Democratic lawmakers in California are quickly advancing bill SB 1144, which requires online marketplaces to collect identity data from high-volume sellers who advertise online but transact offline. If passed, sellers on platforms like Craigslist, Facebook Marketplace, and NextDoor must provide identity verification, which could include biometrics and personal details such as bank account information, Social Security numbers, or driver's licenses.

The proposal aims to combat the resale of stolen goods, targeting sellers who make over$5,000 in profit and complete at least 200 transactions annually. It is part of a broader legislative effort to address retail theft in the state, a problem the California Retailers Association says has reached crisis levels.

However, US tech lobby groups, including TechNet, argue that these requirements will harm the economy by deterring businesses from operating in California. They claim that excessive data collection is unnecessary and will disproportionately benefit large retailers at the expense of smaller online marketplaces. Critics also argue that the bill's requirements are too vague and could inadvertently target unintended users and sites.

The bill, expected to reach Governor Gavin Newsom's desk within weeks, now lies between the need for law enforcement to collect data to fight crime and concerns about privacy and economic impact from the tech industry.

Why does it matter?

Similarly, in New York and Chicago, shoplifting has surged, creating a shadow economy where stolen goods are sold on resale sites and at illicit pawn shops. Last year, a new federal law, the Inform Consumer Act, took effect, requiring online marketplaces like eBay, Facebook Marketplace, and Amazon to verify the identities and bank information of high-volume sellers to combat the online sale of stolen goods.