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California Just Made It Harder to Sell Your Signed Books and Art: Deep Dive

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AB 1570: Collectibles: Sale of Autographed Memorabilia

A terrible law could affect anyone in California who buys or sells autographed items.

A lot has changed since this was written. See this post for the latest thinking on the issue.

This well intentioned law, aimed at reducing forgeries in the sports and entertainment memorabilia industries, has invaded the privacy of the very consumers it aims to protect. It also exposes those very same consumers to civil damage claims for failing to fill out a form correctly.

The law also requires thousands of California businesses to retain seven years’ worth of records for items costing as little as $5. Even in a Democratically controlled state, this kind of paperwork seems excessive–and this bill was written by a Republican, Ling Ling Chang of the 55th Assembly District.

AB 1570:
Bad for Privacy.
Bad for Collectors.
Bad for Art Galleries.
Burdensome for Business.
Bad for Antiquarian Booksellers.

[Update 10/12/16: After a long conversation with a member of Ms. Chang’s staff, I revised the headline from “will affect anyone” to “could affect anyone.” The latter is more accurate, although I stand by my contention that as written, owners of autographed material will often not know if their privacy is at risk when selling signed items.

[Update 10/13/16: Bill’s author to write a letter indicating that the law was not intended to apply to general bookstores or author signing events. ]

[Update 10/13/16: In which we offer proposed changes to AB 1570]

Privacy
The law requires Certificates of Authenticity (COA) for all autographed items sold by dealers. Item 8 (of nine elements of the COA) requires the seller to “Indicate whether the item was obtained or purchased from a third party. If so, indicate the name and address of this third party.”

The people who drafted this law, the unanimous state Assembly and state Senate that passed it, and the governor who signed it never considered that buyers of autographed material often end up selling their autographed material. One aim of the law is to ensure that a collector’s investment in signed items is protected by guaranteeing authenticity.

But no collector who sells a signed item wants her name and address to go on a COA, yet that’s exactly what this law requires.

That’s an invasion of privacy, and it’s not safe. A COA and smart phone mapping app provide thieves a literal driving directions to collectors’ houses. Once the name and address is on a COA, the dealer issuing the COA has no control over what happens to it. The COA could be scanned and posted on eBay the next day for anyone with an Internet connection to see.

This requirement doesn’t just affect collectors.

Virtually everyone in California has signed items in their possession. Books bought at a bookstore author event. A framed print bought from a street artist on vacation. A small sculpture picked up at during an Open Studios event. All of these items are signed. To quote the California Legislature’s own attorney, AB1570 covers “all autographed items.”

I own a new and used bookstore. If you come in to my shop and sell me a signed used book, say a copy of my wife’s The Drunken Botanist, which I price at $9.98, starting next year I will be legally required to give your name and address to the person I bought it from. If you sell that signed vacation print at a yard sale, and the buyer happens to be a dealer, then she has to put your name and address on her COA when she sells the print.

The law has no provision exempting inventory that booksellers and art galleries already have in their possession. My attorney has advised me to have people who sell us books sign a waiver, notifying them that their name will go on a COA. As for people who previously sold us signed books (even $6.95 paperbacks of with no value assigned to the autograph) and their expectation of privacy? Well, if state law requires you to publicize their name and address, you have to do it, my attorney counsels.

The law is even worse for people who want to sell at auction.

Here’s a true story. A few years ago I was at a dinner party. I wandered around looking at the paintings on the wall. One of them struck me as interesting. I asked my host about it. “Oh, that’s just something my husband picked up in Paris fifty years ago,” she said. I went home, looked up the artist in an auction database, and sent my host the results. Within a week, the painting had been consigned to an auction house, where it sold for $100,000.

Under this new California law, my host would have to issue a Certificate of Authenticity to the buyer, guaranteeing the authenticity of the painting.

According to the law, “Any consumer injured by the failure of a dealer to provide a certificate of authenticity containing the information required by this section, or by a dealer’s furnishing of a certificate of authenticity that is false, shall be entitled to recover, in addition to actual damages, a civil penalty in an amount equal to 10 times actual damages, plus court costs, reasonable attorney’s fees, interest, and expert witness fees, if applicable, incurred by the consumer in the action.”

But wait, you say, that only applies to dealers. Your host, an average person who just happened to get lucky at a Paris flea market in the 1960s, isn’t a dealer.

You would think that, but incredibly this law specifically states that a “Dealer includes an auctioneer who sells [signed items] at a public auction, and also includes persons who are consignors or representatives or agents of auctioneers.” That means that anyone who sells anything signed for $5 or more at an auction in California has to provide a Certificate of Authenticity or risk 10x damages. That means my host’s $100,000 windfall would be a potential $1 million liability beginning in January.

Booksellers & Art Galleries
This law was backed by the Star Wars actor Mark Hamill, and it extends a law governing sports collectibles that has been on the books for a number of years.

I can sympathize with Mr. Hamill, who as a consequence of fame is pursued by professional autograph seekers who sell whatever they can get him to sign. His fans are plagued with vast numbers of forged Mark Hamill collectibles. In a real service to his fans, he spends a lot of time on Twitter authenticating autographs, many of which are fake.

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AB1570 was written to regulate the Hollywood autograph mills and the sport collectibles market. In the process, it roped in the book trade and art galleries.

With the exception of a small number of very famous authors (Stephen King, J.K. Rowling) and a tiny number of reclusive writers (J. D. Salinger, Thomas Pynchon), most of the autographs applied to books at the hundreds book signings going on every night around the country, are virtually worthless. Before you could tweet at or “friend” an author, you could go to a bookstore and meet the author while she was on tour promoting her latest book.

After January 1, 2017, those signed items may have to be accompanied by a COA, if the bookstore doesn’t want to open itself to ten-times damages. To be fair, most bookstores are probably exempt from the law because they don’t meet the “dealer” requirement in the law.

To be covered by the law, a business must be “principally in the business of selling” signed items or “having knowledge” of autographs. The independent bookstore or Barnes & Noble in your town probably doesn’t meet that definition. But there are exceptions.

[Update 10/13/16: The American Booksellers Association reports that the bill’s sponsor, Ling Ling Chang, will write a letter to the legislator clarifying her intent that the law does not apply to general bookstores or author signings. The following section therefore may not apply (one of my attorney’s opined that such letters have no force of law).

***** This section may no longer apply ******

Consider Book Passage, one of the most vibrant indie bookstores in the country. The store holds 500+ book signings each year and is a key stop on any author’s book tour. These free literary events make Book Passage a cultural center in the Bay Area. Author-signed books make up a big part of their business.

Bill Petrocelli, the co-owner of Book Passage, is a practicing attorney (and novelist, as if he weren’t busy enough). He read AB 1570 and is very concerned that the law could be applied to his store because signed books are such an important part of his business. I am quoting here from an email he sent his assemblymember:

It may be that some bookstores will continue to provide events in which writers sign books for their readers as part of their appearance, but under this law the store could be acting at its peril. If the beleaguered store owner guesses wrong about the complicated reporting or other requirements, he or she could be financially ruined for even an innocent mistake. This is not an exaggeration. The penalties imposed by the law are way out of proportion to any possible harm that the bookseller might do… Those kinds of financial rewards could encourage a whole business of frivolous lawsuits against vulnerable booksellers.

I assure you, dear reader, that Bill Petrocelli has no political axe to grind. There is no gain here. Lots of money is being spent on lawyers by booksellers and bookseller organizations; time is being wasted in meetings; and in my writing all of this down. We have nothing to gain, but are legitimately concerned by what we have to lose.

Consider this scenario: Neil Gaiman goes to Book Passage next spring, when his book, Norse Mythology, comes out. Mr. Gaiman could sell 1,000 copies, if his signing arm holds out that long. That would be $25,950 for the store, which decides not to issue certificates of authenticity, in part, because it doesn’t want to keep 1,000 identical copies for seven years.

An enterprising attorney sees an opportunity and files a class-action lawsuit against Book Passage, claiming ten-times damages. That’s potentially $300,000, when attorney fees and other charges are added in. In short, a big enough sum to result in a settlement of $30,000 or $50,000. Or an attorney could sue on behalf of all customers of the store who bought signed books without COAs. That could easily be millions of dollars in potential damages.

The Americans with Disabilities Act (ADA) has a similar enforcement mechanism and frivolous lawsuits became so common that the California legislature passed a law to make them more difficult to file. There is little reason to believe that AB 1570 won’t generate similar suits, especially since the damages are potentially much higher than ADA lawsuits. [On a personal note, I think most businesses should do more to support their disabled customers].

***** End of section that may not apply, based on the opinion of the bill’s author *****

Eureka Books
My bookstore, Eureka Books, has been a fixture in Old Town, Eureka, for nearly 30 years. We even made the Huffington Post’s list of 10 Bookstores That Will Stop You in Your Tracks. We are not a typical bookstore. We sell new, used, and rare books. We are members of the leading organizations of antiquarian booksellers, the ABAA and IOBA (we are also members of ILAB, the NCIBA and the ABA – hey, we’re joiners).

According to the ABAA’s counsel, since expertise is a requirement of admission to the organization, we are considered experts under the law, and therefore must provide COAs for all signed items priced over $4.99. That means everything from local artist greeting cards priced at $5 to $5000 signed first editions. In the last 12 months, we have sold 965 signed books by one of the store’s co-owners, Amy Stewart. In 2017, we will have to issue COAs for every one of Amy’s books that we sell (she signs them all, which is part of why we sell so many). This is no small burden, not to mention a real waste of paper.

Art Galleries
Virtually everything any art gallery sells will be covered by this law. Most artists sign their work. And art, being more valuable generally than books, presents a much bigger target for potential lawsuits.

California Civil Code already requires COAs for art “multiples”, that is art in editions, such as signed and numbered prints or photographs. Those regulations require information about the edition aond artist’s signature to be provided at the request of the buyer. Code section 1744.9 provides protection to consignors, transferring the onus of providing the required information to the seller. The code does not call for damages for the failure to provide a COA. Selling fake merchandise is not covered by the law as it is covered by many other consumer protection statutes.

AB 1570 does not supersede the existing art laws, it adds to them. In addition to COAs conforming to Civil Code sections 1742-1744, art dealers must also comply with AB 1570. Double the bureaucracy, with none of the consumer privacy protections of the existing law.

Bad for Business

AB 1570 is not just bad for business because it requires seven years of paperwork for $5 items.

It is not just bad for business because it forces businesses to violate the privacy of people who sell them signed items.

It is not just bad for business because it deters California dealers from selling signed items to avoid the strictures of the law.

It is fundamentally bad for business because the law actually promotes fraud.

That is a strong statement, but hear me out.

First, this law only applies to legitimate dealers. The more respectable you are, the more paperwork and bureaucracy you face. Businesses that claim no expertise in signed items and individual sellers on eBay or at flea markets are not covered. They do not have to provide certificates of authenticity. They aren’t subject to 10 times damages. Pawn shops, incredibly, are allowed to sell forgeries as long as they make no effort to authenticate the item (A pawnbroker is exempt “provided that the pawnbroker does not hold himself or herself out as having knowledge or skill peculiar to collectibles”).

Second, there is no reasonable way to link a COA to most signed items, unless it is part of a signed and numbered edition. Legitimate COAs from legitimate sellers can be paired with forged items with impunity. Let’s say I issue a COA for an authentically signed first edition of The Grapes of Wrath, by John Steinbeck. Years later, a thief acquires the COA (which will probably stay with the book and can easily by stolen from a collector, subsequent bookstore, or auction house), forges Steinbeck’s signature, and includes my COA with it. When the unfortunate buyer realizes he’s been duped, who will he come after? The forger will be long gone. I’ll still be in business and hard-pressed to prove that my COA wasn’t for the book in question.

Finally, the law is very paper-oriented for a 21st century piece of legislation. There is no provision for digital COAs that could, one day, uniquely identify signed items and provide consumers the provenance and authentication the law is intended to achieve. (“The certificate of authenticity shall be in writing, shall be signed by the dealer or his or her authorized agent, and shall specify the date of sale.”)

[Shorter post ….. Reply to Seattle Review of Books ……. ]