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***mandy*** · 01-23-2006, 10:44 AM,

A bill (AB1178) that would require consignment sellers and auction drop off stores to be licensed was reintroduced in the California state assembly last week.

Full Assembly Documents associated with AB 1178 in the 2005-2006 Session:

http://www.leginfo.ca.gov/cgi-bin/postqu...er=ab_1178&sess=CUR&house=A&search_type=bill_update

Quote:SUMMARY : Provides for the creation of an electronic data
reporting system within the Department of Justice (DOJ) by
January 1, 2010, that will receive reports of tangible personal
property acquired by secondhand dealers and pawnbrokers and
specifies licensing fees that are to be used to fund the
creation and maintenance of the electronic data reporting
system. Specifically, this bill :

1)Expands the definition of "secondhand dealer" to include
auctioneers that take possession of the tangible personal
property and coin dealers that trade in tangible personal
property.

2)Exempts any person whose business is limited to the buying,
selling, or trading of secondhand clothing, or accepting
secondhand clothing on sale for consignment, from the
provisions of this bill if the person meets the following:

a) The person does not deal in furs, clothing ornamented
with precious stones or gems, or other similar clothing;
and,

b) The person has not been convicted of a theft-related
crime.

3)Exempts "trade show" operators and vendors from the provisions

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of this bill.

4)Excludes charities that receive tangible personal property as
a nonmonetary donation, participants at gun shows who are not
required to be licensed as a gun dealer, swap meet operators
or vendors, and junk dealers, from the definition of
"secondhand dealer."

5)Subjects any person engaging in the business of a secondhand
dealer or pawnbroker, as defined, to the following fees:

a) A fee of $295 for processing a license application;

b) A fee of $50 for the purpose of licensing enforcement
that may be assessed by the local licensing authority
(i.e., local law enforcement);

c) An unspecified fee sufficient to cover the cost of
conducting a criminal offender record information
background check on an applicant for a secondhand dealer or
pawnbroker license (currently this costs DOJ $32); and,

d) A fee of $175 for the biennial renewal of a license to
be paid to DOJ.

6)Provides that the fees specified in 5), above, shall not
increase at a rate greater than the legislatively approved
annual cost-of-living adjustment for DOJ's budget.

7)Creates the Electronic Data Reporting System Fund and provides
that license application processing fees and license renewal
fees shall be deposited in this account and used for the sole
purpose of implementing and maintaining the electronic data
reporting system provided for in this bill.

8)Adds tangible personal property that bears an identification
number, or that bears evidence of having had an identification
number, to the definition of "tangible personal property."

9)Adds jewelry, sterling silver, sterling silver utensils, and
precious metals, stones and gems to the definition of
"tangible personal property."

10)Provides that tangible personal property does not include the
following:

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a) Chattel paper, documents of title, financial
instruments, currency and money securities;

b) A business machine, as defined, that is taken solely for
repair and that is to be returned to the owner immediately
following its repair;

c) Goods acquired from outside the United States (U.S.) or
its territories and possessions; or,

d) Furniture, rugs, or used books.

11)Requires secondhand dealers and pawnbrokers to report any
tangible personal property they acquire in the U.S. by
purchase or trade, or that they accept for sale on consignment
or for auction, to local law enforcement until the Attorney
General (AG) has certified that the electronic data reporting
system is operational.

12)Requires all secondhand dealers and pawnbrokers to
electronically report every transaction involving the
acquisition of tangible personal property to DOJ via the
electronic data reporting system within 12 months from the
date the AG certifies that the electronic data reporting
system is operational (not to be later than January 1, 2010).

13)Requires the AG to maintain the information contained in
transaction reports from secondhand dealers and pawnbrokers
and provides that access to this information is limited to
state and local law enforcement agencies.

14)Prohibits any state or local agency from charging or
assessing a secondhand dealer or pawnbroker any fee, tax,
levy, license, or other assessment for reporting the
acquisition of tangible personal property.

15)Requires the AG to consult with local law enforcement,
representatives of secondhand dealers, and representatives of
pawnbrokers on or before January 1, 2008, to work towards
developing a standard, statewide format to electronically
transmit reports to DOJ.

16)Requires the AG to submit a report to the Legislature on or
before January 1, 2008, indicating progress made in the

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development and implementation of the electronic data
reporting system.

17)Provides that a person who advertises as a secondhand dealer
or pawnbroker shall be subject to the licensing and reporting
requirements of this bill and shall be guilty of a misdemeanor
if he or she so advertises without holding a valid license.

18)Provides that a district attorney or city attorney may bring
a civil action for any violation of provisions regulating
secondhand dealers, coin dealers, business machine dealers,
and pawnbrokers and that any civil penalties or fines
collected by a court shall be deposited with the county
treasurer in the county in which the court is situated.

19)Makes technical and conforming changes.

EXISTING LAW :

1)Defines a "secondhand dealer" as any person or entity taking
in pawn, trading, accepting for sale on consignment or for
auction, or auctioning, any tangible personal property, as
defined.
Defines a "pawnbroker" as a person engaged in the business of
receiving goods in pledge for security for a loan.

2)Requires secondhand dealers, as defined, and pawnbrokers to be
licensed by local law enforcement agencies. Licensure is
denied to any applicant with a history of property related
crime, and that denial lasts for a period of two years. The
law permits the local licensing authority and DOJ to charge an
initial processing fee, but does not specify the amount of
that fee. For licensure renewal, the local licensing
authority may charge an unspecified fee and DOJ may charge a
fee not to exceed $12.

3)Requires secondhand and coin dealers to hold for a period of
30 days any tangible personal property acquired before
disposing of that tangible personal property. Pawnbrokers
must wait for a period of four months before disposing of
tangible personal property that is acquired.

FISCAL EFFECT : According to Assembly Appropriations Committee,
DOJ estimates:
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1)The following one-time costs to develop the electronic
reporting system, which it estimates would require
applications from 10,000 licensees in order to fully offset
cost: $236,000 in 2005-06; and, 1.3 million in 2006-07 and
2007-08.

2)The following costs to operate and maintain the system, to be
offset by biennial license renewals and additional license
applications: $650,000 in 2008-09; $1 million in 2009-10;
and, $750,000 annually thereafter.

3)One-time costs of $320,000 over three years to process
fingerprint checks for the initial 10,000 licensees, fully
offset by $32 fees, with minor additional costs thereafter for
new applicants, and also offset by fees.

COMMENTS : According to the sponsor, the Collateral Lenders and
Secondhand Dealers Association, this bill will create a database
to track tangible personal property that law enforcement
agencies will be able to use to curtail the sale of stolen
goods, and the database will expedite the rapid recovery of
stolen property to its rightful owner. The sponsor also
contends that this database will help prevent sales tax evasion
in secondhand transactions and strengthen consumer protections
in the secondhand market.

The sponsor claims that a number of other states have created
reporting systems similar to the one provided for in this bill
and that this bill builds on SB 1520 (Schiff) Chapter 994,
Statutes of 2000, designed to establish a data reporting system
like the one in this bill. The sponsor maintains that despite
the passage of SB 1520, California still has an inadequate
reporting system that is primarily based on manual inputs of
secondhand dealer transaction data into the state's Stolen
Property Tracking Systems. The sponsor states that this bill's
intent is to make the electronic data reporting system a reality
so that the benefits of such a system may be realized.

The sponsor notes that many secondhand dealers have expressed
concern because they believe this bill will impose new licensing
requirements upon them; however, the sponsor cites a recent
Attorney General opinion (No. 04-1001), issued on April 6, 2005,
that clearly states that operators of Internet "drop off" stores
are required to hold a license as a secondhand dealer. Further,
the sponsor maintains that, while it is clear that any business

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dealing in secondhand tangible personal property is required to
have a license under current law, many of these businesses are
not in compliance. The sponsor argues that this bill does not
place new licensing requirements on any business and that it
merely clarifies existing law and provides for the creation of
the electronic data reporting system.

In support, the Los Angeles County Sheriff (LA Sheriff)
maintains that SB 1520 did not provide a funding source for the
data reporting system and, since its passage, plans for the
creation of the system have been in limbo. The LA Sheriff
asserts that this bill "seeks to correct this issue by creating
an appropriate funding structure for the implementation and
maintenance of this electronic database."

In opposition, the California Sate Auctioneer's Association
(CSAA) asserts that by adding the phrase "and who does not take
possession of the property" to the exemption granted auctioneers
under existing law, this bill will subject auctioneers to two
different regulatory regimes. As a result, CSAA states that
auctioneers would be subject to all the burdensome reporting and
the 30-day holding period requirements of pawnbrokers and
secondhand dealers as well as the provisions of the regulatory
program pertaining to auctioneers. Furthermore, CSAA argues
that auctioneers are not part of the problem with stolen
property that this bill is trying to fix. CSAA contends that
the primary venues for fencing stolen property, in addition to
pawnshops, are flea markets and swap meets (which are exempted
from this bill) because they dispense cash on the spot.

The California Coin and Bullion Merchants Association (CCBMA)
argue that this bill is "overkill of the first magnitude" and
that "it will seriously and adversely affect commerce in
California without providing any significant benefit in the
battle against traffic in stolen property."

eBay argues that this bill expands the pool of sellers subject
to the secondhand dealer law despite a lack of credible evidence
that Internet marketplaces, sellers, or "drop-off" stores are a
significant repository of non-recovered stolen goods. eBay
points out that sellers who use online marketplaces operate in
transparent venues that can be seen 24 hours a day, seven days a
week and that, as a result, such marketplaces are an undesirable
venue for the sale of stolen goods.

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This bill increases fees and imposes fees and requirements on
more business owners. Under existing law, the amount of the
licensure fee and licensure renewal fee for secondhand dealers
and pawnbrokers is left to the discretion of local law
enforcement, and DOJ is permitted to charge a fee not to exceed
$12 for licensure renewal. This bill provides for an initial
licensure fee up to $295, a license renewal fee of $175, and an
unspecified background check fee to be charged by DOJ. Local
law enforcement also may charge a licensing enforcement fee of
$50.

Furthermore, this bill extends the existing licensure
requirement to coin dealers and business machine dealers who
deal in "tangible personal property" and auctioneers who "take
possession of" tangible personal property. This extension not
only imposes fees upon business owners who currently are not
required to be licensed, but also imposes requirements upon
businesses that trade in tangible personal property. This
includes a requirement to hold tangible personal property for 30
days before selling, trading, or otherwise dispensing of it.

SB 1893 (Burton), of 2004, which died in the Assembly, would
have provided for the creation of the electronic data reporting
system within DOJ that would have been supported by licensing
fees on secondhand dealers, coin dealers, business machine
dealers, and pawnbrokers.

***mandy*** · 02-25-2006, 12:36 PM,

A related article:

Quote:California residents who sell goods on eBay could have to pay a $295 fee and be regulated in the same way as pawnbrokers under legislation designed to crack down on the sale of stolen property.

The legislation being pushed by the state's 700 pawnbrokers would replace a cumbersome paper-based system of reporting transactions of secondhand-property sales to local law enforcement with a statewide electronic database paid for by dealers.

Opponents say the bill would impose needless requirements on consignment stores, auctioneers, eBay trading assistants and the drop-off centers sprouting up to help consumers sell items on the Internet.

Creation of the database is backed by the state Department of Justice...

full article: http://www.sfgate.com/cgi-bin/article.cg...HEGIM1.DTL&feed=rss.business