LLR Report Clarifies Position on Deregulating Auctioneering

January 6, 2012

Investigative Reports

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AuctioneerThe S.C. Auctioneers’ Commission isn’t in danger of being dismantled – as was recommended by one state agency not too long ago – but the time is ripe for deregulating the industry, according to a recent report.

The S.C. Department of Labor, Licensing and Regulation, which oversees the board, believes the bar is set too high for entry into the profession, according to its 2012 Regulatory Report, released late last month.

“The negligible risk associated with most auctions and unavailability of remedies for significant auctions simply do not justify such a high threshold for entry and close regulation of the Practice,” according to a report signed by LLR Director Catherine Templeton.

The report looks at several other boards overseen by LLR, including the Board of Cosmetology, the Real Estate Commission and the Environmental Certification Board.

The report identified trades, occupations and professions that “potentially exceed the extent of regulation permitted by state law,” according to Templeton’s letter to Gov. Nikki Haley, dated Dec. 19.

“We believe the regulatory schemes identified are more restrictive than necessary to protect the health, safety, or welfare of the public,” Templeton writes.

LLR concedes that the state law for becoming a licensed auctioneer is one of the most stringent and restrictive in the country, requiring licensure both of individual auctioneers and of the firm that conducts the auction, participation in a recovery fund, and regular continuing education.

“Our basic guiding principle is that regulations exist to protect the health, safety and welfare of South Carolinians,” Austin Smith, a deputy director with the agency, told The Nerve.

Smith said that while LLR isn’t going to advocate for deregulation of industries or professions deemed by the agency to be over-regulated, it’s also not going to stand in the way of legislative efforts to repeal regulations, either.

The Auctioneers’ Commission licenses and regulates approximately 1,000 auctioneers in South Carolina.

To obtain an auctioneer’s license in South Carolina, an applicant must complete an 80-hour class and pass an examination. In lieu of an 80-hour class, an applicant may pass a test and complete a year-long apprenticeship. But if you want to auction merchandise online, all you need is a valid email address and you can be up and running auctions in minutes.

“In a struggling economy, this kind of business dynamic introduces the sort of economic opportunity entrepreneurs are desperate for, and demonstrates the opportunity to abandon outdated regulatory schemes when they lose relevance,” according to the LLR report.

Curiously, LLR’s emphasis on deregulation appears to represent an about-face for the agency from just a few months ago.

In 2007, LLR issued a white paper urging the “deregulation of the auctioneering profession and ‘sunsetting’ of the Auctioneers’ Commission.” LLR added that the public interest could be protected by increasing criminal and civil penalties for misconduct.

But this past October, when The Nerve called the agency about the white paper, which was available on the Internet, agency spokeswoman Lesia Kudelka said Labor, Licensing and Regulation was no longer recommending that the Auctioneers’ Commission be discontinued and the profession deregulated.

The white paper was then removed from the agency’s website.

Smith, the LLR deputy director, said the response given in October was likely the result of miscommunication within the agency, and that Labor, Licensing and Regulation’s position on the need for less regulation hasn’t changed over the past few years.

The responses provided to The Nerve in October related specifically to the white paper posted on the auctioneering website five years ago under the previous administration, Smith said.

“We felt it would be irresponsible to mindlessly adopt those recommendations. We subsequently finalized our own due diligence, already in progress in October, resulting in the 2012 Regulatory Report,” he added. “Ultimately, we came to a very similar conclusion as the 2007 report, insofar as it suggests that the General Assembly take a hard look at certain areas, including the Auctioneers’ Commission.”

The Auctioneers’ Commission is responsible for the administration and enforcement of the state auctioneers’ law, which establishes specific standards of conduct for practitioners, in order to protect the public. Licensed auctioneers pay $150 annually to the state. In addition, there is a $150 initial application fee.

Activities the commission attempts to protect the public from include: auctioneers knowingly using false bidders, who can be used to artificially drive up auction prices; the use of misleading or untruthful advertising; and engaging in dishonest behavior in connection with a sales transaction, according to the S.C. Code of Laws.

Jimmy Blocker, commission chairman, said in October that “overall” those within the profession have no problem with oversight.

“Everyone in the industry, except for a few crooks, thinks the regulation is good,” he said.

Auctioneers are unique among those regulated by the LLR in that their enterprise is a purely commercial one, according to the agency report.

“Where other professions may expose individuals or the environment to physical harm, those aggrieved by an auctioneer’s errors, omissions, or misdeeds can be made perfectly whole with a monetary remedy,” the report states.

“Moreover, many of the same risks of fraud or financial mismanagement cited by proponents of auctioneer licensing are present in any commercial transaction – yet other retailers are not subject to onerous professional licensure requirements,” it adds.

Reach Dietrich at (803) 779-5022 ext. 110, or kevin@thenerve.org.