eBay Fights State Internet Auctioneering Regulation
eBay Staff Member
Michelle Peacock states the eBay Community’s
to lawmakers across the country
When the state of Ohio enacted a law in February 2005 that extends licensing requirements to include traditional auctions conducted online or over the phone, it resulted in widespread confusion among eBay sellers as well as regulators.
The Ohio bill was the latest in a series of moves in state legislatures around the country aimed at extending state auction licensing requirements to the world of online auctions. These legislative moves could potentially affect the lives of millions of eBay sellers and are raising concerns across the country. To build awareness of how such proposed legislation could place costly burdens on eBay members' businesses, eBay's Government Relations team swung into action.
To help give our readers a better understanding of the issue, The Chatter team went to talk to Michelle Peacock, eBay's Director, Operations and State Government Relations. As Michelle has been spearheading eBay's efforts against this kind of regulation, she has been traveling the length and breadth of the country to get the eBay Community's perspective across to lawmakers. We found her as she was preparing to leave for Ohio.
The Chatter: Michelle, what is the role of Government Relations at eBay?
Michelle: eBay's Government Relations team helps support new laws that make selling and buying on eBay easier and safer than ever. At the same time, we also expend tremendous effort to fight proposed legislation that would make it more difficult for people to run an eBay business.
The Chatter: Can you give us some background on the recent legislative moves in several states that could affect the eBay Community?
Michelle: Certainly. Several US state legislatures are considering extending existing traditional auctioneering regulations to eBay auction-style listings as well. For example, in states like Tennessee, some regulators are attempting to extend existing auctioneer licensing requirements to eBay sellers. Other states considering similar regulations include California, Florida, Maine, Missouri, and Texas.
The Chatter: What are some ways in which the eBay Community, especially sellers, are likely to be affected?
Michelle: This kind of legislation has the potential to affect millions of eBay members, but it will likely hurt sellers and some Trading Assistants the most. Currently around 430,000 people in the US earn a substantial part, or even all of their income, by selling on eBay. Extending traditional auction licensing requirements to eBay sellers would endanger the livelihoods of all these thousands of people. Because many Trading Assistants have bricks-and-mortar facilities that serve as drop-off locations for eBay items, they are especially visible to groups, such as pawnbrokers' associations, lobbying to extend regulations to eBay sellers.
Such legislation would also impose additional burdens on every seller in terms of increasing the time devoted to managing their eBay sales and the amount of money spent in complying with the new regulations. Sellers would be forced to waste hours and hours of their valuable time and hundreds (or potentially thousands) of dollars for certifications and training classes to become licensed auctioneers and for ongoing compliance requirements.
The Chatter: There have been discussions on eBay's Forums about this issue, and many want to know what eBay's perspective is.
Michelle: Simply put, eBay opposes attempts to extend state auction licensing requirements to either eBay sellers or eBay itself. Since eBay and eBay sellers perform functions that are distinct from those of traditional auctioneers, they should not be subject to the same regulation and licensing requirements.
There is no evidence that imposing new regulations and licensing requirements on eBay or eBay sellers would provide any additional consumer protection. Instead, any new regulations would impose unnecessary costs and burdens upon buyers and sellers alike.
The Chatter: What are some of the key differences between how traditional auctioneers and eBay operate?
Michelle: While eBay transactions are commonly referred to as "auctions," there are several fundamental differences between traditional regulated auctions in the offline world and the online transactions that take place in the eBay marketplace. I'd like to contrast how eBay is different from traditional auctioneers:
Traditional auctioneers perform three key functions:
- They take possession of an item to auction it on the owner's behalf.
- They try to get the best possible closing price by exercising the right to accept or reject bids on behalf of their clients.
- They collect money from the high bidder and transmit it to the original owner after deducting their fees.
In contrast, eBay and other online marketplaces perform none of these functions.
- eBay never takes physical or legal possession of any item sold on our sites.
- eBay merely provides a platform on which buyers and sellers can transact. Since the process is completely automated, eBay does not exercise the right to accept or reject bids as a traditional auctioneer does. Instead, any bid from an eBay member that's higher than the previous bid on the listing is automatically accepted.
- eBay does not collect or transmit payment for the transactions on the site – sellers define their payment terms and conditions, using a wide range of available options.
Additionally, in legal and practical terms, eBay and traditional auctioneers have different structures for their transactions. While traditional auctioneers must keep an auction open as long as there are willing bidders, on eBay there is always an automated predetermined end time to a listing, no matter how many people may still want to bid. In addition, traditional auctions include mandatory escrow requirements to protect the original owner of the item up for auction. Such requirements make no sense on eBay since the eBay seller receives funds directly from the buyer.
The Chatter: How have the eBay Community and the general public reacted to these events?
Michelle: Obviously there's a lot of concern in the Community, and as awareness grows, many people are urging lawmakers to review the regulations. Fortunately, many lawmakers themselves are realizing that these regulations could seriously disadvantage their constituents, and e-commerce in general, and are moving to modify their bills.
Despite these encouraging signs, we still have a long way to go before the issue is resolved. There are a few legislators and regulators out there with strong vested interests in extending traditional auctioneering regulations to eBay sellers. These individuals will pose the greatest threat to the eBay Community.
The Chatter: What steps is eBay taking to rally support for its point of view?
Michelle: eBay's Government Relations team has been very active in taking our message to the people, and especially in helping lawmakers understand the wider ramifications of their legislative moves. We're engaging legislators in every state that has enacted such laws or is considering them. And I'm happy to report that the response from state representatives has been very positive. I think more and more representatives understand the importance of making changes to pending legislation or even withdrawing it altogether.
The Chatter: What can individual eBay members, who are concerned about these developments, do to contribute to the efforts?
Michelle: Everyone who's used eBay or other online auction Web sites should realize that they would be affected if this kind of legislation becomes more prevalent. Everyone should send a clear message to their state's elected representatives to express their concerns.
I strongly urge you to speak up by opposing legislation to regulate eBay or eBay sellers. You can look up your state representative by finding your home state in the list of state legislature Web sites. Please write to your legislator and express your views and concerns. For your convenience, we've prepared a sample letter that you may like to use. And please remember to send a copy of your letter to us. You can send it to firstname.lastname@example.org.
For more information on eBay's efforts to stay in touch with federal, state and international government activity that could affect your eBay business, please visit eBay's Government Relations pages.