March 30, 2005 4:00 AM PST

Secondhand blues for eBay consignment sellers

When Debbie Gordon founded Snappy Auctions, she thought her time would be focused on entrepreneurial tasks like selling franchises and linking the online store's computers to those of shipping companies.

But last year she received an unexpected letter from the Tennessee Auctioneer Commission. It ordered Gordon, an eBay consignment seller in Nashville, to submit to mandatory training and licensing. In addition, Snappy Auctions would be required to hire a government-approved auctioneer who had completed a two-year apprenticeship and possessed a "qualifying education certificate."

"We discussed the laws with the commissioner and understood that it does indeed apply to us, so we obviously complied and I got my license," Gordon said. "There were only 13 schools in the country. Luckily there happens to be one in Tennessee."

News.context

What's new:
As the popularity of online consignment sellers grows, a number of state legislatures are contemplating new laws that would target this popular auction technique.

Bottom line:
The heightened regulatory scrutiny has online auction sellers worried that states are taking offline regulations and without thought applying them to online marketplaces.

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Gordon may have been one of the first online consignment sellers to run afoul of auction commissions, but she won't be the last. A growing number of state legislatures are contemplating new laws that would target this popular auction technique, while regulators are weighing whether to invoke licensing laws already on the books.

Online consignment sellers, which go by names like I-SoldIt.com, QuickSellIt.com and BidWayUSA.com, typically sell their clients' items on auction Web sites in exchange for a fee of around 35 percent. eBay has embraced the concept, which it refers to as trading assistants and trading posts, and even features some of those sellers as "eBay University" instructors.

That increased popularity has invited heightened regulatory scrutiny. Twenty-seven states require auctioneers to be licensed, according to the National Auctioneers Association, and other states like California view consignment sellers as the equivalent of pawn shops.

In San Diego County, deputies from the sheriff's office have been visiting Internet consignment sellers to verify that they have the "secondhand good" licenses that pawn shops are required to obtain.

"There have been complaints by secondhand dealers," said Sgt. Mark Stevens of the San Diego Sheriff's Office. "They feel that the stores should be licensed."

Under California law, secondhand dealers are defined as anyone who accepts items "for sale on consignment" or "for auctioning." Dealers must file daily reports with the police that include names, fingerprints and home addresses of each person trying to sell an item, along with that person's driver's license or passport number.

"In California, the law says if your business accepts property on consignment or accepts property for auction, you'll have to get a license," Stevens said. "The way we will most likely handle it is

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9 comments

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Once again...
It's interesting that the article doesn't seem to mention what the costs are for this "training and licensing" that eBay resellers are being required. How hard can it be to set up a few auctions on eBay? I've never sold anything on eBay, but I know people who have, people don't even know much about computers. Oh yeah, auction university here we come!
Posted by Sentinel (199 comments )
Reply Link Flag
strictly about consignment, not auction in general
I was concerned when I started reading the article that the state governments were just looking for a way to regulate auctions in general, but the article is strictly abotu people who auction off items on the behalf of others, the regulation wouldn't apply to you run of the mill online e-tailer who uses an auction to peddle their wares.

Even so, I don't see why anyone should need any more than a standard business license to sell stuff for someone else. All you're doing is providing a service to them. I don't need a computer repair license to run a computer repair business. Maybe it's jsut because services aren't taxed in so many places, so this is just another case of gov't sticking their hand in the wallets of the citizens.
Posted by DaClyde (96 comments )
Link Flag
If these 'legal eagles' have it right....
... then every newspaper with a want ad section must also
comply.
Posted by Earl Benser (4310 comments )
Reply Link Flag
Tennessee Trading Assistant
While I think the law stinks, this article is inaccurate.

First off, you have to take a 30 hour course, at a cost of approximately $300. You're not going to "bid calling" classes. I don't know why the Snappy Bids founder said she had to hire a government approved auctioneer, that's plain false. She and I have to deal with the same inspector, the state only has one.

The state inspector sends a notice to every trading assistant in TN. It states, If you receive items for consignment and the auction originated in this state and the receiver of said goods receives and distributes the proceeds, you need a gallery license. This is not the same as an auctioneers license. No apprenticing or bid-calling, etc.. This is a big difference from the classifieds section.
Posted by ScullyB (47 comments )
Reply Link Flag
What Tennessee requires
You may wish to take a look at the actual Tennessee government website. It <news:link url="http://www.state.tn.us/commerce/boards/auction/req_license.html">says</news:link> that a gallery-class license holder "must employ a Tennessee licensed auctioneer."

Perhaps the state is letting you slide for now? If I were you, I wouldn't bet my business model on that oversight continuing.
Posted by declan00 (848 comments )
Link Flag
Secondhand Blues... or Prison Blues?
In reading the article I was left with my thoughts concentrated not on the legimate eBay particpants but on a more criminal application of the service.

I know that here in Australia a chain of pawn broker like outlets has been forced to comply with heavier requirements due to a proliferation of stolen goods on their shelves.

Imagine the case where "Big Bubba" burgles a block of flats and finds himself with 20 TVs, 15 DVD players and 3 cases of CDs. If he has someone sell his booty on eBay what details are they required to hold regarding "Big Bubba's" identity??? I'm sure someone will correct me but wouldnt this person be a fence?

Perhaps this is the situation that the different state regulators are looking at getting on top of, rather than simply slapping costs, fees and controls on people out to make a quid.
Posted by j3st3r (70 comments )
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