Judge blocks Georgia's online sales law, a win for Meta, Craigslist, others

Georgia’s new law extending data collection requirements for online marketplaces such as Nextdoor and Craigslist can’t stand as it conflicts with federal law, an Atlanta judge has decided.

The state’s “Combating Organized Retail Crime Act” was due to take effect Monday. It requires online marketplaces to obtain and verify information about high-volume sellers whether sales go through the marketplace or not, in an effort to curb online sales of stolen items.

U.S. District Judge Steven D. Grimberg temporarily blocked enforcement of the law in an order Sunday, ruling that it conflicts with the federal “Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act,” known as the INFORM Consumers Act, implemented in 2022.

The federal law only requires online marketplaces to collect bank account, contact and tax identification data about high-volume sellers whose sales are processed through the marketplace. Georgia already had a corresponding law in place, which legislators amended this year to include sales that marketplaces don’t handle.

“Any ordinary meaning of ‘conflict’ is implicated when an online marketplace is both ‘only required’ to count certain transactions and required to count additional transactions too,” Grimberg said in his order. “That’s a conflict. Only means only.”

Grimberg’s ruling means the state’s new law can’t be enforced while it is litigated. NetChoice, the trade association for online marketplaces including Google, Amazon and eBay, sued Georgia Attorney General Chris Carr to void the law.

NetChoice argued in part that Georgia’s new law is preempted by the federal INFORM Consumers Act, and Grimberg agreed.

“When a state law conflicts with a federal one, the federal law reigns supreme,” the judge said.

Chris Marchese, director of NetChoice’s litigation center, said the association is relieved that Georgia’s new law, known as Act 564, has been halted. He said it would hurt Georgia consumers and small businesses, as online marketplaces would likely limit sales in fear of violating the new requirements.

The new law drew criticism from some online sellers worried about disclosing sensitive information.

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