complaint. Georgia enacted Act 564 to give law enforcement additional resources to combat organized retail crime, but it will create “regulatory chaos,” said Chris Marchese, director-NetChoice Litigation Center, in a statement Thursday: “Unfortunately, Act 564 does nothing to address the underlying issue at hand.”

Act 564 will “radically expand” online marketplaces’ obligations under the Georgia statute by requiring them to keep track of all third-party sales of consumer products in the state that are made “by utilizing” an online marketplace, said the complaint. Absent “judicial intervention,” that change will transform Georgia's Inform Consumers Act from a “workable burden” applicable to a limited set of e-commerce marketplaces into “a nearly impossible requirement," it said.

Act 564 will mandate that all manner of online services, including those that merely facilitate third-party speech, investigate and retain information about sales occurring “entirely off-platform,” said the complaint. Act 564 is “invalid for multiple reasons,” including that it’s preempted by the federal Inform Consumers Act, it said. The federal statute was enacted a year ago with the stated goal of adding more transparency to online transactions and to deter criminals from acquiring stolen, counterfeit or unsafe items and selling them through online marketplaces.

Act 564 also violates the First Amendment, said the complaint. Its “onerous” regulations significantly burden both noncommercial and commercial speech, "triggering at least intermediate scrutiny, which Act 564 plainly flunks,” it said. It forces online marketplaces to investigate off-platform activity, and obtain and maintain sensitive information “that they would not ordinarily collect,” it said.

Act 564 also requires that online marketplaces “ensure that third-party sellers comply with disclosure obligations” that the state doesn’t directly impose or enforce on the sellers themselves, said the complaint. Act 564 isn’t “remotely tailored” to further the state’s asserted interest in fighting organized retail crime, it said. Act 564 is “so impossibly burdensome” that it couldn’t survive “even if it were analyzed as an ordinary disclosure requirement,” which it’s not, it said.

Act 564 is “unconstitutionally vague,” as it provides no guidance about what it means to make a sale “by utilizing” an online marketplace in Georgia, said the complaint. That leaves marketplaces “to guess at which types of off-platform transactions they must now attempt to monitor,” it said. That vagueness is “particularly problematic given that the law imposes investigatory responsibilities on companies to gather information that is not generated in the ordinary course of business and implicates the privacy interests of third parties,” it said: “Vagueness in this context inevitably chills the speech of online marketplaces and sellers alike.”

Act 564 also “runs afoul” of Section 230 of the Communications Decency Act, said the complaint. Section 230 “preempts state laws that impose impossible burdens and substantial liability on online services for publishing content provided by third parties,” it said.