FTC Staff: Consumers Benefit from Use and Availability of Online Auction Trading Assistants; Licensing Should Not be Required

In comments provided to the Louisiana State Senate, staff of the Federal Trade Commission’s Bureaus of Consumer Protection, Competition, and Economics and its Office of Policy Planning expressed their support for Senate Bill 642 (SB 642), which would “define more clearly the exact nature of the type of seller who must become licensed as an auctioneer” within the state. The legislation is particularly relevant to online auction trading assistants, or TAs, whose service include helping consumers sell items on online site such as eBay.

Based on its interpretation of current Louisiana Law, the Louisiana Auctioneer’s Licensing Board (LALB) recently began to require online auction house TAs either to have an auction business license or an auctioneer’s license to operate their business. In addition to the education and training costs, a TA must pay $300 for such a license currently and purchase a $10,000 surety bond.

SB 642 would change the statutory definition of “auction” to exempt TAs from the LALB’s licensing requirements. “Based on our experience, we believe that if enacted, SB 642 will enhance consumer welfare by reducing barriers to entry in the provision of online retail services and thereby expanding consumer choice,” the staff wrote in the comments. The staff comments continued by stating that, “We are not aware of any particular consumer protection problem with TAs in Louisiana, and it is unlikely that requiring TAs to become licensed auctioneers or licensed auction businesses will address the most serious fraud-driven complaints associated with Internet auctions – that sellers fail to send the merchandise.”

“This bill is good for consumers. By lowering the price for Louisianans to sell goods through online auction houses, this bill is likely to benefit consumers in Louisiana and elsewhere by increasing the online availability of goods from Louisiana,” said Maureen Ohlhausen, Director of the FTC’s Office of Policy Planning.

The Commission vote authorizing the staff to file the comments with the Louisiana State Senate was 5-0. The comments, which are now available on the FTC’s Web site, represent the views of the staffs of the FTC’s Bureaus of Competition, Consumer Protection, and Economics and Office of Policy Planning, and are not necessarily those of the Commission or any individual commissioner.

Copies of the document mentioned in this release are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. Call toll-free: 1-877-FTC-HELP.

(FTC File No. V060015)