By Christine Paluf With eBay and Ticketmaster in the auction market, it’s a good time to evaluate many states’ regulation on this practice to...

By Christine Paluf

With eBay and Ticketmaster in the auction market, it’s a good time to evaluate many states’ regulation on this practice to determine what need, if any, there is for licensing and regulation in this market.

Internet and technology have been a catalyst for many of the changes in auctioning behavior, and many states are stepping up to the court field to get a piece of the pie.
In May, Louisiana looked at Senate Bill 642, aimed at excluding some Internet transactions from licensing requirements related to auctions.

Lobbyists from eBay sought to protect their “trading assistants” from fees and other requirements required of traditional auctioneers. “Trading assistants” are defined as experienced sellers that resell items for others for a fee.

Extending state regulations to eBay auctioneers is something that the company is fighting to prevent, with major lobbying efforts designed to keep states from setting a precedent that would change the face of the online business. According to eBay.com, the company employs 20 “Governmental Relation Specialists” to “monitor and engage in the political, legislative and regulatory activities of governments.”

Drawing the difference between the traditional auctioneer and the online “traders” is an important first step. Larry Theurer, president of The National Auctioneers Association (NAA), defines an auction as a limited-time sale where an auctioneer solicits bids, selling the product to the highest bidder. He believes that the Internet auction simply offers another medium in which to practice this sales method. Though he claims there is little difference in the way the auctions are conducted, he notes major differences in the way they are regulated.

Michelle Peacock, eBay’s director of operations and state government relations believes the opposite. Part of the businesses’ efforts to lobby state legislatures into leaning toward free-enterprise and to protect their business, Peacock draws a line between what eBay and other online selling sites do in comparison to the traditional auction.

She believes they should not be subject to the same regulation and licensing requirements for three key reasons:

Traditional auctioneers take possession of an item to auction it on the owner’s behalf; they try to get the best possible price for the item by rejecting or accepting bids on the sellers’ behalf, and collect money for the item which they pass on to the seller.

Peacock claims eBay does none of these things, it never takes possession of the item, only provides the platform for the transaction, not dealing with bids and also does not collect money, it is passed directly from buyer to seller.

Another difference between the two is the end time of the auction, there is always a pre-determined end to bids on eBay. And in traditional auctions, all the buyers and sellers are in one place.

Twenty-nine states currently have laws for professional auctioneers. Some require a course of study or apprenticeship of six months to two years; passing an exam; licensing fees; or completion of continuing education courses.

Two states require licensure for online auctioneers, a number that is much lower due to eBay’s lobbying efforts. New Hampshire requires course completion, a state examination, a $10,000 bond and an annual $85 fee.

North Carolina and Tennessee both began attempts at regulating online auctions, though after public outcry, both abandoned those efforts.

There are also exceptions to these rules that apply to those that sell their own property or property that wasn’t purchased specifically for resale. This is where the water can get murky for eBay ticket sellers or other online auctions, such as those Ticketmaster has recently held.

The NAA believes that the general lack of regulation over those auctioning online gives them an unfair advantage over those who practice traditionally. The association suggests consumer protection and defrauding the process as the reason to regulate.

Others claim that eBay has its own protective policies in place, and that they protect both buyers and sellers. Auctions originally served the purpose of collecting goods into one place when finding what you needed was a much more complicated proposition. Today all it takes is the click of a button.

The world is changing, and with it, the behaviors of consumers and the way they get their tickets is as well. With that change comes a need for appreciating the difference between the newer versions of old practices.

E-commerce is the way of the world, and trying to regulate it the same way as traditional auctions will require some evaluation and redefinition of these practices.