Summary:

When a federal firearms licensee (FFL) – a licensed gun dealer – sells a firearm, he/she must conduct a criminal background check on the buyer to ensure that the buyer is not a felon, domestic abuser, minor or other prohibited purchaser. However, unlicensed sellers who sell firearms from a “personal collection” do not have to conduct background checks. One venue for non-dealer sales is the consignment auction.

IPGV works toward the goal of securing background checks on firearms sold at consignment auctions in Iowa in order to prevent prohibited purchasers from buying guns from auctioneers unlicensed to deal in firearms.

The Issue in Depth:

Under federal law, consignment auctioneers are required to have a federal firearms license in order to sell firearms, because they take possession of the firearms before they are sold. Estate auctioneers, who do not take possession of the firearms, are not required to have a federal firearms license in order to auction firearms.

As applied to a dealer in firearms, 18 U.S.C. § 921(a)(21)(C) defines the term “engaged in the business” as “a person who devotes time, attention, and labor to dealing in firearms as a regular course of trade or business with the principal objective of livelihood and profit through the repetitive purchase and resale of firearms, but such term shall not include a person who makes occasional sales, exchanges, or purchases of firearms for the enhancement of a personal collection or for a hobby, or who sells all or part of his personal collection of firearms.”

The key words in this definition are “devotes time, attention, and labor,” “regular course of trade or business,” and “principal objective of livelihood and profit.”

In a typical consignment auction business, an auctioneer enters into a consignment agreement with an owner of firearms to sell the owner’s firearms. The auctioneer takes possession of the firearms in advance of the auction. The firearms are inventoried and tagged for identification and typically arranged on tables for viewing by the general public prior to the actual auction. Sometimes, photographs of the firearms are posted on the auctioneer’s website. The auctioneer advertises the auction in newspapers and other media outlets. The auctioneer receives a percentage, usually 10 to 25 percent, of the final selling price of each firearm.

For the typical consignment auction business described above, it is clear that the auctioneer devotes time, attention, and labor to dealing in firearms as a regular course of trade or business with the principal objective of livelihood and profit, and therefore, meets the definition of “engaged in the business” of dealing in firearms.

In addition, consignment-type auctions are addressed in Bureau of Alcohol, Tobacco and Firearms Publication ATF 5300.4, “Federal Firearms Regulation Reference Guide – 2000”. In the Question & Answer section on Auctioneers is the following:

"In consignment-type auctions, an auctioneer often takes possession of firearms in advance of the auction. These firearms are generally inventoried, evaluated, and tagged for identification. The firearms belong to individuals who have entered into a consignment agreement with the auctioneer giving that auctioneer authority to sell the firearms. The auctioneer has possession and control of the firearms. Under these circumstances, an auctioneer would generally need a license."

It is clear from a reading of federal law and the ATF publication that consignment auctioneers should be licensed to lawfully sell firearms in the course of business. However, a survey of approximately 40 consignment auction businesses in Iowa by Iowans for the Prevention of Gun Violence (IPGV) found that many auctioneers who sell firearms on consignment are not licensed.

Dealing in firearms without a license is not just a technical violation of federal law; it is a matter of public safety. Under 18 U.S.C. § 922(t)(1) (the Brady Law), federally licensed firearms dealers are required to conduct criminal background checks on all buyers. Background checks are performed by contacting the National Instant Criminal Background Check System (NICS) operated by the federal government.

However, unlicensed individuals, e.g., auctioneers who sell firearms on consignment, cannot conduct background checks on buyers because only licensed firearms dealers have access to NICS. Thus, consignment auction businesses that are engaged in the business of dealing in firearms without a federal firearms license provide convenient venues for felons, domestic abusers, minors, even terrorists and other persons who are prohibited by law from possessing firearms to buy firearms without having to undergo a background check. This puts the community and all Iowans at increased risk of gun violence

In a time of increased concern for public safety, one cannot defend businesses that are engaged in the business selling firearms to the general public without requiring buyers to undergo a background check. Such conduct puts profits ahead of the general welfare of the public.

Proposed Solution:

Consignment auctioneers who are currently selling firearms without a federal firearms license in Iowa have two options:

All consignment auctioneers who wish to deal in firearms should obtain a federal firearms license from the Bureau of Alcohol, Tobacco and Firearms in order to be in compliance with federal law and to prevent the sale of firearms to prohibited purchasers. The license fee is $300 for three years and $90 for each subsequent three-year period. The Iowa survey found one auctioneer who was licensed.

Do not sell firearms on consignment. The Iowa survey found eight auctioneers who responded that they did not sell firearms on consignment, or only sold antique firearms.