Setting the Record Straight on Louisiana’s Online Marketplace Bill
Imagine selling knitted hats at a storefront in Lafayette, Louisiana. Every customer buying a hat would make their purchase at the same spot, checking out at the same register, subject to the same local rules and regulations around the sale of knitted headwear. For the consumer and for the store owner, the sale is simple and requires adherence to only one set of local laws.
Now imagine that same hat seller decides instead to sell their knitted berets and beanies on eBay, making them available to all 64 parishes and 304 municipalities in the Bayou State. Instead of one set of rules, the same shopkeeper has now entered a maze of local regulatory measures with competing rules on taxation, and user data, and product listings. It’s enough red tape to drive a business offline.
The good news is, Louisiana lawmakers have an answer — a new bill (HB 591) that would create a statewide framework for the regulation of online marketplaces. Instead of having to keep up with dozens of municipalities changing codes around the online sale of products or services, our hypothetical knitting entrepreneur would only need to follow a single statewide set of rules to make their products accessible to all Louisianans.
The bad news is that opponents of this legislation have mischaracterized the bill as a ban on local cities passing short-term rental (STR) regulations. That’s a misrepresentation that deserves to be corrected as lawmakers debate passage of a bill that stands to help a range of online retailers and entrepreneurs.
What HB 591 does and doesn’t do
The first correction worth noting is that HB 591 does not, in fact, prohibit cities and towns from enacting regulations on short term rentals. Short-term rental activity, zoning, registration, and caps would all still be well within the purview of local governments under this legislation.
HB591 ensures that the regulation of online marketplaces, third party marketplaces which facilitate transactions for products or services between two or more parties, happens at the state level. The products or services themselves, STRs included, can still be regulated locally..
The other mischaracterization worth noting is that HB 591 isn’t actually a bill about short-term rentals. It’s legislation that creates a framework for the regulation of online marketplaces as diverse as eBay, Amazon, and TikTok.
Other states have pursued legislative frameworks similar to HB 591 all without interfering with the local regulation of STRs.
Take Tennessee for example. Not long ago, Tennessee passed a similar law to ensure that online marketplace regulation happened at the state level. Since the passage of that legislation, Tennessee cities including Chattanooga, Memphis, Hendersonville, and Sevier County have all passed their own localized STR regulations.
The impact of patchwork digital regulations
For both consumers and entrepreneurs, the consequences of pushing online regulation down to the local level can be harmful. In Seattle, new local regulations on online delivery this year spiked prices for basic online orders while putting delivery workers out of a job. In Minneapolis, new city regulations on ridesharing platforms have driven Uber and Lyft out, threatening an estimated 8,000 jobs.
Not only do patchwork digital laws have dire consequences for the workers they leave jobless, they’re harmful to consumers in and around the cities that enact them. Banning rideshare apps in one city makes travel to, from, and through that city difficult for residents of adjacent neighborhoods, for example.
A chance for a smarter approach
In addition to standardizing the treatment of online platforms statewide, HB 591 includes digital protections that will help keep consumer data private online. The bill includes a measure prohibiting online platforms from sharing data without a subpoena or court order.
At the moment, Louisiana stands at a crossroads. There’s a clear need for online regulations that protect consumers in today’s digital world, but the question remains who should enact them.
For state lawmakers who have the full picture of Louisiana commerce in mind, the answer should be easy. Online transactions aren’t confined by town lines, and Louisiana’s regulation of online marketplaces shouldn’t be either. HB 591 provides a thoughtful framework for Louisiana to tackle a statewide issue without stripping local governments of the ability to regulate products in their own jurisdiction.
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