White Papers

Why Are Second-Hand Dealer Licenses Such a Big Deal?

David Singer is Director of Research Projects at Business Licenses, LLC. We recently met to discuss second-hand dealership licenses and their ramifications for retailers. The conversation has been lightly edited for clarity.

 

Q: Let’s start by defining the key term. What is second-hand dealing?

DS: The traditional model for a second-hand dealership is one in which a retailer purchases precious items, such as gold, diamonds, silver, and other treasures directly from the public. Think of those stores that advertise “WE BUY GOLD”. Pawn shops are the traditional model for this business, but they can take other forms as well.

Another example of second-hand dealerships is when a company travels from town to town and hosts events. They might show up and advertise in local papers and on television stations that the public can come find them at a hotel where they’ve rented space and sell their valuables. That’s also very popular.

Another, albeit less commonly discussed, model for second-hand dealership businesses is one that buys back general items, such as clothing, electronic devices, or books.

 

Q: Clothing and books don’t sound like “precious” items.

DS: If they have any value at all, then they are precious. I’m often advising retailers that purchase or trade ANYTHING to go through the process of considering whether or not they are second-hand dealers according to the law. They might fit and not know it. There are serious consequences to not having proper second-hand dealership licenses when you need them.

 

Q: That sounds ominous. What kind of consequences should people know about?

DS: You can be fined. Your store can be shut down. You can be led away in hand-cuffs.

 

The rest of this interview in which David Singer discusses three specific retailers and explains how they dealt with their second-hand dealership licensing issues, can be downloaded using the form on the right.