Police arrested owners of The Drop Spot, an eBay drop-off store located in Traverse City, Michigan, on August 10. Police searched, patted down and handcuffed President and co-owner Steve Swaney and seized the store's business records. Police also arrested shareholder Mark Bowie, who has operated a separate business in the city for 30 years.

The business owners were in a dispute with police over whether they were required to comply with state statutes regarding second-hand dealers, which requires the fingerprinting of customers.

Steve Swaney said he and his lawyer, Jim Aprea, believe the statutes do not apply to The Drop Spot because the business does not purchase the items dropped off by customers. Instead, The Drop Spot sells the items on eBay on the customer's behalf.

Grand Traverse County Prosecuting Attorney Al Schneider said the case was brought to his attention by the police. Traverse City Police Detective Sutherin, who first approached The Drop Spot back in May, did not return a phone call seeking comment on the case. A hearing is scheduled for September 8.

The case is similar to one in March when police arrested a drop-off store owner in Tallahassee, Florida, for not following the law regarding pawn shops and consignment shops. The case was dismissed by the judge hearing the matter. The detective in that case told AuctionBytes that the store was brought to his attention by some of the pawnshop owners, who were complaining that the drop-off store wasn't following the same guidelines they were required to follow.

The issue of which state laws and regulations may apply to eBay drop-off stores and Trading Assistants has been gaining attention as these stores continue to spring up across the country (and in other parts of the world). Lawrence Coffin, a Trading Assistant located in Boston, has begun compiling a list of state regulations he believes apply to eBay Trading Assistants (http://www.beantowntradingpost.com/ebay_regulation/states.php).

Tom Joria, who operates the Ace Buyers pawnshop in Traverse City, said he hasn't looked into the business of eBay drop-off stores and whether they should be regulated. But he sees possible problems arising from local thieves who might use eBay drop-off stores as an agent for selling or fencing stolen goods. "I am confident that when the owners that were arrested give serious thought as to the intent of these laws and the benefit that comes from following them, they will gladly comply."

Jack Reynolds, co-founder of QuikDrop, an eBay drop-off store franchise, believes eBay drop-off stores should be regulated, but said "we must define ourselves as something different." Reynolds believes eBay drop-off stores should be required to follow certain practices:

• Drop-off stores must post items on the public Internet.
  
• Drop-off stores must include a picture and serial number, if there is one, in the online description.
  
• Drop-off stores must mail a check to the address on the customer's driver's license and should never hand cash across the counter.
  
• Drop-off stores must remove any listings that are identified by law enforcement as stolen.

QuikDrop's Reynolds said there's not a single case of a stolen good sold on eBay by a drop-off store. He warns that car dealers and real estate agents will be joining pawnshops and second-hand dealers as the next industries to go to government asking for help in the form of drop-off store regulation.