We recently wrote about the right for an auctioneer/seller to refuse to accept cash for purchases. That analysis here: https://mikebrandlyauctioneer.wordpress.com/2020/12/29/can-an-auctioneer-refuse-cash/. Today, we wonder if an auctioneer could refuse any payment method other than cash. In other words, can an auctioneer accept only cash?
The answer to this question is an absolute — yes. In fact, we just completed five (5) auctions (in a rural part of Ohio) in late 2020 where we only accepted cash. Our reason? No chance of credit card chargebacks, no bad checks, no processing fees … although the risk of counterfeit money which we checked for as it was turned in to our cashier.
A few bidders who didn’t know of our policy were alerted to a nearby (500 feet) ATM where they could use their debit or credit card to secure some cash. All appeared fine with that policy especially after realizing our advertisement for these auctions noted, “cash only.” Maybe bidders don’t read terms and conditions?
Certainly, we were mindful of the current Coronavirus pandemic. We took precautions including mandatory masks, distancing, and hand sanitizer. The auctions went smoothly and we had good return crowds (and new bidders) at each subsequent auction, coincidentally one night when many had online auctions fail: https://mikebrandlyauctioneer.wordpress.com/2020/12/23/no-auction-is-safe-from-disaster/.
Outside of real property closings, we accept cash at all our auctions and consider such a good service for our buyers (as well as our sellers,) especially for those without checking accounts and/or debit/credit cards. There is little doubt some people can only pay cash or otherwise not participate as a bidder.
Can auctioneers conducting online auctions accept cash? They can — especially if the buyers are close by and can combine paying that cash when they pick up their purchases. For live auctions, accepting cash is more-or-less standard practice.
In regard to counterfeit bills, the higher the valued the bill, the more risk of it being counterfeit. It’s good to have a policy regarding which bills ($50 or higher, $20 or higher) are checked with a counterfeit pen or another detection device. As well, it’s always good to count all cash twice for accuracy. For buyers, invoices indicating, “paid in full” are important.
As well, some sort of portable locked box or bank bags should be used, stored out of sight, and deposited or taken home accompanied by a trusted employee, police officer, deputy sheriff — or maybe even a private security officer. In fact, since the auction is advertised as “cash only” it’s probably prudent to have a police officer or the like on-site for the entire auction event and/or checkout.
When I first worked for Jack B. Smith, Auctioneer in Columbus, Ohio he would regularly have a considerable amount of cash at the end of any auction, and following the auction he would have a Columbus police officer accompany his wife Gloria to the bank to make that deposit — a very wise policy.
There are some reporting considerations for auctioneers accepting cash, as well as cashier’s checks, bank drafts, traveler’s checks, and money orders. We noted this requirement regarding the IRS Form 8300: https://mikebrandlyauctioneer.wordpress.com/2020/02/27/auctioneers-irs-form-8300-reporting/.
I’m not suggesting it’s prudent for any auctioneer to only accept cash and no other payment types. I am saying that an auctioneer may only accept cash, but it appears prudent to accept a variety of payment methods in order to maximize the bidder pool and thus the seller’s net proceeds.
Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, RES Auction Services, and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, and an Instructor at the National Auctioneers Association’s Designation Academy and Western College of Auctioneering. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.
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