Used-CD Shops Criticize Resale Laws Legislation in Florida and Utah to restrict the resale of used merchandise is having unintended consequences for used-CD stores. A number of other states are considering "pawn shop laws" that primarily target trade in stolen goods. Some CD shops say the legislation may put them out of business.
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Used-CD Shops Criticize Resale Laws

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Used-CD Shops Criticize Resale Laws

Used-CD Shops Criticize Resale Laws

Used-CD Shops Criticize Resale Laws

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Legislation in Florida and Utah to restrict the resale of used merchandise is having unintended consequences for used-CD stores. A number of other states are considering "pawn shop laws" that primarily target trade in stolen goods. Some CD shops say the legislation may put them out of business.

ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MICHELE NORRIS, host:

And I'm Michele Norris.

CD collectors and the stores and Web sites that cater to them are worried. New laws in two states promise to crack down on pawnshops and other stores that sell second-hand goods, including CDs.

As NPR's Greg Allen reports from Miami, other states are considering similar legislation.

GREG ALLEN: For any music lover, CD Trader in Hollywood, Florida is bound to look familiar.

Ms. ANNE PAGER(ph) (Owner, CD Trader): Oh, we have thousands of CDs laid out. It's alphabetized, categorized.

ALLEN: It's a small store in a shopping plaza, the one where there are usually, even during quiet times, one or two customers flipping through the bins. Sixteen years ago when CD Trader opened, owner Anne Pager says sales were booming. This was before iPods, before Napster, before the word downloading enters the vocabulary.

Now, even though CD Trader also sells used video games and repairs iPods, Pager says she still makes most of her money on second-hand CDs, and most of her sales are to customers over 40.

Ms. PAGER: As far as high volume, I would say probably the old, classic rock and R&B and it's the baby boomers in them. People my age, you know, in the late 30s, 40s, who have the (unintelligible) come to spend 100 bucks or 150 bucks.

ALLEN: Pager says her business follows the rest of the music industry. When new CD sales are down, used sales are down as well. And right now, sales are down. She has seen many of her competitors close their doors. And recently, she got more bad news. Customers told her about a law passed late last year here in Florida that places new restrictions on stores that sell most second-hand items, including CDs.

Under the law, stores are now required to get identification from sellers, maintain records of each transaction for three years, and hold any item bought for 30 days before reselling it. Pager says other provisions of the law could put her out of business. One of the toughest requires that she offer store credit for any discs she buys.

Ms. PAGER: We can't pay cash from merchandise because most people who come in just want to sell the stuff, and the fact that we have to fingerprint people, because I don't think it's right.

ALLEN: Right. And the law said you had to take a thumbprint, more (unintelligible) to sell even one CD.

Ms. PAGER: Mm-hmm. Exactly. Whether it's a $200-videogame system or a $3, you know, Eagles' CD, I still have to thumbprint them.

(Soundbite of song, "Smugger's Blues)

Mr. GLENN FREY (Singer): (Singing) There's lots of shady characters, lots of dirty deals. Every name's an alias in case somebody squeals. It's the lure of easy money, it's got a very strong appeal.

ALLEN: Aside from the economic impact, the main topic of conversation here is who's behind the new law. For many, the leading suspects are the record companies. They have targeted used CD sales in the past. In the early 1990s, four of the majors waged a short-lived campaign to pressure stores not to sell second-hand CDs.

The recording industry says it's not involved this time, and Jim Donio agrees. Donio is the president of the National Association of Recording Merchandisers, a group that represents retailers. Donio believes lawmakers in Florida and in Utah, where a similar measure was passed, had no idea they might be regulating used CD stores out of business.

Mr. JIM DONIO (President, National Association of Recording Merchandisers): The law in Florida in particular is very confusing. It's very complicated. We don't feel that when it was crafted, the intent was for it to be focused on second-hand or used music CDs, that that's just the very unintended consequence of the law.

ALLEN: Donio says while it may be too late to do anything in Florida, the recording merchandisers are now working to carve out exceptions for used CDs in other states that are considering similar legislation. One of those states is Rhode Island, where Mike Dreese does business.

Dreese is the owner of Newbury Comics, a New England chain that does some $10 million in used CD sales each year. He's concerned about the privacy of customers, but says the biggest victims will be the small, used CD stores that may be forced to close their doors.

Mr. MIKE DREESE (Owner, Newbury Comics): This is kind of picking on a group of people that hardly have the ability to fight back in any reasonable fashion. So all I see it being as something where there is going to be a lot of selective enforcement going on. And that always unfortunate.

ALLEN: Although the Florida law has been in effect for several months, so far, it's had little impact on second-hand CD sales. In large part, that's because the law is so broadly written, it applies to all kinds of retailers of used goods, and it leaves enforcement up to local authorities who may have more pressing duties than policing used CD stores.

Greg Allen, NPR News, Miami.

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