ACC Program Area: The Project on Reproductions - Reference Archive

Reference Archive

Hobby Protection Act Review Draws 1,000 Comments

(by Connie Swaim, Editor, Eastern Edition, AntiqueWeek. From July 13, 1998 edition. connie@antiqueweek.com)

The Federal Trade Commission has completed its review of the rules and regulations under the Hobby Protection Act. There is both good and bad news in the July 7 report which was issued by the four commissioners who voted during the review process. The report was published in the July 7 issue of the Federal Register.

The good news is the act was retained. It will continue to offer protection from imitations for political item collectors and numismatic collectors. The bad news is the Commission did not have the authority to expand the Act, nor did it recommend to expand the Act despite the fact that 1,000 letters asking for such an expansion were received.

The Hobby Protection Act was passed by Congress on Nov 29, 1973. the Act requires manufacturers and importers of "imitation political items to mark plainly and permanently such items with the calendar year such items were manufactured. The act also requires manufacturers and importers of imitation numismatic items to mark plainly and permanently such items with the word `copy.' The Act further provides that the Commission is to promulgate regulations for determining the manner and form imitation political items and imitation numismatic items are to be permanently marked with the calendar year of manufacture and the word `copy,'" according to the information in the Federal Register.

Under the Act, an imitation political item is "an item which purports to be, but in fact is not, an original political item, or which is a reproduction, copy or, counterfeit of an original political item." the numismatic definition is basically the same.

Periodically the rules of acts such as this one are reviewed by the FTC to see if any changes need to be made or to see if the rules are even needed anymore. Part of the review process involves asking citizens for comments on the rules. In the spring of 1997 antiqueWeek urged its readers to become involved and make their voices heard on this issue. Other organizations and newspapers, including the Antique & Collectibles Dealers Association, American Political Items Collectors and the antique & Collectors Reproduction News, urged the same thing.

At the time there was much discussion on whether such a fragmented industry could be organized. Would people respond on their own? The answer is a resounding yes! The FTC received 1,145 comments on the Hobby Protection Act. While this may not sound like a huge number, it really is impressive. Robert Easton, special assistant, Division of Enforcement, Bureau of Consumer Protection, said, "For a relatively unknown rule I think it is a tremendous number."

So, antiquers made their voices heard. They spoke out and yet the rule was not changed. The Commission cited three reasons the rule was not changed. First and foremost the Commission does not have the authority under the Act to expand coverage. Even if it had wanted to change the Act it could not have done so. "The existence of other state and federal laws that provide remedies for these problems and the availability of resources that educate and warn collectors on how to distinguish originals from reproductions," were also listed as reasons not to expand the act.

Any changes in the Hobby Protection Act would have to come from Congress. While AntiqueWeek, and others involved in this effort, urged readers to contact their congressman, evidently we didn't find the right person to take an interest in our cause.

While the Commission did not make any recommendations for change to Congress, it did at least pass the information it received to the U.S. Customs department. The Commission noted that many responses discussed country-of-origin markings. Writers stated that if items coming into the country had permanent markings and not peel-off paper labels, then some of the problem would be alleviated. "Because many comments indicated that foreign-made reproductions pose the greatest problems, the Commission has brought the issues raised in this proceeding to the attention of the Customs Service, which has authority to take action where goods fail to bear a required country-of-origin marking...Several comments indicated their belief that country-of-origin labels are deliberately removed. The Customs Service urges persons with information regarding the violative removal of required country-of-origin markings to write to: Office of Field Operations, Attn. Commercial Enforcement Branch, U.S. Customs Service, 1300 Pennsylvania Avenue, NW, Washington, DC 20229 or call the Customs' toll free Commercial Fraud Hotline at 1.800.ITS.FAKE."

Other legal remedies are mentioned by the Commission. "For example, passing off can be prosecuted as criminal fraud or as civil fraud in a lawsuit by the buyer."

The efforts of publications such as AntiqueWeek and the Antique & Collectors Reproduction News to educate buyers and sellers was also mentioned as a reason not to expand the act. "In addition to legal remedies, the record indicates that there are non-legal resources available to educate consumers about antiques and collectibles and thus reduce consumers' susceptibility to the practice of passing off. For example, several newsletters and hobby newspapers regularly warn and advise buyers of antiques and collectibles about reproductions of specific items and classes of items. Many comments also indicate that there are collector clubs for many categories of collectibles that provide members with similar information."

The more than 1,000 comments received by the Commission evidently contained a lot of information.

"The comments suggested that there are many categories of collectibles subject to being passed off and that the volume of reproductions being offered for sale as originals may be large. The comments provided several explanations for the passing-off problems. First, the comments uniformly stated that the quality of reproductions has greatly improved to the point that reproductions can be virtually indistinguishable from the originals. Several comments noted that even experts may not be able to distinguish originals from reproductions.

"The comments appeared to agree that the quality of reproductions has improved, but were not in agreement regarding how these reproductions come to be passed off as originals. According to one commenter, the problem is not with reproductions being made for decorative purposes and sold in retail stores, where it is likely that the purchasers are aware that they are buying reproductions. The problem begins when a reproduction subsequently enters the secondary market and may be passed off as an original. Other commenters, however, argued that reproductions are deliberately sold as originals.

"The comments present numerous anecdotes regarding the harm caused by passing off. Although these anecdotes do not present information sufficient to quality or determine the amount of economic and other harm caused, the following is a summary of the adverse effects noted in the comments: that the individual buyer pays considerably more than the product is worth; that the owners of original antiques or collectibles which are heavily reproduced lose the value of their investment; that the uncertainty regarding the genuineness of antiques and collectibles dissuade persons from purchasing originals or from becoming collectors, which also adversely affects businesses that deal in originals."

While the people involved in last year's push to generate all these great comments are happy that the Hobby Protection Act wasn't canceled, most of them expressed great disappointment that nothing was done to expand the act. Also, several people commented that it seemed odd that the Commission would allow political items and coins to be protected, but then say that existing laws and education protect the rest of the industry.

"I'm disappointed that they didn't really support the move to expand the Act, but I'm pleased they didn't scrap it entirely," said Larry Krug, partner of Americana Resources and executive director of the American Political Items Collectors.

Yvonne Tucker of the Antiques & Collectibles Dealers Association said it was unfortunate and that the industry will have to keep trying to make its voice heard.

"ACDA, as a group, will continue its efforts to have country of origin and dates marked on all reproductions of antiques and collectibles. We still feel it is a big problem. we will continue to look for a spokesperson for this cause. ACDA will continue trying to help the public keep from getting duped by reproductions and fakes," Tucker said.

Krug felt the door was still open to do something. "We need to organize the industry and keep working on this. Timing is critical. We cannot let the battle drop," he said.

Many of the people I spoke with had not had the opportunity to read the full Federal Register comments. However, Mark Chervenka, publisher of the Antique & Collectors Reproduction News was able to read the full document. He was also one of the people spearheading the push to have the act expanded last year.

"Celebrating the recent FTC decision on the Hobby Protection Act would be like thanking the government for not repealing laws against murder. While it is good to maintain protection for numismatics and political items, failure to expand the law to cover all reproductions must be viewed as a defeat for all honest and ethical antique dealers, auctioneers, show managers and collectors," Chervenka said.

Regarding using U.S. Customs to pursue the problem of unmarked reproductions, Chervenka said he wanted to see proof of any convictions. "I challenge the FTC to produce the records of a single conviction obtained by the U.S. Customs for violating country-of-origin marks on antique reproductions. When has anyone seen a `made in China' sticker on any of the tens of thousands of pieces of new Roseville or `Made in Indonesia" stickers on new furniture? According to current import laws quoted by the FTC, the removal of those stickers or absence of a mark is a Federal crime. Show me the convictions!"

Likewise, Chervenka knows of fewer than six convictions when people have tried the other legal remedies such as fraud which the FTC Commission mentions. "In over six years of researching cases involving reproductions and fakes, I know of less than six convictions. But I have hundreds of letters of complaints. Who doesn't know of a dealer, antique mall or auctioneer who regularly deals in fakes, but has never been prosecuted by local authorities, much less found guilty."

"As a publisher myself, I am embarrassed and ashamed only four hobby publications filed comments with the FTC. They were Antique Week, Antiques Journal, Coin World and ACRN. Is this how companies and editorial staffs reward the people they depend on for profits and a living? Maybe subscribers to publications that did not support expanding the law should cancel their subscriptions and use the money to hire a national lobbyist," Chervenka said.

Copies of the full text of the Federal Register notice are available from the FTC's website at www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, Sixth Street and Pennsylvania Avenue, NW, Washington, DC 20580 or call 202.382.4357. You must have a PDF reader in order to view the entire Federal Register notice on the FTC's website. However, the general press release can be viewed by anyone able to access the Internet. 200205