Rinker on Collectibles

RINKER ON COLLECTIBLES — Column #1550

The Erosion of Caveat Emptor

For the past several decades, the federal government, state governments, and judiciary have slowly chipped away at caveat emptor, the nearly impenetrable barricade auctioneers, dealers, and other sellers in the antiques and collectibles trade hide behind to avoid being accountable for the authenticity and claims made during the sale of objects. The legislative and judicial rulings that favor the buyer over the seller receive little notice in the trade. First, their impact is localized, often applying to one specific collecting category as opposed to the antiques and collectibles trade as a whole. Second, enforcement of the legislation and judicial rulings is extremely lax. Third, most individuals involved in the trade only care about an issue if it impacts them personally. The “good of the trade” is an oft-talked about principle but only in the abstract sense.

A case in point is a California law that amended Section 1739.7 of the Civil Code designed to combat fraudulent autograph and limited edition sales. Some background is necessary before discussing this amendment.

California, especially the Los Angeles area, houses some of the biggest fraudulent autograph and memorabilia mills in the United States. Kevin Nelson’s “Operation Bullpen,” published by Southampton Books in October 2006, documented not only the issue involving fraudulent sports autographs but presidential, celebrity, and a host of other fake signature material. In the 1990s, the Chicago Division of the Federal Bureau of Investigation began “Operation Bullpen,” a fraud investigation focused on fake celebrity and sports autographs. The San Diego unit started “Operation Foul Ball” in 1997. When the investigation ended, 13 forgery rings were dismantled. The FBI suggested that 90 percent of sports signatures were fraudulent. “Sports Collectors Daily” on March 1, 2013, ran an article by Kevin Nelson entitled “Operation Bullpen: The Case That Has Never Gone Away.” Phase III of Operation Bullpen now focuses on forged sports equipment and memorabilia.

Prior to its amendment, Section 1739.7 of the California Civil Code dealt primarily with sports related memorabilia. The law defined autographed as an object “bearing the actual signature of a personality signed by that individual’s own hand.” A collectible was “an autographed sports item, including, but not limited to, a photograph, book, ticket, plaque, or other sports memorabilia sold or offered for sale in or from this state by a dealer to a consumer for five dollars ($5) or more.” The definition of dealer was extremely broad—auctioneers and mail order, telephone order, or cable television sellers. The law required a seller to provide a detailed description of the object along with a Certificate of Authenticity (COA). The COA had to be in writing, signed, and include the date of sale. The seller was required to keep the COA on file for seven years. Further, “THIS DEALER MAY BE SURETY BONDED OR OTHERWISE INSURED TO ENSURE THE AUTHENTICITY OF ANY COLLECTIBLES SOLD BY THIS DEALER.” The bill also included a page of provisions setting dealer standards for those engaged in the sale of sports memorabilia at flea markets, baseball card shows, and other sale venues.

Until the current controversy over the passage of an amendment to this law, I was unaware of it. Why? First, if there was public outcry about the law in the sport memorabilia collecting community, I missed it. Second, it is a California law. To the best of my knowledge, other states have not copied it, albeit Illinois and New Jersey (homes to other large fraudulent autograph mills) should consider it. Third, since I do not collect sports autographed material, the issue was not on my radar screen. In fairness, I do own several sports autograph items. In every case, I watched the player sign them.

I understand the logic behind and need for the legislation. I cannot figure out how it became law. The simplest explanation is the disorganization inherent in the antiques and collectibles field. The trade is basically unorganized. Auctioneers and appraisers have national organizations, but their lobby efforts are limited. The collectibles industry, once well organized and a powerful group, is a shadow of its former self. Forget dealers. Put ten, even three, in the same room and disagreement is the order of the day. The antiques and collectibles trade has no spokesperson or group that effectively represents the industry as a whole.

Enter Luke Skywalker – Mark Hamill. The Force was with him when he convinced Representative Ling Ling Chang of the California State Assembly to introduce an amendment to Section 1739.7 that expanded the law to include all autograph material. According to the California “Legislative Counsel’s Digest,” the term “collectible” is redefined to mean “all autographed items, whether or not sports related….” Faster than a jump through hyperspace, the bill flew through the State Assembly, State Senate, and was signed by Governor Jerry “Moonbeam” Brown on September 9, 2016 and is scheduled to go into effect in January 2017.

Hamill’s intent was honorable. Celebrities and their fans have been victimized by autograph fraud from the advent of paper and pencil. This is not a 20th or 21st century issue. Unfortunately, the Chang amendment to Section 1739.7 of the Civil Code is not the answer.

How did this amendment get enacted into law in the first place? It is hard to imagine there was not one collector in the California State Assembly or the State Senate who did not foresee the broad ramifications this law would have on the antiques and collectibles secondary market. I exclude Governor Brown, who I suspect signed the law without reading it.

At the moment, the good news is that the law applies only to California sellers. The bad news is that the sale of autograph material by California dealers contributes substantially to the state economy. The law does not penalize the crooks. They will continue to practice their fraudulent endeavors. Instead, it creates a hardship for the large number of honest auctioneers, book dealers, and others who provide material to beginning and experienced collectors.

Forget the obvious – autographed material sold at antiques and collectibles auctions, flea markets, malls, shops, and shows. Consider these scenarios. First, a local bookstore invites an author to do a book signing. The cost of the book is over five dollars. The new law now requires the author as well as the bookstore to issue a COA that the signature is authentic. Each has to retain their copy for seven years. Second, participants in the San Diego Comic-Con want to have an artist sign a copy of one of his comic books. Is a COA need? Once the comic book is signed, its collectibles value is well over five dollars. Third, a public library is sponsoring a book sale.

Dozens of author signed books are among the books being offered for sale. Who on the library staff has the ability to create a COA? In the above three scenarios, it is highly unlikely that the author or staff are bonded, thus violating one of the law’s provisions.

In issuing a COA, the person signing it has to certify that the signature is authentic. Autograph authentication is not an exact science. Expert autograph authenticators are fooled on a regular basis. The average seller has no expertize to authenticate autographs, let alone most of the material he/she sells.

Section 1739.7 of the California Civil Code contains detailed provisions for the sale of “limited edition” memorabilia and the meaning of “mint condition” and express warranty, the latter negating any ability to hide behind caveat emptor. The full bill is available at: http://www.leginfo.ca.gov/cgi-bin/displaycode?section=civ&group=01001-02000&file=1739.7.

What happens next? California booksellers are leading the hue and cry about the impracticality of the legislation. Website URLs indicate little to no support from the trade outside California. The Rockies are a great barrier and not just geographically.

Unless opponents organize and find support within the State Assembly and State Senate, Section 1739.7 of the California Civil Code is a fait accompli. The antiques and collectibles trade needs to hold its collective breath and hope the plague on its house remains confined to the Golden State.

The current angst is “much ado about nothing.” Section 1739.7 of the California Civil Code is a “white collar” law. It is not high priority for any law enforcement agency, an enterprising young DA being the possible exemption. My best guess is that in six months the law will be essentially forgotten. It will be business as usual. California eBay sellers are likely to go unpunished if they violate the law. eBay is not a policeman.

I am taking a wait and see approach. Having stated this, I will not be singing “California, here I come” in the immediate future.

Harry L. Rinker welcomes questions from readers about collectibles, those mass-produced items from the twentieth and twenty-first centuries. Selected letters will be answered in this column. Harry cannot provide personal answers. Photos and other material submitted cannot be returned. Send your questions to: Rinker on Collectibles, 5955 Mill Point Court SE, Kentwood, MI 49512. You also can e-mail your questions to harrylrinker@aol.com. Only e-mails containing a full name and mailing address will be considered.

You can listen and participate in WHATCHA GOT?, Harry’s antiques and collectibles radio call-in show, on Sunday mornings between 8:00 AM and 10:00 AM Eastern Time. If you cannot find it on a station in your area, WHATCHA GOT? streams live on the Internet at www.gcnlive.com.

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