Escrow accounts and continuing education are not terms one usually associates with online auctions, but in at least one state, eBay Trading Assistants may soon be in for a rude awakening.
According to Terry Dunning, who sits on the Illinois Auction Advisory Board, "if you are selling goods for another (or others) on a commission basis in the state of Illinois, you need an auctioneer's license."
Illinois does not differentiate between those who sell via "live" auction and those selling online - the same auctioneer's license applies to both, according to Dunning. Obtaining that license means attending auctioneer's school, passing a test, paying a $200 a year licensing fee if your business is not incorporated, another $250 if it is.
Then there's the escrow accounts. Illinois requires that auction proceeds not be "co-mingled." If this all sounds familiar, perhaps it is from the previous article on this topic, located at http://auctionbytes.com/cab/abn/y05/m02/i25/s02.
The article stated, "Illinois, on the other hand, appears to be approaching licensing online auction sellers in a completely different respect and covering all the bases. The Illinois Department of Financial and Professional Regulation, Division of Banks and Real Estate (DBRE) filed their final rules needed to Register Internet Auction Listing Services (IALS) in 2004. These rules implement provisions of the Auction License Act (225 ILCS 407/10-27) and went into effect on September 16, 2004."
Apparently this section in the first article led to some confusion. This special section of Illinois "law" actually applies specifically to online auction entities such as eBay, according to Dunning, and thus, there are no schooling requirements. There are at least five or six companies so registered in Illinois, according to Dunning, including eBay and Overstock.
The Illinois Department of Financial and Professional Regulation, to whom the Advisory Board reports, confirmed that both eBay and Overstock were registered with their department. A spokesperson said, "there are seven active companies who have registered and there are several more pending." She would not reveal the names of the other IALS companies registered in Illinois.
At the time of this article's writing, this would appear to make Illinois the first state in the country to require an online auction giant such as eBay, located in California, to obtain a registration in another state in order to do business with buyers and sellers in that state.
However, Dunning added that "the Illinois sellers on eBay and the other online auction companies, if they are selling other people's goods, for a fee or commission basis, they have to obtain a regular Illinois auctioneer's license." He said this included any of the "drop-off" auction companies such as AuctionDrop.
Under "definitions" in the Illinois Auction Law, "Auction" means the sale or lease or property, real or personal, by means of exchanges between an auctioneer or associate auctioneer and prospective purchasers or lessees, which consists of a series of invitations for offers made by the auctioneer or associate auctioneer and offers by prospective purchasers or lessees for the purpose of obtaining an acceptable offer for the sale or lease of the property including the sale or lease of property via mail, telecommunications, or the Internet.
Those definitions also state: "Auctioneer" means a person or entity who, for another, for a fee, compensation, commission or any other valuable consideration at auction or with the intention or expectation of receiving value consideration by the means of or process of an auction or sale at auction or providing an auction service, offers, negotiates, or attempts to negotiate an auction contract, sale, purchase, or exchange of goods, chattels, merchandise, personal property, real property, or any commodity that may be lawfully kept or offered for sale by or at auction.
Dunning said the Division of Banks and Real Estate (DBRE), which licenses auctioneers in Illinois, was "just in the process of trying to compile the list of all those based in Illinois who are selling on eBay." He said, "according to eBay, there are at least 800 eBay Trading Assistants in Illinois."
He said due to a major budget crunch in the state, this could take some time, but added, "We will be contacting them. Then it will be - surprise! You need to get a license."
According to eBay spokesman Hani Durzy, "With regard to online auction registration requirements, Illinois is the only state in the nation that has such an obligation that has been tailored specifically to the online world, and we filed the necessary registration forms. Overall, we believe these laws are redundant and unnecessary. Neither eBay nor sellers on the site are auctioneers by the traditional and statutory definitions of the term."
The Illinois Dept. of Banks and Real Estate (which regulates IL auctioneers) has posted their online registration regulations for online auction companies like eBay, plus application, etc. at http://www.obre.state.il.us/REALEST/NEWS/IALSReg.htm
You can read all the provisions of the Illinois Auction Law, the licensing requirements and all matters related to auctions in Illinois at http://www.obre.state.il.us/REALEST/auctioneers.htm