Business is always a battlefield, but few e-commerce proponents have fought campaigns as fierce as those to keep Internet auctioning license-free.
So intense have been skirmishes between online sellers and state legislators that only one state has a law specifically requiring online auctioneer licensing.
According to the National Auctioneers Association ('NAA'), 33 states and the District of Columbia have state auctioneer-licensing laws. Some of those 33 states have laws that exempt Internet auctions from licensing. The NAA says that 12 states have no state-level licensing requirement, but allow municipalities and other political entities to license auctioneers in some way. Five states ' Alaska, California, Oregon, Utah and Wyoming ' have no general auctioning licensing, the NAA says. The State Auction Laws & Auctioneer Licensing Requirements blawg (see, www.auctionlaw.wordpress.com/state-auction-laws-auctioneer-licensing-requirements) says 16 states have no general auctioning licensure but regulate selling at various levels, such as with taxing-authority or other business licenses.
As of June, it seemed that only Illinois had a law that required licensing of online auctioneers. But industry sources say Pennsylvania is the latest Internet-auction licensing battleground.
Plenty of lawyers have enlisted in the fight against ' and for ' states seeking to license Internet sellers who seem to meet states' description of auctioneers. These attorneys are gaining and honing skills, and drawing revenue, in this lucrative sales channel, which the NAA says cashed $270.7 billion last year.
The NAA (a professional-development outfit besides being a lobby) supports online-auction licensing and says licensing online auctions ' for people who make a business of selling property for others ' will reduce Internet auction fraud, which has been on a steady upswing for several years.
Auctioneers, usually licensed professionals, overwhelmingly favor online-auction licensing, according to the NAA and other industry sources; on the other hand, online sellers and companies they use, with eBay the 800-pound poster-child example, generally oppose licensing for online auctions.
But as Internet connections and use have proliferated, more people are engaging in online auctioning and, as often happens when any activity that promotes a growing exchange of money and merchandise, fraud has become common. Most licensing proponents see licensing as a way to stem fraud, and to offer consumers some redress after being ripped off online.
Says NAA spokesman Chris Longly: 'With licensing, a person who feels he's been taken advantage of can file a grievance against the auctioneer, and have some redress for wrongdoing. Most states have a bonding requirement, and that's important, because we're not talking about just small items, like trading cards and that kind of thing. Auctions involve items like heavy equipment that is very expensive and that's important to protect against fraud, or even damage. When you deal with a bonded, licensed auctioneer, you know that you have an avenue to pursue a complaint, and you know that, with bonding, merchandise ' shipped or consigned ' is protected against damage or loss.'
The Latest Big-State Battleground
To gauge the threat of online-auction fraud, consider figures from just one populous state, Pennsylvania.
In 2004, 2,580 reports of Internet fraud from Pennsylvania were referred for investigation by the Internet Crime Complaint Center ('IC3'), a joint effort of the FBI and the non-profit National White Collar Crime Center.
Seventy-two percent of those complaints ' 1,857.6 ' involved Internet-auction fraud, a number that put Pennsylvania sixth on the most-Internet-fraud-reported list. The next largest Internet crime category in Pennsylvania was non-delivery of merchandise or fraud involving payment, which accounted for 15.2% of complaints, or about 390. Forty-six percent of online auction-related losses reported in Pennsylvania in 2004 amounted to $100 to $1,000, with the median loss at $250 (94.7% of victims were in this dollar range).
In 2005, Internet fraud crimes reported in Pennsylvania sprinted at a 60% increase, to 6,603, with 4,193 auction rip-offs, IC3 says. Auction fraud accounted for 63% of Internet crimes reported in Pennsylvania that year. Other categories saw increases, but not in significant percentages, and the median monetary loss was about the same as in 2004.
2006 statistics were similar, except for the number of online crimes reported ' 7,044; median loss related to online auction fraud jumped to $757.18.
Last year, Pennsylvania generated 6,494 complaints.
Nationally, the IC3 last year received 206,884 Internet-crime reports involving a record $239.09 million in losses.
Legislators Examine the Problem
The Pennsylvania General Assembly has been considering bills that would affect online auctions, including a bill that would require online high-volume sellers of others' goods to get a state auctioneer's license, the same license that motor-mouthed, gavel-swinging 'physical' auctioneers conducting auctions as their livelihood must obtain.
Senate Bill 908, introduced more than a year ago by Republican Sen. Rob Wonderling, a former high-tech think-tank president who represents a district in suburban Philadelphia, would exempt online sellers from auction licensing. In a letter to constituents and the people of Pennsylvania posted on his Web site, Sen. Wonderling wrote:
