As a born-and-raised resident of Louisiana, I am well aware of my state's unique quirks and its, shall we say, checkered political past. Here in Louisiana, alligator is considered a delicacy, counties are referred to as parishes, and our complex legal system is based not on English common law, the way it is in the other 49 states, but on the Napoleonic Code. Suffice it to say that we often march to the beat of a different drummer.
Nevertheless, I'm still a little puzzled by my state's controversial battle with online auction king eBay
According to the licensing board, most of Louisiana's 1 million registered users are exempt from the requirements. Those cleaning out the garage, finding a vintage "LSU Tigers 2003 National Champs" pint glass, and then unloading it on eBay for a few extra bucks should be in the clear. Instead, the law specifically targets so-called "trading associates," or those who charge a fee to list items on behalf of third-party owners. There are an estimated 460 such middlemen currently operating statewide.
This confrontation has been going on since last year, but it apparently heated up last week, when eBay fired back a provocative letter to all of the state's registered sellers, warning that anyone selling more than two items annually could be at risk for potential regulatory hassles. While that degree of oversight is unlikely, there is still a great deal of uncertainty. To clear up the confusion, a state senator from south Louisiana (with the aid of an eBay lobbyist) has introduced a bill that will define exactly what constitutes an auction.
To be sure, Louisiana is not the only state interested in regulating eBay's vast marketplace. States from Tennessee to California have contemplated laws of their own, and last year, Ohio passed legislation that went so far as to require sellers to pass oral and written auctioneering exams -- or face possible fines and jail time. While these acts might earn a standing ovation from rabid consumer advocate Ralph Nader, are they really necessary?
Anyone who has completed a transaction on eBay probably understands that the company's proprietary feedback-based rating system is an effective safeguard to prevent fraudulent users from taking advantage of unsuspecting customers. Though a few isolated problems are inevitable, the system generally ensures that both buyer and seller are reputable.
Regardless of whether state regulatory agencies are overstepping their jurisdictional bounds, the heightened scrutiny raises a number of questions. I could be wrong -- it wouldn't be the first time -- but isn't eBay itself technically the auctioneer on items sold on its website? And what about "Buy It Now" fixed-price listings, which represent nearly one-third of all items purchased on the site? Finally, will watchdog groups be equally vigilant with respect to smaller auction sites such as Overstock.com
Should state governments treat "drop-off" eBay consignment locations like any other profit-seeking retail establishment? Sure. Should they go out of their way to hinder interstate commerce and discourage the business practices of nearly half a million Americans who earn the bulk of their income on eBay? Absolutely not.
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Fool contributor Nathan Slaughter has to physically resist the temptation to buy baseball cards on eBay. He owns shares of Overstock but none of the other companies mentioned. The Motley Fool has a disclosure policy.
