Mastro/Legendary Article in Today's NY Daily News

[sportscardtheory]

Originally Posted by oldjudge

Personally, I think people are barking up the wrong tree here. The auction house, by sending out lots to winners before payment is received, is simply making a credit decision that they are willing to trust that bidder. If they are wrong they must suffer the consequences. Credit is extended in all businesses. When you charge something on a credit card the bank is allowing you to take delivery of goods before they are paid for. Our society is built on people getting items before they pay for them. Mastro obviously made some poor credit decisions. REA may send out some items early but, if they are better at assessing the creditworthiness of their customers, they may not be subjecting themselves to any appreciable risk while at the same time generating considerable good will.

They are not the ones suffering the consequences.

If they are selling their own product, this would make sense. But this is consignment, the items are not theirs to take such outlandish risks. This has nothing to do with credit.

[oldjudge]

Of course it does. Once the auction house sends out the lot/lots they are implicitly taking on the responsibility to pay the consignor. If they do not they are legally liable. This is exactly a credit decision.

[Peter_Spaeth]

I agree with Jay. I am sure, at the time, Mastro had good reason to extend credit to Dave, for many possible reasons as to which I would be speculating. It is only in hindsight that, of course, it looks bad. Indeed, it may be unrealistic to run an auction house at that level without extending credit to certain bidders.

[sportscardtheory]

Originally Posted by oldjudge

Of course it does. Once the auction house sends out the lot/lots they are implicitly taking on the responsibility to pay the consignor. If they do not they are legally liable. This is exactly a credit decision.

Okay, so if they don't pay, they should go to prison for theft. The consignee is the one that the theft is perpetrated upon. To simply have them go through the court system to get their money back is preposterous. If I go to a casino and they offer me credit, and decide I don't want to pay, I go to jail. They don't simply keep asking me for the money I owe them.

[sportscardtheory]

The moral of the story is, if you don't want to get screwed over by people who like to pass off blame (auction houses), don't use them. I know I never would.