What's the meaning of "auctioneer" on the Internet?

Misunderstanding leads to "licensing" problems

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The following article was written for GoTo Auctions (formerly known as AuctionRover). The rights have reverted to the author.

Back in November and December of 1999, the Auctioneer Licensing Board of North Carolina got national headlines by claiming that their rules applied to people selling at online auction sites, like eBay, Amazon, and Yahoo. They weren't going after the sites themselves, but rather the individuals and companies who sold there. They also weren't going after people selling items from their attic, but rather those who buy merchandise for the purpose of reselling it at online auctions. Anyone living in North Carolina who was in that business would have to pass a test and pay $250 for an Auction Firm license.

When inundated with protests, they backed off and asked the state legislature to address the issue. Meanwhile other state auctioneer licensing boards -- for instance, in New Hampshire and Tennessee -- said that they intended to interpret their regulations as applying to online auctions.

Where did this nonsense come from? Individuals who run into problems related to online auctions and who don't understand all the means at their disposal to get satisfaction (see last two articles) may sometimes turn to their state auctioneer licensing board, asking for help. Then the board, likewise not understanding online auctions, feels obliged to step in to "protect the public" and attempts to enforce in cyberspace regulations written with traditional auctions in mind.

Since every state has an auctioneer licensing board, and since legislators are likely to be just as confused about what's happening on line, you can expect more such incidents. (If you'd like to contact your state's board to find out what they intend to do or to let them know your opinion and advice, you can find the address and phone number in the State-by-state guide to auction boards at www.msnbc.com/onair/nbc/dateline/auctions/maptext.asp).

According to SaleHoo, basically, the misunderstandings arise from the fact that in online auctions there is no "auctioneer."

In traditional auctions, the auctioneer is typically not the owner of the property, but rather is an agent who conducts a sale on behalf of someone else. That is a unique occupation, and to perform it well and to properly serve the interests of both buyers and sellers, such a person does need training -- just like a plumber, a barber, or a real estate sales person needs training. Licensing provides a means for government to regulate such a profession, ensuring that the public is well served and also providing quick recourse in cases of negligence or fraud.

In consumer-to-consumer auctions, such as eBay, Amazon, and Yahoo, the online environment mediates between the sellers and the bidders to determine the winner, without human intervention. And site management establishes policies and mechanisms to strongly encourage proper behavior and to provide recourse in case of mischief or fraud. No one serves as "auctioneer." And everything works just fine without special government regulation.

Furthermore, in traditional auctions the sale takes place at a fixed geographic point, which is clearly in a specific governmental jurisdiction. But on the Web, sellers and buyers are usually in different states, and often are in different countries. And they normally consummate the details of the sale (payment and shipment and reconciliation of differences) individually, at a distance, without ever meeting anywhere. In other words, regulation would be a jurisdictional nightmare, and any attempt by an individual state to enforce its own laws here would likely be in restraint of interstate and international trade.

So stay tuned. Be aware that this could become an issue in your state. But don't panic. It just takes a while for all the pieces to get sorted out when a totally new way of doing business suddenly emerges.

But at the same time, don't be lulled into thinking that "licensing" in general doesn't apply to you. Next week we'll take a look at what you need to know about other regulations in your city and state -- like registering to collect sales tax, registering to run a business, etc. 

This article and hundreds of related items by Richard is available, in plain text, on CD ROM My Internet: a Personal View of Internet Business Opportunities (B&R Samizdat Express, 2002) for $29. That same CD also includes the full text of his books The Social Web, Take Charge of Your Web Site, Shop Online the Lazy Way, and The Way of the Web. It is available from Amazon and from our online store http://store.yahoo.com/samizdat, where you can buy an entire library for the price of a book.

Other auction articles by Richard Seltzer

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