March 6, 2008
Del. Dereck E. Davis
Chairman, Economic Matters Committee
Maryland General Assembly
Annapolis, Maryland 21401-1991
Subject: HB 1297, to prohibit the sale of certain goods via an internet auction
Scheduled for Hearing on March 6, 2008
Dear Chairman Davis and members of the Committee:
We write to oppose HB 1297, which would prohibit Maryland residents and businesses from selling common consumer items such as cosmetics, non-prescription drugs, food products, and baby formula on any internet auction.
While traditional retailers suggest that this legislation is a matter of consumer protection, it’s more accurate to view it as competition prevention. Namely, to prevent internet auction sites from helping Maryland consumers and businesses compete with traditional retailers in the sale of new or used food and drug items.
If the retailers were truly concerned about consumer safety, they would advocate a wider ban on sale of these consumer goods, including flea markets, websites with fixed price listings, and newspaper classifieds. Instead, HB 1297 targets only Internet auctions, perhaps because the websites of large sites like eBay will advise sellers against listing legally prohibited items. But eBay never takes possession of auctioned items, so they can’t verify what’s on the label of items listed by sellers.
Moreover, it’s nearly impossible for Maryland consumers and businesses to know which foods and other items are subject to labeling requirements of the U.S. Food and Drug Administration, since the FDA website has no easily accessible list of regulated items. Lacking a definitive list, Maryland sellers may assume that the state prohibits online auctions for any product whose label bears just a “fresh if used by” date stamp.
Consequently, Maryland sellers will be confused and discouraged from using internet auctions to sell excess inventory, liquidated freight, surplus goods, or unwanted gifts. These are items that Marylanders have legally acquired and are legally entitled to sell. But HB 1297 threatens Marylanders with convictions and fines for using online auctions, which can often generate the highest sale price for large lots. The effect would be precisely the kind of competition prevention that the retailers are seeking to accomplish with this legislation.
Another factor motivating traditional retailers to advocate HB 1297 is that large stores have a big problem with theft. But when retailers blame online marketplaces for organized retail crime, they don’t want you to know about the root causes of their theft problems. The National Retail Federation conducted its own study of the problem in 2005, and found that:
Most retail theft occurs from a store’s own employees and retail vendors. Shoplifting accounted for less than one-third of all theft.
Retailers have pursued fewer prosecutions, arrests, and invoked civil recovery laws less frequently in 2005 compared to previous years.
Retail theft is not increasing. The rate has generally declined over the years, and is 12% lower than it was just 4 years earlier.
If enacted into law, HB 1297 would impose extraordinary and discriminatory restrictions on Internet auctions and the thousands of Maryland consumers that use them every day. We respectfully ask that you therefore oppose HB 1297.
Thank you for considering our views, and please let me know if I can provide further information for your deliberations on this important issue.
Executive Director, NetChoice
cc: Members of the Economic Matters Committee
NetChoice is a coalition of trade associations and e-Commerce businesses who share the goal of promoting convenience, choice and commerce on the Net. NetChoice members include AOL, the Association for Competitive Technology, eBay, the Electronic Retailing Association, News Corporation, Oracle, VeriSign, Yahoo! and others. More information about NetChoice can be found at www.netchoice.org .