Louisiana Makes It Illegal To Use Cash For Secondhand Sales

http://www.techdirt.com/articles/20111019/17424316421/louisiana-makes-it-illegal-to-use-cash-secondhand-sales.shtml

by nextparadigms • 15 years ago

29 43 15 years ago

hugh34• 15 years ago

The law applies to 'second-hand dealers', and it's not clear whether this term is defined. Does it only apply to professional second-hand dealers, or to anybody selling anything?

jshort2• 15 years ago

I would hope that it applies to everyone or the law would be miss a portion of the illegal activity they are attempting to capture. Criminals will probably still operate in cash and those that are law-abiding now have to go through the hassle of documentation.

JoeAltmaier4• 15 years ago

So, the criminal is going to be caught because they documented their illegal activities?

I think this is a case of a law that catches only the innocent.

pmh• 15 years ago

It's defined in §1861(A)(1) as "Anyone, other than a nonprofit entity, who buys, sells, trades in, or otherwise acquires or disposes of junk or used or secondhand property more frequently than once per month from any other person, other than a nonprofit entity, shall be deemed as being engaged in the business of a secondhand dealer."

The law seems targeted at pawn shops and the like, but is broadly worded enough to apply to some random person buying stuff off of Craigslist.

raganwald• 15 years ago

In the Spring and Autumn, many sports nuts go through a flurry of second-hand sales and purchases. I’m selling a couple of pairs of mountain bike tires right at this moment, so if I were in LA, I would break the law if I accepted cash for a $25 pair of tires.

Nice!

ajkessler3• 15 years ago

It's defined in section 1861:

Every person in this state engaged in the business of buying, selling, trading in, or otherwise acquiring or disposing of junk or used or secondhand property, including but not limited to jewelry, silverware, diamonds, precious metals, ferrous materials, catalytic converters, auto hulks, copper, copper wire, copper alloy, bronze, zinc, aluminum other than in the form of cans, stainless steel, nickel alloys, or brass, whether in the form of bars, cable, ingots, rods, tubing, wire, wire scraps, clamps or connectors, railroad track materials, water utility materials, furniture, pictures, objects of art, clothing, mechanic's tools, carpenter's tools, automobile hubcaps, automotive batteries, automotive sound equipment such as radios, CB radios, stereos, speakers, cassettes, compact disc players, and similar automotive audio supplies, used building components, and items defined as cemetery artifacts is a secondhand dealer. Anyone, other than a nonprofit entity, who buys, sells, trades in, or otherwise acquires or disposes of junk or used or secondhand property more frequently than once per month from any other person, other than a nonprofit entity, shall be deemed as being engaged in the business of a secondhand dealer.

hugh34• 15 years ago

So (and my eyes glazed over that huge list of objects) the threshold is "more than once a month"? That sounds... far too broad.

JoeAltmaier4• 15 years ago

Legal tender is a form of payment, defined by law, which must be accepted by creditors as payment for debts.

That seems at odds with a law preventing the use of legal tender for certain transactions.

mikeash2• 15 years ago

Most sales don't involve debt, though. The law couldn't prevent you from using cash to pay off a loan you took out for the item, but it can prevent you from directly paying cash for the item (I think).

Symmetry• 15 years ago

That is correct. This is why merchants can refuse your business if you want to pay for something expensive with pennies.

beej71• 15 years ago

I'm sure there's law around this, but I can imagine a secondhand seller giving a short-term (e.g. 5 seconds) loan to a buyer and then the buyer paying off the debt in cash. :-)

scottdw24• 15 years ago

A debt is any financial obligation. Any partially executed contract (you receive a good you agreed to pay for), creates a financial obligation, and hence a debt.

So, article I should make the law invalid.

maximilianburke• 15 years ago

Could you then work around this law by issuing a note of credit to the customer, and then taking their cash to pay off the note?

hugh34• 15 years ago

Eugene Volokh wrote about this law yesterday. He addresses whether this law is inconsistent with "legal tender", and notes that a recent district court decision ruled that a very similar law was upheld and ruled not to be.

http://volokh.com/2011/10/19/louisiana-bans-secondhand-deale...

famousactress• 15 years ago

If there isn't already solid legal protection from states passing laws like this, then we ought to consider a constitutional amendment.

torontos• 15 years ago

In my reading of this, it's for dealers only - pawnshops and such... in which case it wouldn't really prevent the thing it's attempting to prevent.

nobody314159• 15 years ago

"more frequently than once per month from any other person, ... shall be deemed as being engaged in the business of a secondhand dealer."

So more than one Ebay a month and you are a dealer.

rick888• 15 years ago

What about garage sales?

tzs2• 15 years ago

There is a list in the law of things it does not apply to. One of them is "Private residential sales commonly known as 'garage sales' or 'yard sales' as long as such sales take place at a residential address".

ajkessler3• 15 years ago

This is pretty clearly targeted at meth heads, auto thief rings, and the mob (there's a mob in LA?). It basically says if you're running any kind of scrap metal yard, auto yard or dealer, pawn shop, or similar business where you buy high value items from anybody who walks in off the street, stop giving people cash so we can track them down.

The law's so poorly written and overbroad (i.e. the definition of "junk" is "junk"; a single garage sale would seem to subject you to liability) that, even if it's legal for a state to ban the use of cash (almost certainly not), this thing will get thrown out anyway.

bradleyland• 15 years ago

I don't know if the issue is as prolific in LA as it is here in Florida, but we're experiencing a huge number of thefts of air-conditioning "cores". The thief hits a sub-division that is largely vacant, pops the top off the A/C system, cuts the tubing and removes the largely-copper condenser coil. The thief then sells a truck load of these cores to a scrapyard for around $100 each. The owner of the unit is faced with a couple thousand dollars in repair bills. Thieves in this area have honed their core-lifting skills on unoccupied residential areas, and have moved on to hitting commercial properties late at night when no one is around to hear them. There were 7 homes hit in our neighborhood in the last 3 months, and at least one commercial business that made the papers because of the exorbitant cost of replacement ($15k).

There's a lot of pressure growing to enact policies that make it harder to traffic in the stolen materials, as well as providing a means to track down the sellers. This smells like the same thing.

ajkessler3• 15 years ago

I'm sure FL experienced this as well, but for the past few years, as foreclosures have left whole neighborhoods vacant in parts of CA, NV and AZ, people have been coming through and just ripping copper piping straight out of the walls. Thousands of dollars in damage for a couple dollars worth of scrap metal.

And I was kidding about the meth head thing. Last time I was up in Portland, they were doing a bunch of work on the railroad. Some guys had ripped out all the ties along a half mile stretch of the line. Again.

Trying to police the source of the cash is smart. It's just probably not going to fly with this law.

jshort2• 15 years ago

http://legallad.quickanddirtytips.com/legal-tender.aspx I found this to be an interesting read. Particularly " In fact, as we discussed in our earlier episodes, courts in a number of states have dismissed challenges to various no-cash policies."

fleitz• 15 years ago

Simply trade the goods for a debt obligation due immediately.

This isn't to catch b&e artists it's to catch people not paying taxes.

sehugg• 15 years ago

This law will only result in lost tax revenue as dealers keep cash transactions off of the books. Checks are worthless and there are no free electronic transfers in the States like in the EU.

Punishing the innocent by offloading law enforcement duties is not a good way to run a society, it just erodes respect for the law.

tzs2• 15 years ago

Several comments here have mentioned that this applies to pawn shops. It does not. The bill explicitly exempts them from the cash requirement. It's a little hard to notice, because it basically says something like "the provisions of section X do not apply to dealers operating under Y". Y is an existing section of Louisiana law that covers pawn shops, and X is the section of the new law that imposes the cash restriction.

This bill, like many, is written as a list of edits to apply to the existing law. If you don't read the existing law, you can get a very misleading idea of what the bill does. For example, there's one place where the existing law has a list of 4 categories of exceptions to the reporting requirements. The new bill modifies one of them, and adds a fifth. The other 3 are unchanged, and so are not mentioned at all in the bill, and remain in effect. Someone who doesn't read the original law might get the impression that there are only 3 exceptions in the list of exceptions (although the fact that they are numbered 1 and 5 hopefully would tip most people off...)

gte910h3• 15 years ago

Sounds like they're clamping down on auto theft -> scrap metal rings.

drallison• 15 years ago

United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes and dues. Foreign gold or silver coins are not legal tender for debts. —31 U.S.C. § 5103

It seems unlikely that a prohibition on the use of cash in any transduction is likely to survive judicial examination.

Louisiana Makes It Illegal To Use Cash For Secondhand Sales

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