Auctioneer Licensing – The Debate

December 25, 2011

There are currently 27 states that require auctioneer licensing. There is another 13 states that have some form of license requirements for particular types of property or may allow for cities or counties to license auctioneers.

Just as there are many questions about auctions, there are also a lot of pros & cons in the debate concerning whether an auctioneer should be licensed and what makes one an Auctioneer.

What makes one an Auctioneer?
In most licensing states, it primarily requires anyone that calls bids at a live auction to hold an auctioneer license. Of course, there are often exceptions, such as government entities, lien holders, charities, etc. However, while one might wonder why these should be exempt, this is primarily about those that conduct auctions as a profession.

Except for a couple of states that have recently passed laws regarding online auctions, there is no requirement for someone running an Online Auction to be licensed, as they do not call bids.

So, what is it about bid calling that should require one to have a license?
One might claim that it’s to protect the buyers from those that would use a shill bidder. That wouldn’t make sense, as shill bidding can be done in an online auction, as well. Then there are those charity auctions that use a volunteer auctioneer (who doesn’t have to be licensed), who doesn’t know that the organizers are shill bidding to drive the bids up, as they justify their actions because it’s for a good cause.

The Real Reason?
In the 1970’s through the 1980’s, many state auctioneer associations started pushing to enact such laws, as they proclaimed there were unscrupulous, fly-by-night auctioneers causing all the problems. Of course, some also felt that it would make them more “professional” to proclaim they were licensed, providing them a higher level of respect for their profession.

Then there are those that proclaim this was primarily about reducing competition by putting up barriers and making it more difficult for someone wanting to pursue the profession. This raised more concerns as auctioneer associations also pushed for auction school requirements (typically 80 hours, as that was already the standard class length amongst most auction schools in the country) and then annual Continuing Education requirements, which is now required by most licensing states.

Why should an Auctioneer be licensed?
Such laws have generally been drafted under the auspice that it is to protect the public. This may raise the question, what is the public being protected from and why do they need this protection?

Auctioneers are entrusted with other people’s goods and upon the sale of those goods, they are responsible for the money received and disbursing those funds to the rightful owners. This may be a very good reason to insure that these people are protected from some that may have less than honorable intentions.

On the other hand, there are already laws that protect people from such things. However, licensing boards are given the authority to discipline such auctioneers in violation of the law. The negative is that they may have no authority to discipline anyone that is not a licensed auctioneer. So, it would still be up to the District Attorney to take action against someone acting in an unlicensed capacity… like that volunteer charity auctioneer or a self-storage manager, real estate agent, bank officer, etc., that may not fully understand auction law, although everyone thinks being an auctioneer is so easy, a caveman can do it.

Now, consider that there are many other businesses that also handle other people’s goods and money, which do not require any licensing by any regulatory board. There are people that conduct Estate Sales (this is basically a garage sale handled by someone else), Consignment Shops, Online Auctions, Charities that utilize consigned goods (items that have a minimum to be paid to the consignor, with the remainder going to the charity) and many other examples of people that sell goods for others and responsible for disbursing the funds of the sale. None of these are required to be licensed and if there is a problem, it must be handled through the civil and criminal courts.

Considering all of this, there are also other requirements under most state auctioneer laws, such as:

  • Auctioneer Name & License Number must be present on all auction advertising.
  • Auctioneers may be required to maintain a separate Escrow bank account to prevent commingling of funds with their own business funds.
  • Auctioneers may be required to post bond or in other states, they are required to pay into a “recovery fund” (which is still a bond) administered by the licensing board.
  • And these are only a FEW of the various other requirements set forth under their state’s auctioneer laws. Almost none of these are required of similar professions that handle other people’s goods or dealing with buyers of those goods.

    So, many questions still remain, such as…

  • Why should auctioneers be licensed to protect the public, when the same public face the same potential problems with those of similar professions?
  • Should other professions also be licensed and bound by similar requirements?
  • Should Online Auctions be licensed and regulated? Why not?
  • – – – – – – – – – –
    Since the only comment was off-topic, comments have been closed. I’ll leave this open for comments for a while, but please keep the comments on topic. Off-topic questions or comments will be deleted, so if anyone has questions or comments regarding other auction related matters, please use the Questions & Comments page to post those concerns. Thanks

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    No Warranty Or Guarantees at Auction, EXCEPT…

    June 2, 2008

    I was presented the following scenario in the comments here

    Here’s a basic summary of the comments:
    I was recently duped into buying a painting supposedly from a valuable artist only to find out later that it was not. In this case, the auctioneer’s homepage posted all the items for sale and had the artist’s name and year the painting was done. The day of the sale, he said that he was told by a colleague that it was probably the work of the artist in question.

    When a buyer attends an auction, there are “Terms & Conditions” that the Auctioneer usually gives at the beginning, although they may also be posted in written form. In most cases, these Terms & Conditions have a statement such as, “All items are being sold “As-Is, Where-Is, with No Warranties or Guarantees Expressed or Implied.”

    Many Auctioneers think this gets them “off the hook” in case there is something wrong with the item, as buyers are also told to look things over and know what they’re bidding on. So, in this context, it appears that it rests solely with the buyer’s own judgment. And it Does… UNLESS, the Auctioneer makes a statement of the items’ condition, authenticity, value or other similar statement. Now, I know that there are some Auctioneers that may try to argue this point, but those are the ones that may find out the hard way… in front of a judge.

    As long as the Auctioneer says, “I’m selling this nice painting of a farm house by a lake” and you can see that it is just that, but you know there’s a small rip in the painting, then it is up to your judgment of value for this painting. Caveat Emptor, as the saying goes or “Let the Buyer Beware”, which means it is solely up to your own knowledge and judgment. If you didn’t notice the rip, and you’re the high bidder, it’s still YOURS, when the Auctioneer calls “SOLD.”

    But, what if it was a print and not a painting? What if the Auctioneer said it was by a particular artist and it wasn’t?

    My first question is, “Was the Auctioneer kidding around?”, as we all know that most Auctioneers may use a bit of tongue-in-cheek humor to entertain, as well as sell stuff. This would certainly be a gray area and may depend on the reaction of the crowd. After all, if it was picture of a mallard swimming on the lake and the Auctioneer referred to it as a Walt Disney Painting of Donald Duck, then it probably wouldn’t change anything… Yes, I know that’s the extreme, but more subtle forms of humor and conjecture may also be used and if most of the crowd knows better, then it may still be hard to hold him to his word.

    However, if you are bidding on something that has been held out to be much more valuable than it actually is, and the Auctioneer knowingly or not, tells you that it is “likely a Picasso”, then he may have a lot more problems trying to convince a judge that he was just “kidding around”.

    If the auctioneer states “I have a Picasso”, then it may be assumed to be genuine. However, if he says, “I have a painting that is signed Picasso”, then it is up to the bidder to determine if it is real, as he has not claimed it to be genuine. However, the wording of a statement can be difficult to ascertain what he may be implying. If in doubt, stop the auctioneer and ask… “Is this a genuine Picasso?”

    To state that a “colleague said that it was probably the work of the artist in question”, does not relieve the auctioneer from his obligation, as he is an agent of the seller. So, if the “seller” misrepresented the item, it may still be an invalid sale. To state “probably” is not necessarily a good defense for the auctioneer, as it may still be considered a misleading statement. I know that if I heard an auctioneer say “probably”, I am going to consider that it was not verified and unless I know that, it IS what it’s supposed to be, then I’m not going to bid very much (if I bid at all). But, that is not to say that you were not misled into thinking that it was an original… so, the actual wording of his statements may actually determine his liability.

    However, if the auctioneer stated something like, “A colleague said that it was probably the work of the artist in question, but I can not guarantee it, so please bid accordingly“, then he has basically left it to the bidders to decide for themselves, as to its’ authenticity. If I made such a claim, I would make sure everyone heard me, by repeating the “no guarantee… bid accordingly” and I may also add “I have not verified this”, just to make sure there was no misunderstanding by the bidders. It’s not unusual for a seller to bring something to auction, who is also misinformed about their goods. Often, the auctioneer is only repeating what he has been told by the seller, however it still makes both, the seller and the auctioneer responsible, should the item not be as the seller believed. This doesn’t make them bad people, just misinformed… but the seller should still be held to his claim. However, if either KNEW it was a fake, then it is a serious offense, as that gets into fraud and may be a criminal offense.

    As I previously pointed out, sometimes, it’s all in the way it is said and some bidders will try to use the line, “but I thought he said…”

    In these types of cases, it doesn’t matter what you thought he said, as it is each individual’s own responsibility for determining the authenticity and to pay close attention to the Auctioneer. If you only heard the part when he said “Picasso”, if you aren’t sure, then you should stop him and ask for clarification before bidding.

    Now, back to the original comment that was left. This Auctioneer posted this picture on his website and put the “Author’s Name” under it. This could clearly indicate to the consumer that he is claiming it to be authentic. Since this Auctioneer went on to say that “a colleague said that it was probably the work of the artist in question” is only putting additional authenticity to what was already published and he may actually be considered to be holding this out to be authentic. To put the “question” on the end of the statement may not get him off the hook in this case, without further statements to make clear that he is not sure of the authenticity that was previously claimed on the website. If I had an interest in this item, I certainly would have stopped the Auctioneer and questioned his “appraisal” of the painting. If he continues to assert that it is was probably authentic, then he would likely be held to a guarantee that he has just expressed, otherwise he may be found to have violated FTC laws for fraud.