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I've recently read a thread on Reddit from the world of collectible card games that I found very interesting. Here's my summary of what the poster on Reddit describes has happened to them:

I have offered expensive collectible cards to a re-selling company. The company claims that the cards are counterfeit and informs me that they won't return the cards to me, won't tell me how they identified the cards as counterfeits, and that they will destroy them. Can they do this? Can I object to their decision?

Here's a more detailed description of the situation with some additional background.

This is about cards from a fantasy card game. As the playing cards in this game differ in their rarity, and as there are limited editions of cards, the cards are considered collectibles with a lively secondary market. There's a company on the secondary market (henceforth Reseller) that offers to buy cards from individuals to resell them in their own online store. The procedure for this is that they list buying prices on their website. People interested inselling at these prices send in their cards and will receive the set amount.

It's not unusual that some cards are worth hundreds, if not thousands of dollars – so unsurprisingly, counterfeit cards do exist. The company producing the card game is aware of these counterfeit cards and has added features to their printing process that makes manufacturing fake cards more difficult.

Bob wants to sell several cards to Reseller. He himself bought these cards from a reputable source, and the cards themselves don't look suspicious, so he doesn't have a reason to assume they are counterfeit cards. He sends his cards to Reseller and expects to receive the sale price for them. Instead, he is informed by Reseller that the cards he offered were determined to be counterfeit. Due to an agreement between them and the producing company, they would not ship back the cards to Bob but instead destroy them. They would not disclose the means of identifying the counterfeit cards to Bob, but they would provide confirmation of the destruction of the cards on request.

Reseller do not explain how they proceed in the case of counterfeit cards being offered to them in their Terms of Service. Yet, you can find a description of this procedure if you go to page two on their helpdesk list of frequent customer support questions. This list can be found if you follow a link in one question on their Selling FAQ page. In other words, the information is available on their website, but it's not exactly easy to discover unless you explicitly search for it.

Now, buying or selling counterfeit goods is clearly illegal in most jurisdictions. If Reseller have identified the cards as counterfeit, they may not purchase them, resell them, or probably even ship them back. They probably won't disclose their means of identifying fake cards in order to avoid giving counterfeit manufacturers important clues on how to improve their illegal cards.

However, the procedure employed by Reseller can be very disadvantageous to Bob and other potential customers in at least two ways:

  • The cards that Bob offered may be misidentified as counterfeits by Reseller. If they still destroy the cards, they are destroying cards that are the legal property of Bob. Bob will receive no compensation for his loss.
  • The procedure may be abused by Reseller. They may falsely claim that the cards Bob sent them were counterfeit, but instead of destroying them, they may keep them to resell them later. If Bob asks for confirmation of destruction, they may send him pictures of actual counterfeit copies that were destroyed independently of the present event. For Bob, there's no way of telling whether the pictures show the copies he sent to Reseller, or completely unrelated copies.

Given these risks, if I was Bob, I would probably agree that counterfeit cards can't be sold and should be destroyed – but I'd only accept this if there was independent proof that my cards were indeed fake cards. However, this proof is explicitly withheld by Reseller. So, I'm wondering whether Reseller has the right to decide that the cards were counterfeit, and consequently to destroy them without Bob's consent. I also wonder whether Bob has the right to demand an independent confirmation of Reseller's assessment.

Reseller is located in the US, but I'm also interested in other jurisdictions such as the UK or EU member states.

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    I didn't include a link to the Reddit post that this is based on in order to avoid mentioning the names of the involved parties, but I can add it if necessary. – Schmuddi Apr 16 at 9:22
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    Was the policy for handling suspected counterfeits part of the agreement under which Bob sent the cards to the reseller? – Sneftel Apr 16 at 10:38
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    @Sneftel: The policy is not stated in the Terms of Service on Reseller's website, but it is described on a page on the help desk. I don't know if this makes it a legally binding part of Bob's and Reseller's agreement; that might already be a part of an answer. In addition, Bob may have received another legal document from the company e.g. when they confirmed the arrival of the cards, but as I'm not Bob, I don't know about that (Bob doesn't mention anything like that in their Reddit post). – Schmuddi Apr 16 at 13:47
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    If I were Bob I would write threatening to sue for the presumed value of the non-counterfeit cards unless my property was returned immediately. The reseller can certainly ship them back because mere possession of these cards is not a crime. – Paul Johnson Apr 16 at 15:58
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    @PaulJohnson: I'd like to encourage you to turn your comment into a full-fledged answer. It sounds a lot like I feel about the situation, but I don't know if my feeling would be backed by US (or e.g. UK) law. – Schmuddi Apr 16 at 17:43
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In the US, there are provisions of criminal law especially 18 USC 2320 which make selling counterfeit goods a crime. Counterfeit goods are subject to forfeiture to the US government. However, this requires a formal legal determination that the goods are counterfeit, and no provision of the law excuses a seller for illegally seizing property that they hold in trust for a party.

There might be a contractual provision that allows this, e.g. "at our sole determination we may deem property to be counterfeit and will destroy it, without compensation". In that case especially with online services, it matters what the "contract" says. It is not sufficient to say "It's somewhere on the web page". Generally there is an "I agree" button that links to a document: and that document may refer to other documents such as "Community standards". So if the restriction is in the agreement or in a document referred to by the agreement, then it would be legal. The assumption is that the party agreeing to the terms reads "the agreement", and also reads or understands any terms mentioned in "the agreement" (they become part of the agreement).

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    I don't know about the US, but in the UK there is a rule that unusual or onerous contract terms must be bought to the attention of the signer so that there is clear agreement; you can't just bury something like this in the fine print. The US and UK are common law legal systems with a common root, so I'd be surprised if they differed on this. Anybody know more? (lawteacher.net/cases/interfoto-picture-library-v-stiletto.php) – Paul Johnson Apr 16 at 15:55
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    In the US, if the terms were literally "just somewhere on the webpage" then they would not be part of the agreement, hence the question of the findability of the term is the central legal concern. – user6726 Apr 16 at 18:28
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Due to an agreement between them and the producing company, they would not ship back the cards to Bob but instead destroy them.

This is simply illegal. Regardless of whether the cards are counterfeit they remain the property of Bob until sold. The intentional destruction of Bob's property without his permission is at least a civil tort (so Bob can claim compensation) and may be a crime as well, although that probably depends on the relevant state law regarding vandalism.

This is not affected by any agreement between the Reseller and the publisher, as Bob is not a party to that agreement.

The amount of compensation is an interesting question. The Reseller's position would be that the cards were counterfeit and therefore worthless. Bob's position would be that since he bought the cards in good faith they were presumptively genuine and therefore valuable. In the hypothetical case of Bob vs The Reseller, the court would need to look at the evidence of value. Bob can prove that he paid a certain amount for the cards, and the court would likely take that as the value unless the Reseller presented other evidence. That evidence would need to be specific; the Reseller could not simply say "We know that these cards are counterfeit", they would need to explain exactly how they know, and that information would also be part of discovery. If the evidence involves trade secrets owned by the publisher the case gets complicated.

On the other hand, suppose that Bob persuades the Reseller to return the cards. Since he is now on notice that the cards are counterfeit he can't sell them himself (unless he can find evidence that the Reseller was incorrect). Federal law prohibits trafficking in "labels, patches, stickers, wrappers, badges, emblems, medallions, charms, boxes, containers, cans, cases, hangtags, documentation, or packaging of any type or nature, knowing that a counterfeit mark has been applied thereto, the use of which is likely to cause confusion, to cause mistake, or to deceive,". So even if Bob offers to sell these cards openly as fakes for $5 he is breaking the law.

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