Hobby advocates call for action
- Published: Jun 10, 2015, 3 AM
Secondhand goods legislation passed in municipalities across the country that require merchants to gather extensive personal information from customers when making a transaction are causing problems for some businesses, hobby advocates report.
And it’s only going to get worse, says Kathy J. McFadden, executive director of the Industry Council for Tangible Assets.
“We need everyone in the dealer and collector community to be a part of ICTA to help us fight these type of laws,” she said. “We can’t do this alone nor can just a handful of dealers take on all the responsibility to finance the fight and do all of the heavy lifting.”
The latest casualty is Scott Nichols, owner of Chester’s Coins & Gifts in Ames, Iowa, where the Ames city council on May 19 passed a second-hand goods ordinance with little public notice.
Nichols closed his shop for 30 days while he assesses his next move, which will likely involve selling his location in Ames and possibly moving the business to another locality where there is no such ordinance.
The Ames ordinance requires business owners to file electronic reports for secondhand goods purchases into an online database, restricted to law enforcement access, called LeadsOnline.
The reports would include the seller’s name, date of birth, date of sale, description of the item, and a photograph of the item sold.
Under the ordinance, coin shops and similar businesses are now required to report all bullion purchases of $1 or more.
The personal information requirements will drive customers away who feel the request is an intrusion into their privacy, according to Nichols.
Ames’ law enforcement officials claim the ordinance is an effective tool for the recovery of stolen property.
The Ames Tribune has editorialized for the repeal of the ordinance, suggesting it is detrimental to local business.
Reporting laws are not restricted to local communities. State and federal regulations exist.
McFadden said federal laws on cash and broker reporting require a client to give at least a name and in some cases an address depending on how much and what is being purchased.
“I am sure there are many local laws that have these requirements,” McFadden said. “The Minnesota bullion coin dealer statute, the one ICTA has taken up the challenge to make changes, most definitely has that and much more. Pennsylvania has a couple of bills introduced in 2015 in their legislature.”
Among the legislation pending in Pennsylvania, according to McFadden, is PA S 799, a provision of which would require merchants to “keep records of all covered transactions, including name, age, birth date, and address of the seller, verified by proof of identity approved by the Pennsylvania State Police.”
Number of bills
McFadden checked StateNet for secondhand dealers and pawnbroker bills introduced in 201,5 and as of May 19, 10 such bills were introduced in states across the country.
“Some only address pawnbrokers,” McFadden said. “Most have not had a hearing or passed out of their committee of origin.”
Because of the implications and requirements of the Minnesota statute, at least one eBay seller, from Tennessee, posts in his online auctions that he won’t accept business from customers living in Minnesota.
California attorney Armen Vartian, who represents dealers and collectors on issues involving coins and other collectibles, says in many locations, including California, “pawnbrokers have lobbied to include coin dealers in the definition of ‘second hand dealer’ in order to level the playing field, in their minds, which they think favors coin dealers because [in those locations] pawnbrokers have to take identifying information about their suppliers and also hold on to goods for a period of time so the police can check whether the goods are stolen,” while coin dealers are not required to do the same.
Vartian said state and municipal legislators usually determine there’s a difference between coin dealers and pawnbrokers, “but apparently in Ames they didn’t.” Coin dealers and pawnbrokers are both regulated by the city ordinance.
“It’s annoying for coin dealers to have to take information about everyone who comes in with coins to sell, but some dealers who are also licensed pawnbrokers do this regularly,” Vartian said. “But having to keep coins in inventory for 30 days or more is a real problem” for coin dealers, since their livelihood may depend in part on selling bullion, the price of which can rise or fall quickly. In a falling bullion market, the price of a metal may fall during the period of time a the firm has to hold a purchased item under such regulations.
Nichols says he has been a professional numismatist full or part-time for the past 20 years, the last 11 from his storefront on Ames’ Main Street.
“I have been rewarded for serving the Ames community with integrity by a bill that in a large part treats me like a pawn shop,” Nichols said. “Pawn shop customers are typically poor. My clients are savers and investors. Buyers of silver and gold tend toward libertarian values. Some of these people will not want police having knowledge of their investment choices.”
With the Ames ordinance in place, Nichols said his customers have the option of traveling 30 miles away to Des Moines where professional numismatists are exempt from such restrictive record-keeping requirements.
“The [Ames] council wants me to try it and see if I like it,” Nichols said. “I told them if I try it and lose even one four-, five- or six-figure purchase opportunity that I will lose hundreds, thousands or tens of thousands of dollars in profits. I have great respect for my clients’ privacy rights and would rather go out of business or move to a neighboring town than put their name, address, date of birth, drivers license#, picture and description of and price I paid them on the internet.”
Nichols claims the Ames City Council and Ames Police Department drafted the ordinance “without a clue about me, my business, or my customers.”
“Most of them have never seen a gold coin or even heard the word ‘numismatist,’?” Nichols said. “They [council] passed it entirely on the police department recommendation.”
He added: “My business, which would be affected more than any other in town, was never considered as I don’t think most of them knew I existed. I got a copy of the bill only after it had passed the first time. None of them even paid a bit of attention until I decided to close.”
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