We have discussed at length when an auctioneer needs to be an FFL; no, we didn’t transpose the words in our title. Today we ask, “When does an FFL need to be an auctioneer?”
The ATF licenses persons who “engage in the business” of selling firearms in the United States. A Federal Firearms Licensee (FFL) is such a licensee.
Auctioneers without this license routinely look for ways to avoid getting it, and still sell firearms. One of the common illegal “work-arounds” has been for the auctioneer to partner with an FFL when taking guns in on consignment and/or from multiple sellers. We discussed this illegal partnering here: https://mikebrandlyauctioneer.wordpress.com/2015/08/17/auctioneer-with-the-help-of-an-ffl/
A common specific “work-around” involves an FFL who has accepted firearms from one or more sellers who then brings those firearms to an auctioneer’s place of business (auction house or the like) to sell, and then takes all those “sold” firearms back to his [Federal Firearms] licensed location to distribute to buyers.
This circumstance involves lots of issues — and none of them are good. The pertinent questions include: (1) Who did the owners of the firearms sign a contract with to sell them at auction? (2) Who is marketing these guns, accepting payments and/or paying consignors? (3) Where exactly is this FFL conducting business?
The ATF in particular doesn’t consider these issues good either. It would appear to them that the auctioneer is “engaging in the business” of selling firearms without a license, and the FFL is conducting unauthorized business away from his licensed location — both violations of federal law.
Of course, FFL’s can conduct business away from their licensed locations if such involves a gun show or other qualifying event; however, auctions do not qualify as gun shows nor qualifying events. Relatedly, does the state require a license for this FFL to engage in the auction business?
For the auctioneer, the sole exemption allowing an auctioneer to sell firearms without having an FFL involves an onsite auction with a single seller who maintains control and possession of the firearms; more on that here: https://mikebrandlyauctioneer.wordpress.com/2016/08/27/how-does-auctioneer-ffl-licensing-work/. What we’ve described above is not an exemption.
Maybe a good rule of thumb for auctioneers would be that anytime there are firearms involved, and a “work-around” is being discussed, it’s not a good idea, and likely illegal. By the way, the penalties for “engaging in the business” of selling firearms without proper licensing involve substantial fines and even prison time, while initial licensing is only $200 and $90 thereafter for 3-year renewals.
Thus, maybe the best rule to remember — “no work-arounds.”
Mike Brandly, Auctioneer, CAI, 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 of Business, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.
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