Resale shops say ordinance will put them out of business
Law will require stores to photograph sellers and list items for police database
Moms come into New to You Kids in Greenfield every week to sell their babies' outgrown rompers to the small resale shop. But the business says it will have to close if it has to comply with a new city ordinance requiring it to take each mom's picture and send that, along with detailed descriptions of the items she sells, to a police database every day.
The Greenfield ordinance also imposes transaction fees on resale stores that could amount to tens of thousands of dollars annually - a big burden for small retailers.
"It's horrendous. This will put us out of business if we have to adhere to it," said New to You Kids owner Robert Reinhardt.
Half-Price Books, a national resale chain that has a store a few doors down from Reinhardt's in the Greenfield Fashion Center, will consider getting out of its lease, district manager Joe Desch said.
Half-Price also is thinking about filing a lawsuit against Greenfield on First Amendment grounds, because the new ordinance, which takes effect next summer, will require the bookstore to send police a daily list of customers who sell books to them, with identification and titles sold.
But Greenfield Police Detective Chuck Fletcher has news for resale operators who think they can escape the reporting requirements by moving to another town: There soon may to no place to run, no place to hide.
"You may be able to jump over to Greendale or West Allis, but guess what," said Fletcher, noting that with more cities adopting stricter ordinances, retailers may have trouble finding a place without restrictions.
Fletcher is the unofficial state expert and promoter of a new municipal code that requires resale stores to send information into a statewide police database.
"I've given lectures from Waushara County down to Walworth County," he said.
While Fletcher is encouraging municipalities across the state to adopt the stricter codes, some are including exemptions for clothing shops and bookstores. For example, West Allis' new ordinance, adopted in January, excludes those categories and doesn't charge transaction fees.
"The Police Department thought that was too much volume and not worth the time and effort to keep track of," West Allis City Attorney Scott Post said.
Some municipalities, including Greenfield, are adopting the stricter rules at the request of their police departments, in reaction to an influx of shady gold buyers who make it easy for thieves to fence stolen jewelry. The database makes it possible for police to see lists of items sold to resale shops in participating communities across the state. By sifting through the lists, investigators can find stolen items and identify frequent sellers who may be considered suspects in theft and shoplifting cases.
But the tougher rules, if they don't include exemptions, can hurt small resale shops that are trying to make an honest living in a bad economy, proprietors say.
Milwaukee aldermen approved a resale ordinance in July but excluded bookstores and clothing resale shops.
"I think it's a very good crime prevention technique," Milwaukee Assistant City Attorney Adam Stephens said. "But you may defeat the purpose if you regulate too much."
Based on state law
The new code being adopted by cities around the state is based on a state law that already requires pawn shops and businesses that buy metals and jewelry to take and keep information on sellers and items. The code expands the requirements by including businesses that haven't needed to report transactions in the past and by mandating that the businesses install software from the Northeastern Wisconsin Property Reporting System and input seller identification and detailed merchandise descriptions each day. Businesses must photograph sellers and items, and they must keep the items for a set period of time - 10 to 30 days in most cities that have adopted the ordinances - before reselling them. Desch of Half-Price Books said it would be impossible to comply with that provision because of the storage space it would require.
The reporting system was developed a few years ago by the Green Bay Police Department, which maintains the database. Use of the system is free to municipalities, but some, including Greenfield and Wausau, are imposing transaction fees on resale stores to offset policing costs.
Greenfield will require retailers to pay 50 cents for each purchase they make up to $10, a dollar for every transaction from $10 to $100, plus an extra 1% of the transaction amount for sales over $100. Wausau, which enacted its ordinance in July, is charging a flat $1.50 fee per transaction. The Wausau ordinance has no exclusions for any resale businesses and includes consignment transactions.
At New to You Kids, owner Reinhardt estimates the fees will amount to $10,000 per year.
"But the fees are the tip of the iceberg," he said. The shop already keeps information on the identity of sellers, but the new ordinance will require his store to do merchandise documentation that it doesn't now do. He will need to hire two people to type product descriptions of 140,000 items per year - many of them carrying prices below $1 - into the police database. The wages for those jobs will cost him $40,000, and the store doesn't bring in enough money to offset that, Reinhardt said.
At Music Go Round, a musical instrument store in the Greenfield Fashion Center, owner Skott Moriarti estimates the new ordinance will cost him at least $17,000 to implement in the first year. That includes wages for extra employee hours and the purchase of a computer and photo equipment, because the parent company for his franchise store, Winmark Corp., won't allow him to connect third-party software to the store's system. There are concerns about a data security breach and about liability for damages in the event that a breach occurs, Moriarti said.
Signs may give bad vibe
The ordinance also requires businesses to post a sign notifying customers that they will be photographed and that their information will be submitted to police. Moriarti and others said the sign will give customers a bad vibe about the business.
"We don't want to be perceived as a pawn shop, something shady," Moriarti said.
Music Go Round's customers typically bring in instruments because they want to trade for something else. They aren't selling their equipment because they need money to pay the rent, he said.
Lela Harris of Milwaukee sold some books at the Half-Price store in Greenfield last week. Harris said she wouldn't mind giving her information to the police database, because she had nothing to hide.
"But when you think of it in a broader sense, it does seem an invasion of privacy. I might feel a little bit taken aback by that," Harris said. "I understand it more for a pawn shop."
Fletcher, the Greenfield detective, sees no reason for exemptions and is unmoved by the pleas of business operators who say the ordinance places an unfair burden on them.
"I'm pretty firm on this," Fletcher said. "If you take anything secondhand, you need to know the integrity of your customer. They say, '99% of my customers are honest.' But what about the other 1%?"
Greenfield resale operators who were interviewed said they have cooperated with police in the past and are committed to do that in the future. But they said problems with suspicious merchandise were few and far between.
At New to You Kids, store employees make a lowball offer on the rare occasions when they suspect a customer is trying to sell stolen goods.
"We hope they will go away," Reinhardt said.
Music Go Round staffers will ask a suspicious seller how to use the item, Moriarti said. If the seller doesn't know, the store won't buy it, he said.
Even so, Fletcher said stores unintentionally do end up with stolen merchandise.
"I understand it's a little more work," Fletcher said. "But that's the price you pay when you don't know the integrity of your customer."
Ordinance called onerous
Steve Murphy, president of franchising for Winmark Corp, the Minneapolis-based franchise parent for Play It Again Sports, Music Go Round, Plato's Closet and Once Upon a Child, said the Greenfield ordinance is one of the most onerous he's seen in the country.
"We want to comply with local law," Murphy said. Winmark has worked with local communities elsewhere to get exemptions for franchisees from pawn shop laws that are mostly aimed at businesses that buy gold and jewelry.
The fees associated with the Greenfield ordinance, though, appear to be a way for the municipality to raise money at a time when local governments are financially stressed.
"Small business is where job creation is going to start," Murphy said. "You can only get so much blood from a turnip."
Greenfield Mayor Michael Neitzke said aldermen may be inclined to consider an exemption for books and clothing before the ordinance takes effect. Recoveries of stolen jewelry by Greenfield police using the reporting system data have been impressive, he said.
"The real problem is the gold businesses," Neitzke said. "We need to be reasonable and we need to balance constitutional rights and the need to stay in business in a tough economy."
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