Auctioneer John Nicholson has called for a review of data protection rules when it comes to alerting salerooms to serial non-payers and problem bidders.
He has decided to go public after another
auction house, quoting the Data Protection Act, did not warn him
about a rogue phone bidder when he carried out due diligence
despite asking them directly whether they had had any problems with
the individual in question.
Legal opinion sought by ATG indicates that
passing on this vital information can remain a serious risk to the
supplier of that information even when there appears to be very
good reasons for doing so.
Mr Nicholson has since discovered that the
bidder owes tens of thousands of pounds to other auction houses and
that at least one of them had banned him from bidding. However,
fear of breaking data protection rules meant that no industrywide
alert had been issued about the bidder.
The result for Nicholson's was an unpaid
bill of £200,000, and a very distressed vendor.
The Chinese bidder, based in Italy, gave
Nicholson's photos of his credit card, identity card with photo and
even invoices from other auction houses for goods bought there
under his name, including at Christie's in Paris, which showed a
client account and bidding number.
The auction house contacted Christie's but
were unable to ascertain whether the bidder had paid for his
purchases because of the Data Protection Act. It is still not known
whether that bill was paid.
A further complication arose because the
bidder did not pay the promised deposit for bidding before
Nicholson's sale, and attempts to process that deposit using the
card details failed, so Mr Nicholson had to take the decision
whether to risk allowing him to bid or alternatively risk his
vendor losing a sale.
"Having made all the relevant checks -
including whether he had been flagged up as a problem as an online
bidder, which he hadn't been - I took a calculated gamble.
"He had a Christie's bidding number and a
quarter of a million pound account with them, and I thought that
you had to be someone to have got that. It seemed OK but I had no
way of checking him, apart from the details he supplied and phoning
Christie's, and they couldn't tell me anything because of data
protection. It's ridiculous."
Matters did not improve following the sale.
"After the sale we sent him the bill and we heard nothing. Within a
day we rang and got nothing and then continued to ring and got no
One Nicholson's employee speaks Mandarin
Chinese and when she rang she managed to speak to a woman who
claimed to be the bidder's daughter, who said he was not there. Mr
Nicholson thought that as it was around Chinese New Year, it was
possible that the bidder had gone to China for the celebrations and
so might pay later.
Last week, however, he said a follow-up call
with the same woman made it clear that the bidder was uncontactable
and that they were unlikely to be paid.
Mr Nicholson believes that one of the main
reasons rogue bidders con auction houses is to get hold of the
invoices which can then be used in secondary fraud, either in China
itself or elsewhere.
"It's possible that it is used in money
laundering and bribes," he said.
He and his research assistant have since
found evidence that a man of the same name and age, and from the
same town in Italy as their bidder, entered a plea bargain in the
Italian courts four years ago on charges linked to tax evasion and
fraud running into hundreds of thousands of euros.
"The problem is that auctioneers don't talk
to each other like they used to. We may all be rivals, but we also
have an interest in protecting each other from this sort of thing
and it's about time someone did something about it, which is why
I'm speaking out," Mr Nicholson told ATG.
Nicholson's have banned another rogue bidder
after his name showed up on a list linked to online bidding, but he
says that there is no such alert system for phone and commission
"Exactly who should this data protection be
ATG legal columnist Milton Silverman, a
partner with law firm Streathers, has been studying the data
protection issue and is preparing a more detailed commentary for a
He told us: "There is arguably a case for
disseminating information under certain circumstances but the
principles in the Act would have to be applied on a case-by-case
A ray of hope then, but no more than that
because, as it stands, it appears that this would mean a detailed
assessment of each set of circumstances as they arose, which would
not deal with late or last-minute registration of bidders.
What Nicholson's have done, in the meantime,
is to introduce new rules for phone and absentee bids, which are
being published in their catalogues and online. They state that
bids will not be accepted without prior proof of ID, address, a
valid email address, mobile and landline phone numbers. Where
accumulated bids are expected to go above £5000, a deposit will be
Finally, successful bids must be paid for in
full using cash or debit cards in the saleroom itself or by bank
transfer, with goods not being released until funds have been
Call for Review
Mr Nicholson now wants parliament to review
the Data Protection Act to deal with what he sees as a charter for
"I want the Act looked at again because it's
stupid. All it does is to protect the guilty at the expense of the
innocent," he said.
This is not the first time that auctioneers
have expressed frustration that competition laws and the Data
Protection Act prevent them from exchanging information regarding
In November 2010, Halls of Shrewsbury
introduced new protocols to deal with purchasers unknown to the
firm after a fraudster was allowed to operate for two weeks at
numerous salerooms across the country because auctioneers could not
tip each other off to his activities.
Martin Kidson-Trigg, whose own auction house
near Swindon was one of the victims, recalls the investigating
police officer at the time insisting that the public had a duty to
prevent crime and report suspected fraud and that this superceded
data protection rules. However, current legal opinion would not
appear to concur with that view.