HR-9799-119
Referred to the House Committee on the Judiciary.
Sponsored by Becca Balint (D-VT)
What it does
This bill would direct the Federal Trade Commission (FTC) to issue rules establishing procedural protections for third-party sellers on large online marketplaces, referred to as "critical trading partners." Key protections would include: limits on how long platforms can hold a seller's inventory or funds (30 days maximum without meeting a legal standard of proof); required written notice within 72 hours of any hold or suspension; at least 30 days' advance notice before material policy changes; and detailed disclosures during investigations. The bill would also create a private right of action allowing injured sellers to sue for triple damages, override mandatory arbitration clauses, and allow state attorneys general to bring suits on behalf of residents.
Who benefits
Third-party sellers on large online marketplaces — particularly small and independent businesses — who would gain procedural protections against sudden account suspensions, inventory holds, and fund freezes. Sellers who have experienced unexplained deactivations or opaque enforcement actions would gain appeal rights and transparency. State attorneys general would gain new enforcement tools. Plaintiffs' attorneys would benefit from the private right of action and treble damages provision. Consumers may indirectly benefit if greater seller stability leads to more product variety and competition on platforms.
Who is hurt
Large online marketplace operators (e.g., platforms with third-party seller programs) would face new compliance costs, mandatory disclosure obligations, and litigation exposure. Platforms' ability to quickly remove potentially fraudulent or counterfeit sellers could be slowed by the 30-day hold limits and burden-of-proof requirements, which may indirectly harm consumers who purchase counterfeit or unsafe goods during that window. Legitimate sellers who compete against bad actors may face a less-policed marketplace. The FTC would bear new rulemaking and enforcement burdens. Mandatory arbitration providers would lose business as the bill overrides those agreements.
Supporters argue
Supporters argue that dominant online marketplaces have grown so large that small businesses have no viable alternative to using them, yet sellers face sudden account deactivations, unexplained fund freezes, and inventory holds with no meaningful recourse — effectively destroying livelihoods overnight. They contend that the bill's 30-day limits and notice requirements simply apply basic due process principles to a commercial relationship where one party holds overwhelming power, and that treble damages are necessary to deter platforms that would otherwise absorb smaller penalties as a cost of doing business.
Opponents argue
Opponents argue that the bill imposes government-mandated procedural requirements on private contractual relationships, potentially preventing platforms from swiftly removing fraudulent sellers, counterfeit goods, and bad actors who harm consumers. They contend that the "critical trading partner" definition is broad enough to sweep in a wide range of platforms beyond large marketplaces, and that the 180-day FTC rulemaking deadline combined with vague standards — such as what constitutes a "material" policy change — delegates significant lawmaking discretion to an agency whose authority faces heightened judicial scrutiny under West Virginia v. EPA (2022) and Loper Bright v. Raimondo (2024).
Constitutional context
Congress's authority to regulate online marketplace conduct rests on the Commerce Clause (Art. I, §8, cl. 3), as these platforms operate in and substantially affect interstate commerce under Wickard v. Filburn (1942). However, the bill's broad delegation of rulemaking authority to the FTC — including defining key terms like "legally valid standard of proof" and setting the scope of "critical trading partners" — may face challenge under the major questions doctrine (West Virginia v. EPA, 2022) and post-Chevron independent judicial review (Loper Bright v. Raimondo, 2024) if courts find the statutory authorization insufficiently clear for rules of significant economic scope.
Checks and balances
The executive branch (FTC) gains new rulemaking and enforcement authority; checks include congressional oversight, the 180-day rulemaking deadline, judicial review of FTC rules under the major questions doctrine and post-Loper Bright independent statutory interpretation, and state attorneys general who serve as parallel enforcers.
Historical precedent
The EU's Platform-to-Business (P2B) Regulation (2020) established similar transparency and fairness requirements for online marketplace operators in Europe, though no directly analogous federal U.S. statute has been enacted.