New Pa. law requires online trading assistants to be licensed, bonded

HARRISBURG, Pa. (ACNI) – On Oct. 9, Governor Edward G. Rendell of Pennsylvania added his signature to Senate Bill 908, thus enacting a law that makes it mandatory for online trading assistants to register with the State Board of Auctioneer Examiners, pay a registration fee and post a surety bond. 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.

Previously, those who sold personal property through timed Internet auctions on behalf of a third party in Pennsylvania were exempted from obtaining an auctioneer’s license, although it had been argued that “trading assistants” were operating as de facto auctioneers. Some of the state’s auctioneers, particularly those whose businesses are largely dependent on local estates, felt the situation created an unfair advantage for their unlicensed competitors. Additionally, Pennsylvania’s auctioneers overwhelmingly felt that they have a collective reputation to uphold, and that unregulated trading assistants should not in any way be regarded or perceived as “auctioneers.”

Under the new bill, which was introduced on Sept. 25 by State Senator Rob Wonderling (R-24th District, representing parts of Bucks, Lehigh, Montgomery and Northampton counties), 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.

In presenting his case for passage of the bill, Wonderling noted that more than 15,000 residents of Pennsylvania make their living by selling goods on sites like eBay. He said consumers who either buy or sell items through a trading assistant will be afforded greater protection now, because those assistants will be bonded and monies received will be placed in escrow while a transaction is in progress. It is important to note that the new legislation specifically excludes “any sale conducted through an online Internet bidding platform [such as LiveAuctioneers.com] from being considered an auction or sale at auction.” Additionally, the law does not apply to individuals who sell their own merchandise on eBay or similar Web sites.

Trading assistant licenses will not be granted to anyone who has been convicted of forgery, embezzlement, obtaining money under false pretenses, extortion, criminal conspiracy or similar offenses, either in Pennsylvania or any other state.

Mike Sturla (D-Lancaster), who negotiated final language of the legislation, said he had been working on some of the provisions since last year. He said his goal was to “(address) the growing problem of online auction fraud.”

Based on certain blog postings seen online, not everyone is pleased with the new law. One blogger asked, “Why should I have to be licensed? EBay actually conducts the auction, while I just write the descriptions and send the merchandise.” The blogger also questioned how the state would enforce the law, noting that many sellers don’t know they are to collect sales tax.

Failure to be registered as a trading assistant carries a potential fine of up to $500, a prison term of up to three months, or both. A second offense on conviction carries a fine of up to $2,000 to $5,000, imprisonment of not less than one to two years, or both. The civil penalty includes a fine of up to $1,000.

Two auctioneers, Doug Ebersole, manager of Conestoga Auctions in Manheim, Pa., and Tom Horst of Horst Auctioneers in Ephrata, Pa., said they favored the new law. “Why shouldn’t they get a license and bonding like we do?” Ebersole asked. A request for comment from eBay had not yet been received as this article was being finalized.

The new law has received endorsement from the Pennsylvania Auctioneers Assn (PAA), which had encouraged its members to contact their individual state senators. Oversight will be carried out by the State Board of Auctioneer Examiners in the Department of State. The PAA will remove one appointed member from the board in order to add a new member who will represent trading assistants.

Copyright 2008 Auction Central News International. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.