Specifies auction requirements

2 Co-sponsors

• Ruth Hassell-Thompson
• Bill Perkins

BILL NUMBER:S230

Title of bill

An act to amend the general business law, in relation to auction requirements

Purpose

To increase transparency and disclosure in the auction process beyond the borders of New York City.

Summary of provisions

The bill requires that an auctioneer be held responsible -- to the extent practicable -- for making a good faith effort to ensure the accuracy of statements contained in any catalogue, as of the date of the catalogue's initial publication.

* The consignor must show that he or she has complete and lawful right, title, and interest in property being auctioned.

* It must be disclosed if an auctioneer or auction house has any interest in an article being auctioned.

* The existence of a "reserve price" must be disclosed to the audience.

* It must be disclosed if an auctioneer extends a loan to a purchaser.

* Detailed information must be provided about any jewelry being sold.

* Each auction sale must be advertised at least once in the seven days preceding the auction.

* Prospective purchasers must be allowed to inspect articles for sale.

* Checks must be sent to anyone entitled to proceeds of a sale within 14 days, unless a written agreement stating otherwise has been established.

* Except to implement the reserve price no auctioneer, consignor etc. shall make a bid unless their status as someone with inside information has been disclosed.

* If the reserve price is not bid, the auctioneer may withdraw a lot from sale.

* An auctioneer may not offer more than one article for sale at any time unless combining of articles/lots is indicated prior to the initial bid.

* An auctioneer may not offer an article contained in a carton or package unless it is announced that the bidder can reject the item upon opening such package.

The following types of auctions are exempt from the provisions of this bill: livestock, thoroughbreds, highway equipment, automobiles, and self-storage spaces.

The provisions of this bill will be enforced by the Attorney General's office.

Existing law

State law does not currently regulate the use of manipulative bids and practices by auction houses.

Justification

The genesis of this legislation was an IS-month investigation by Assembly Member Richard Brodsky into art market practices, followed by a hearing and many meetings with art market participants.

During the investigation, it came to light that auction houses had periodically engaged in deceptive practices as a means of obtaining bids that would meet and/or exceed the reserve price, Witnesses testified that these practices served to undermine confidence in the art market, and that such bids should be prohibited. This bill does exactly that, In addition, testimony suggested that prices were sometimes artificially inflated, in part due to a lack of transparency, which served to distort the market and disrupt operation of a vibrant, healthy and profitable marketplace. This bill addresses those concerns.

By expanding several aspects of the successful auction regulation program that exists in New York city to many counties in the rest of the state, this bill will help ensure that there are no easy loopholes to avoid the stricter rules that currently apply only in New York City.

Legislative history

2012: Referred to Consumer Protection 2009-10: S.4313D (Squadron) - Passed Senate A.1730D (Brodsky) - Passed Assembly 2007-08: A.2442 - Passed Assembly 2005-06: A.3514 2003-04: A.1254 2001-02: A 1317 1999-00: A 3847 1997-98: A.536 1995-96: A.284 1993-94: A 1249

Fiscal implications

None.

Local fiscal implications

None.

Effective date

This bill will take effect on the sixtieth day after it becomes a law.