New PA Law on Internet Trading Assistants

On October 8, 2008, PA Governor Edward G. Rendell signed a bill into law that creates a new category of "trading assistants" who assist others through an "online Internet bidding platform" and requires them to register with the Pennsylvania State Board of Auctioneer Examiners, pay a registration fee, and post a surety bond.

Fiduciaries who contemplate sale of tangible personal property through an online Internet auction service should be aware of new Act 89 of 2008 (also posted in PDF format, 12 pages).

A Press Release issued by the Governor's Office entitled "Governor Rendell Signs 10 Bills Into Law" (10/09/08), briefly announced the new law, among others signed on October 8, 2008:

"Senate Bill 908 [PN 2374, enacted as Act No. 89 of 2008] amends the Auctioneer and Auction Licensing Act to require “trading assistants” (people who sell, for a fee or commission, someone’s personal property through an online Internet bidding platform) to register with the State Board of Auctioneer Examiners.

Auction Central News posted an excellent article, entitled "New Pa. law requires online trading assistants to be licensed, bonded" (10/12/08), by Gene Friedman & Catherine Saunders-Watson, who summarized the new law's background and effects:

Known as the Auctioneer Licensing and Trading Assistant Registration Act, Senate Bill 908 is an amended, updated version of an existing law (Act 85) that has been on the books since 1983.

In its new form, the legislation creates a more equitable and clearly defined playing field for the state's licensed auctioneers, who face increased competition from entrepreneurs or "drop shops" that charge a fee to manage auctions online for outside consignors.

On the other hand, the law also benefits trading assistants, who no longer have to fear the prospect of legislation requiring them to undertake formal auctioneer training. * * *

Under the new [law], which was introduced [as a bill] on Sept. 25 by State Senator Rob Wonderling, * * * trading assistants will be required to pay a biennial $100 fee to the State Board of Auctioneer Examiners. Additionally, each trading assistant must file a $5,000 bond to cover any judgments that might be ordered payable by a court. * * *

Last year, discussion about regulation of online auctioneers was sparked nationwide when the Pennsylvania Attorney General's Office commenced proceedings under the prior law governing auction activities. See: PA EE&F Law Blog posting "Ebay Sellers as "Auctioneers" in PA" (11/26/07).

The Pennsylvania Auctioneers Association supported some form of a bill to regulate electronic auction brokers. See: "PAA Position Statement on the Electronic Auction Broker Legislation" and "Newest Information on PA's Electronic Auction Broker Legislative Initiative", both by Jay A. Layman.

Act 89 was the result of compromises made during a "stakeholder process convened by Representative Mike Sturla" that resulted in "a major step forward for both traditional auctioneers and electronic auction brokers," according to Mr. Layman.

Upon enactment, PAA celebrated in a Press Release posted on its website, entitled "Success for PAA's Online Auction Legislative Initiative" (PDF, 2 pages), by Jay A. Layman, also posted on AuctionZip, on October 17, 2008.

He congratulated participants in the process who arrived at a balanced legislative solution:

This effort began with divergent views expressed in Senate Bill 908 and House Bill 1899. However, the final version of Senate Bill 908 is a classic example of success by the stakeholder group convened by these legislators.

Included in it were representatives from the Department of State, Office of the Attorney General, Governor’s Office, Representative Mike Sturla and his staff, Senator Rob Wonderling and his staff, Senator Tommy Tomlinson and his staff, eBay, and the PAA.

The scope of discussions included diverse political philosophies of the role of government, the need for consumer protection and support for emerging technologies in the modern business environment.

The final work product achieved a delicate balancing of these concerns, and the effort was rewarded with the necessary political support of the House and Senate leaders managing the legislative process and who agreed it should become law. * * *

Act 89 defines "Online Internet Bidding Platform" as "hardware or software architecture that provides or enables computer access by multiple users to an interactive computer server for the purpose of allowing users to offer property for sale and that does not examine, set the price or prepare the description of the property to be offered."

The Act creates a newly-designated group, who require licensing and some regulation -- "Trading Assistants" who sell personal property belonging to another for a fee, through such an online Internet bidding platform:

They are not required to comply with this law when they sell their own property.

In lieu of licensure requirements for traditional auctioneers, they must comply with a simpler biennial registration process that includes obtaining a bond, placing monies in escrow, disclosing their registration number, providing written receipts, and being subject to fines and penalties for failure to register or comply with the law. * * *

A fiduciary, just like an individual, should be able to sell tangible assets being administered as part of the managed "corpus", through an electronic Internet auction without licensure as a "trading assistant", assuming no separate sale commission would be charged for that auction service.

However, a fiduciary in Pennsylvania who engages another person to do so for a fee should first require proof of registration under new Act 89 of 2008 (once it takes effect).

The act will take effect sixty days after October 8, 2008.

Ebay Sellers as "Auctioneers" in PA

If a fiduciary in Pennsylvania decides to consign tangible personal property for liquidation through an online listing agent, like an eBay selling service, check for its auctioneer's license.

On November 17, 2007, an article entitled "Ebay sellers pushed to get auctioneer licenses" reported strict enforcement of PA laws & regulations governing auctioneers that require online sellers of property owned by others either to serve apprenticeships with traditional auctioneers or to take college auctioneering courses, for certification.

The article by Ford Turner, published by the Patriot-News (Harrisburg, PA), reported the position recently taken by the Pennsylvania State Board of Auctioneer Examiners:

The legal clout behind the examiners board is wielded by the Pennsylvania Department of State. Spokeswoman Leslie Amoros said it backs up 27 licensing boards, including those that deal with nurses, landscape architects and barbers.

The purpose, Amoros said, is to maintain the integrity of the professions. In the debate about online auctioneering, she said, the state is trying to protect consumers and apply the law, which has no language specific to online selling.

“Our position is that brokers who accept goods from sellers on consignment and then sell goods on eBay and retain a percentage ... must have an auctioneer license,” she said.

The enforcement does not affect people who sell personal belongings on eBay. It only applies to vendors who sell other people’s possessions. * * *

The applicable statute is the Auctioneer and Auction Licensing Act, 63 P.S. §§734.1 et seq.; and the relevant administrative rules are Regulations of the State Board of Auctioneer Examiners, 49 PA. CODE §§1.1 - 1.31. These govern auctioneer licensure procedures.

Another article, entitled "Online Sellers Need Pa. Auctioneer's Licenses", by Bradley Vasoli, published November 20, 2007, in The Bulletin (Philadelphia, PA), confirmed the penalties sought to be applied to unlicensed online sellers who are not owners of the property they list for sale.

Online merchants who sell secondhand items on eBay face a high legal hurdle set up for them by the State Board of Auctioneer Examiners.

Pennsylvania's Auctioneer Licensing Act requires anyone who makes a living taking bids on goods not their own to serve as an apprentice auctioneer for at least two years or to complete 20 credit hours in auctioning at a school approved by the Examiners Board.Under current Pennsylvania law, that goes for the eBay sellers as well.

State authorities have recently ramped up enforcement of the requirements. This has put a significant onus on thousands of Pennsylvanians who derive most of their income buying goods and selling them on the auction site eBay or other Web sites.

Some residents in that line of work, like Barry Fallon who owned iSold It on eBay in Lower Paxton Township, and Mary Jo Pletz who ran a secondhand antique e-commerce operation in Walnutport, face charges by the Pennsylvania Department of State. * * *

An article entitled "eBay Opposes Regulation while Pennsylvania Sellers Face Fines", by Ina Steiner, posted November 20, 2007, by AuctionBytes (a trade publication for online merchants), confirmed the enforcement effort in PA and reviewed opposition to it:

eBay consignment sellers in Pennsylvania are facing $1,000 fines if they do not comply with the state's auctioneering licensing requirements. A Pennsylvania newspaper article reports that at least two bills are awaiting committee action in the Legislature designed to deal with eBay consignment sellers.

AuctionBytes wrote in April about the plight of a Pennsylvania seller who is being forced to get an auctioneer's license to operate his eBay drop-off store. [See: "Pennsylvania Latest Battleground in eBay Consignment-Sales Regulation" (04/23/07).]

eBay said it opposes attempts to extend state auction licensing requirements to eBay sellers, or to eBay itself.

eBay spokesperson Catherine England said Monday that while eBay transactions are commonly referred to as auctions, there are several fundamental differences between traditional regulated auctions and the transactions that occur over the eBay platform. * * *

A chart of laws affecting eBay consignment sellers is available on the AuctionBytes website.

eBay states its opposition to state regulation of online sellers under auctioneer laws, and notes some recent state law changes, in its position statement "Auctioneering Regulations: eBay opposes attempts to extend state auction licensing requirements to either eBay sellers or eBay itself".

This enforcement policy adds to the business challenges faced recently by online sellers of others' property. See: "EBay drop-off stores rethink business model", by Steve Mellon, published together with "Auctioneers licenses an issue for eBay sellers", by Teresa F. Lindeman, on May 3, 2007, in the Pittsburgh Post-Gazette.

The Patriot-News article mentioned two pending bills that would change this situation in Pennsylvania, if adopted:

“The auction laws were written before the computer age, and there needs to be some change,” said Allen Shissler, a Tioga County farmer who left the auctioneer examiners board within the last 18 months. “But the board is very careful on how they want to evolve the law. ... You don’t want the politicians to be involved too much, or they will have a heyday.”

At least two bills awaiting committee action in the Legislature were designed to deal with eBay auctioneering. Their outcome will have broad implications.

While there are 2,100 licensed auctioneers in Pennsylvania, the lead sponsor of a state Senate bill, Sen. Rob Wonderling, R-Montgomery, said there are more than 15,000 state residents who make most of their money by trading and selling on the Internet

His bill would remove any requirement for licensing residents who use online trading platforms. Those who demand they have licenses, he said, do not understand the modern, electronic economy. * * *

Another bill in the state House of Representatives would require online sellers of other people’s items to register, pay a fee of about $100, and secure a bond that would cost about $50, according to state Rep. Michael Sturla, D-Lancaster, the lead sponsor. The bill would not require anyone to go to auctioneers’ school, he said.

Sellers should register with the state, he said, because the eBay system allows sellers to submit bids on their own items, driving up prices in a false manner.

“There is a consumer protection issue here,” Sturla said. * * *

Sturla's bill in the House is House Bill 1899, P.N. 2733; and Wonderling's bill in the Senate is Senate Bill 908, P.N. 1080.

One motivation for state regulation of online sellers is the potential for consumer fraud. See: "eBay fights States who enforce auctioneer license requirements", by Burleson Consulting, posted on eCommerce Tips in May, 2007 (written by a person who had been defrauded). There are many schemes utilizing eBay as a vehicle. See: "eBay Accounts Hijacked and Used to Scam Buyers", by Tim Stevens, posted on AOL News' Switched, on October 22, 2007, which discussed online fraud in Great Britain.

There is another very powerful reason justifying updated state regulation of online resellers: Fencing of stolen goods. See: "E-bay drop-off stores balking at regulation -- States want to prevent sale of stolen items", by Katie Hafner, posted by the International Herald Tribune on May 25, 2005.

This concern is real in Pennsylvania. The PA Attorney General had conducted an investigation for almost two years that resulted in criminal charges in August, 2006, where eBay was utilized to "fence" stolen goods. See: Press Release, "Attorney General Corbett & Blair Co. DA Consiglio announce arrest of four in "Operation eBay large-scale shoplifting and Internet sales schemes" (08/01/06).

The article, "Pennsylvania Busts eBay Scam Rings", posted by ConsumerAffairs.com (08/05/06), quoted from that Press Release:

Agents from the Pennsylvania Attorney General's Bureau of Narcotics Investigation (BNI), along with Pennsylvania State Police and local law enforcement, have captured four principal figures in two large-scale conspiracies that sold thousands of dollars worth of merchandise stolen from stores throughout central Pennsylvania.

Attorney General Tom Corbett said the 22-month long investigation, known as "Operation eBay," focused on the use of online auctions and Altoona area pawn shops to resell sporting goods, appliances, electronics and other items which were stolen from the shelves of local retail stores. The ring also sold industrial equipment, including compressors, paint sprayers and other heavy-duty equipment stolen from businesses and construction sites throughout the region. * * *

Corbett explained that individuals who unwittingly purchased stolen items from Friedenberger via eBay auctions would often pay for the items using checks or Paypal - an online system operated by eBay. * * *

As technology enables consumer abuse or criminal conduct to take new forms, the law should change to regulate conduct effectively. Perhaps a broad-based, in-depth study should be conducted by the Legislature in this developing area.

In the meanwhile, owners of personal property, including fiduciaries, who utilize an online seller's services in Pennsylvania, should check for an auctioneer's certification issued under the current law.

Update: 05/05/08:

On May 4, 2008, Auction Bytes posted an article entitled "Upcoming Licensing Hearing Could Impact Many eBay Sellers", by Ina Steiner, who provided a comprehensive update of the situation involving Barry Fallon.

Small-business owner Barry Fallon was scheduled to appear before the Pennsylvania State Board of Auctioneer Examiners on May 12, 2008, to face charges of conducting an auction on eBay and operating an auction house without a license. Fallon sold his consignment drop-off store in 2007 after regulators required him to get an auctioneer's license to operate the store, which operated as an iSold It franchise.

"It would be wonderful if a lot of Pennsylvania eBay Trading Assistants and Power Sellers could attend this hearing in support of all of us," Fallon said. "A show of strength might help sway their decision. If I am convicted everyone else in the state will be next. Any promotion of such mass show of support would greatly be appreciated."

Fallon said he would be defending himself since a lawyer would cost over $10,000. He faces fines of at least $2,000. * * *

The article contains many links and up-to-date information. It concludes with a link to an interview, available online: "You can hear an interview with Barry Fallon conducted last week on the Ecommerce Industry Soundbytes podcast."

Pennsylvanian Jack Palance Dies

Previously I made a posting, "PA's Jack Palance Sells Personal Items at Auction", about proud Pennsylvania senior citizen Jack Palance, who offered many of his personal possessions for sale on October 12, 2006, at an auction held in Hazelton, PA.

Sadly, on Friday, November 10, 2006, Jack Palance died.

His passing was reported in an article posted on Comcast by the Associated Press here, entitled "Oscar-Winning Actor Jack Palance Dies".

The article begins:

Jack Palance, the craggy-faced menace in "Shane," "Sudden Fear" and other films who turned to comedy at 70 with his Oscar-winning self-parody in "City Slickers," died Friday.

Palance died of natural causes at his home in Montecito, Calif., surrounded by family, said spokesman Dick Guttman. Palance was 85 according to Associated Press records, but his family gave his age as 87. * * *

The article concludes: "Movie audiences, however, were electrified by the actor's chiseled face and hulking presence, and a calm, low voice that made him all the more chilling."

He will be remembered for his brash, tenacious, and iconoclastic approach in a long life. Born in Hazel Township, PA, in 1919, he will remain a famous Pennsylvanian.

Jack Palance: "Do you know what the secret of life is?
One thing. Just one thing.
You stick to that and everything else don't mean shit."

Billy Crystal: "Yeah, but what's that one thing?"

Jack Palance: "That's what you've got to figure out."

-- From the movie City Slickers, as quoted here

PA's Jack Palance Sells Personal Items at Auction

On October 9, 2006, a news article reported that veteran actor Jack Palance is auctioning off more than 3,000 personal items from his Pennsylvania home. The "City Slickers" movie star will begin the three-day sale of memorabilia at his 150 acre Holly-Brooke Farm on Thursday, October 12, 2006.

The three-day auction starts Thursday, and items going on the block range from the screen legend's old straw hat to an 1878 Steinway & Sons grand piano.

"People can spend $5 or $50,000 at this auction," said Phil Eagle, an antique appraiser who traveled from California to sort and catalog the items to be sold.

Palance, the son of a coal miner and a native of nearby Lattimer Mines, collected most of the items during trips around the world filming movies.

The 87-year-old actor, who won the best supporting actor Oscar in 1992 for "City Slickers," also is parting with more than 1,400 books, posters from his movies, his high school championship football banners and memorabilia, movie props, his saddle, boots and vest.

Several classic cars will be sold, along with a horse-drawn carriage that is being stored in the barn alongside furniture, antique store display cases, salvaged railings and architectural pieces.

The complete Associated Press article, as posted by Yahoo News, can be found online here.

The article notes that "Keystone State Auctioneers Inc. is preparing for a crowd of up to 1,000 at Palance's property." The collection items to be sold are listed on that auctioneer's website here.

In Pennsylvania, there are many such auctioneers, often utilized in the liquidation of tangible personal property by estates.

The Pennsylvania Auctioneers Association has existed for 57 years. It is self-described as "a professional organization of nearly 600 auctioneers in the Commonwealth of Pennsylvania which was formed in 1949 to unite auctioneers, provide education and monitor legislation affecting the auction industry, with the desire that buyers and sellers would be better served." PAA operates the Pennsylvania Auctioneers Accredited Continuing Education (PAACE) Program, which is a "voluntary educational program . . . for all PA-licensed auctioneers in the absence of mandatory continuing education for auctioneers in the Commonwealth of Pennsylvania."

The PAA website notes the existence of the National Auctioneers Association, and its "Accredited Auctioneer, Real Estate" professional designation, which is awarded by the National Auctioneers Association Education Institute "to qualified real estate auctioneers who meet the educational and experiential requirements of the Institute and who adhere to a strict code of ethics and standards of practice."

That website mentions the Auction Marketing Institute, founded in 1976, as an international association. It also notes the auctioneers' professional designations CAI (Certified Auctioneers Institute), GPPA (Graduate, Personal Property Appraiser), and AARE (Accredited Auctioneer Real Estate) that are awarded to properly qualified auctioneers.

These notations, a list of definitions, and other information about auctions & auctioneers all can be found here in PAA's "Frequently Asked Questions".

From a quick review of the auction list, the Palance collection appears to reflect his very energetic & accomplished life.

“One of the most important reasons for living is to do something -- live outside of yourself and put together an idea, an idea that you want to explore and then complete . . . Awaken your creative sensitivities!” -- Jack Palance