Regulatory Quagmire Awaits eBay Drop-off Storeowners

 By Ina Steiner
AuctionBytes.com
May 17, 2007

Selling on eBay has become big business, and government agencies at all levels are taking note. Particularly visible to lawmakers, regulators and law enforcers are eBay drop-off stores. But across the United States, there is no consistency in drop-off store regulation.

AuctionBytes commissioned UnRavel the Gavel Senior Editor Kathy Greer to inquire of all 50 states what licenses they require of eBay drop-off stores. The results are summarized in the accompanying table (http://www.auctionbytes.com/cab/pages/state_regs).

Some states require drop-off stores to hold an auctioneer's license, while other states require they comply with rules for pawnshops or consignment shops. Other states have no regulations in place specifically dealing with drop-off stores, though local law-enforcement agencies may interpret existing laws written for pawnshops and consignment stores as being applicable to drop-off stores.

Further complicating matters is that cities and counties may have their own rules and regulations that are different from state regulations. And in conducting her research, Kathy Greer also discovered that there are regulations around the sale of real estate and automobiles that may apply to drop-off stores.

A recent survey of 101 eBay drop-off stores conducted by AuctionBytes (http://www.auctionbytes.com/cab/abu/y207/m05/abu0190/s02) asked storeowners what licensing requirements applied to their store. Nine respondents said they were required to have a consignment store license; 8 said they needed an auctioneers license; and 3 said they needed a pawnbroker license; 1 said they needed a second-hand dealers license; 1 said they needed an auto-broker license; and 1 said they possibly needed an auctioneers license - it was under review in their state.

The survey also asked what procedures store personnel carried out with regard to consignors. Ninety-nine percent of respondents required consignors to sign a contract, and 60 percent required consignors to show a photo ID. Twenty-six percent required that all payments be sent to the consignor's address on the photo ID, and 6 percent required a holding period before listing an item. One respondent required consignors be fingerprinted, one required a deposit, and one had a 10-day holding period before releasing funds to the consignor.

Asked if they had ever been notified by local law enforcement that their eBay drop-off store was in violation of governmental regulations or laws, 4 percent said they had.

Despite the inconsistency around drop-off store regulation, only 9 percent of survey respondents called "government regulation" one of their biggest challenges in operating their eBay drop-off store, and none called it their biggest challenge.

http://www.auctionbytes.com/cab/pages/state_regs