HOUSE OF REPRESENTATIVES

140th GENERAL ASSEMBLY

HOUSE BILL NO. 607

AN ACT TO AMEND TITLE 6 OF THE DELAWARE CODE RELATING TO UNUSED PROPERTY MARKETS.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. Amend Chapter 47, Title 6 of the Delaware Code, by designating the existing language thereof as "Subchapter I" and by adding thereto a new "Subchapter II" as follows:

"Subchapter II. Unused Property Markets

§ 4720. Definitions.

As used in this subchapter:

1. ‘Baby food’ or ‘Infant formula’ means any food manufactured, packaged, and labeled specifically for sale for consumption by a child under the age of two.
2. ‘New and unused property’ shall mean tangible personal property that was acquired by the Unused Property Merchant directly from the producer, manufacturer, wholesaler or retailer in the ordinary course of business which has never been used since its production or manufacturing or which is in its original and unopened package or container, if such personal property was so packaged when originally produced or manufactured.
3. ‘Nonprescription drug’ means any non-narcotic medicine or drug that may be sold without a prescription and is prepackaged for use by the consumer and prepared by the manufacturer or producer for use by the consumer. The term nonprescription shall include any drug commonly known as an ‘over the counter drug’ which is required by state food and drug laws or the federal ‘Food, Drug and Cosmetic Act’ to be properly labeled and unadulterated, but shall not include any herbal products, dietary supplements, botanical extracts, or vitamins.
4. ‘Medical device’ means any instrument, apparatus, implement, machine, contrivance, implant, invitro reagent, tool, of other similar or related article, including any component part or accessory, required by federal law to bear the label, ‘Caution: Federal law requires dispensing by or on the order of a physician" or which is defined by federal law as a medical device and which is intended for use in the diagnosis of disease or other conditions or in the cure, mitigation, treatment of prevention of disease in man or other animals, or is intended to affect the structure or any function of the body of man or other animals, which does not achieve any of its principal intended purposes through chemical action within or on the body of man or other animals and which is not dependant upon being metabolized for achievement of any of its principal intended purposes.
5. ‘Unused property market’ means any event at which persons offer personal property for sale or exchange, and which involves a series of sales sufficient in number, scope, and character to constitute a regular course of business, provided however that the event occurs at least six (6) times in any 12-month period. Unused property markets include any ‘swap meet,’ ‘indoor swap meet,’ ‘flea market,’ or other similar event at which transient retailers transact temporary or transient business, however the event is described and whether or not a fee is charged for entrance thereto.
6. ‘Unused property merchant’ means any person, other than a vendor or merchant with an established retail store in the county, who transports an inventory of goods to a building, vacant lot or other unused property market location and who, at that location, displays the goods for sale and sells the goods at retail or offers the goods for sale at retail and shall include any transient retailer.

§ 4721. Prohibition on sale of certain goods.

No unused property merchant shall offer at an unused property market for sale or knowingly permit the sale of baby food, infant formula, cosmetics or personal care products, or any nonprescription drug or medical device. This section shall not apply to a person who keeps available for public inspection a written authorization identifying that person as an authorized representative of the manufactuer or distributor of such product, as long as the authorization is not false, fraudulent, or fraudulently obtained.

1. No unused property merchant shall offer any new and unused property for sale at an unused property market for which the merchant does not possess a receipt of sale or equivalent documentary evidence of true ownership.
2. Every unused property merchant shall maintain receipts for the purchase of, or other documentary evidence of true ownership of new and unused property, for a period of not less than 2 years from the date of acquisition by the unused property merchant.
3. Receipts for the purchase for new and unused property, and any other documentary evidence of true ownership, must contain at least:

1. the date of the transaction;
2. the name and address of the person, corporation, or entity from whom the new and unused property was acquired;
3. an identification and description of the new and unused property acquired;
4. the price paid for such new and unused property; and
5. the signature of the seller and buyer of the new and unused property.

1. falsify, obliterate, or destroy such receipts, or knowingly allow the same to occur; or
2. refuse, or fail upon request, to make such receipts available for inspection within a period of time which is reasonable under the individual circumstances surrounding such request.

§ 4723. Unlawful trade in new and unused property; Penalties.

1. Any person who violates the provisions of this subchapter shall, in addition to any other crimes or violations contained in this Code, be guilty of the unlawful trade in new and unused property and shall, in addition to any other penalty provided for in any other provision of this Code:

1. For the first offence, be guilty of a Class B misdemeanor; and
2. For a second offence, be guilty of a Class A misdemeanor; and
3. For a third or subsequent offence, be guilty a Class G Felony.

1. The Superior Court shall have original jurisdiction over all violations of this subchapter.

§ 4724. Same - Exceptions.

1. Any event which is organized for the exclusive benefit or any community chest, fund, foundation, association, or corporation organized and operated for religious, educational, or charitable purposes, provided that no part of any admission fee or parking fee charged vendors or prospective purchasers or the gross receipts or net earnings from the sale or exchange of personal property, whether in the form of a percentage of the receipts or earnings, as salary, or otherwise, inures to the benefit of any private shareholder or person participating in the organization or conduct of the event;
2. Any event at which all of the personal property offered for sale or displayed is new, and all persons, selling, exchanging or offering or displaying personal property for sale or exchange, are manufacturers or authorized representatives of manufacturers or distributors;
3. The sale of a motor vehicle or trailer that is required to be registered or is subject to the certificate of title laws of this state;
4. The sale of wood for fuel, ice, or livestock;
5. Business conducted in any industry or association trade show;
6. Property, although never used, whose style, packaging or material, clearly indicates that such property was not produced or manufactured within recent times;
7. Anyone who sells by sample, catalog or brochure for future delivery;
8. The sale of arts or crafts by a person who produces such arts or crafts;
9. The sale of new and unused property claimed to be the personal possession of the unused property merchant which had been intended for the merchant’s personal use; provided, however, that this exception shall not apply to any item of personal property that is one of four or more identical items that the unused property merchant possesses or offers for sale; or
10. Persons who make sales presentations pursuant to a prior, individualized invitation issued to the consumer by the owner or legal occupant of the premises."

This Act prohibits the sale of new and unused baby foods and infant formulas, over-the-counter pharmaceutical products, and medical devices at flea markets, swap meets, or other new and unused property markets except by properly authorized representatives of the manufacturer or distributor thereof. This prohibition is a consumer protection measure designed to ensure that such items remain in the normal retail markets where they are subject to strict FDA guidelines on transportation, storage, labeling, and handling. In the setting of unused property markets, these items are not subject to such regulations, and as a result are often stored at temperatures above levels considered safe by the FDA, handled or labeled in a manner inconsistent with FDA safety regulations, and sold after FDA regulations would require that they be expired and returned to their manufacturers or disposed of pursuant to FDA regulations.

This Act also requires new and unused property merchants to maintain their receipts of sale, or other documentary evidence of true ownership, for a period of not less than 2 years from the date the merchant originally acquired the property, and to present or allow the inspection of such evidence within a reasonable time of a request for the same, given the circumstances surrounding the request. This provision is designed to combat the increasing problem of "Flea Market Fencing" whereby some unused property merchants will purchase items of personal property in bulk that they know have been stolen and will resell them at flea markets at a price that is far below the ordinary retail price of the items. Sometimes these merchants will actually place orders with their sources for certain items, knowing that their sources will likely procure the items through large scale theft thereof. Often, if these merchants are unable to sell their entire stock at a flea market, they will sell the remainder to warehouses, known as repack warehouses, where the items are cleaned, repacked and resold back into the ordinary stream of commerce. By requiring the merchant to retain evidence of true ownership as defined by this Act, this type of resale becomes more difficult and thus less profitable. As a result this Act, should help to curb this activity.