Sellers Beware: A Cautionary Tale of Legal Entanglements For Magic Players

Any veteran trading card game player will tell you that all TCG’s of lasting success are propped up by three important pillars. These pillars are engaging and balanced rules, a well funded and coordinated professional scene and a healthy after market for single cards. For Magic: The Gathering, undoubtedly the world’s biggest TCG, this after market includes heavy traffic from both professional resellers and private collectors and players. So when a MtG player shared a story of being served with legal documents for buying and reselling MtG cards, the community grew rightfully concerned.

GermanJudge

Tobias Gräfensteiner, a 27 years old German MtG player, posted on reddit on 30th of May about the legal troubles he had run into for selling MtG cards on Magickartenmarkt.de, an Europe based MtG market platform also commonly known as MagicCardMarket or MKM. I will briefly outline the story he shared. Tobias shared that he bought a play set (4) of Chromanticore from a registered professional seller on TCGDiscount for 1.75 Euros after hearing that the card may become popular. Tobias admitted that he also bought 20+ copies of this card from other sellers and attempted to resell them for 2.99 Euros when the price rose. On April 22, Tobias received a letter drafted by TCGDiscount’s lawyers, claiming that by acting as a commercial seller while remaining a private seller, he had illegally taken advantage over TCGDiscounts. The letter asked for damages of 750 Euros to be paid to TCGDiscounts, and the signing of a declaration of discontinuance, meaning Tobias would no longer be allowed to privately sell cards on MKM. This is because under German law, buying and selling for a profit, even of a hobbyist product such as trading cards, is considered a commercial activity and therefore requires the seller to be registered as a commercial trader and pay taxes.

In response to this, Tobias had a lawyer draft a response letter attempting to outline that all of his activities on MKM are simply part of the hobby, including the buying and selling of Magic cards. He also defended his activity of ‘speculating’ on cards as a small part of his activity on MKM and that a lot of his stock actually comes from winnings. Tobias claimed that this cost him 390 Euros.

On May 21, a bailiff delivered Tobias’ a letter from the district court of Bochum. TCGDiscounts had obtained a prohibition order from the court outlining that if Tobias sold another card as a private seller on MKM, he could face  a fine of up to 250,000 Euros or an arrest of up to six months for disobedience of a court order plus bear an estimated court costs of around 1,500 Euros. This order can be obtained by TCGDiscounts due to the fact that under German law, anyone observing a violation can have a court order obtained without having to be actually effected by such a violation.

Tobias stated that he immediately deactivated his MKM account after receiving the order. Consulting with his lawyer led him to conclude that he will have to go to court if he wished to contest the order which would cost a great deal. This lead him to share his story on reddit and also to start a petition aimed at TCGDiscounts.

When I heard Tobias’ story I decided to reach out to TCGDiscounts with some questions to hear their side. They shared with me a statement they prepared in response to Tobias’ post which can be read here for the sake of preserving this article’s length. The following are their answers to my questions.

  • Tobias had bought 4 Chromaticores from you for 1.75 Euros and sold them for 2.99 Euros, thus making a net profit of 4.95 Euros total. Now, Tobias claimed that the letter by your lawyers claimed 750 Euros payment from him. If that is the case, how did you arrive at that value and why?

In Germany, to avoid unnecessary hearings, you can send a competitor who is acting against laws or rules a written warning. This written warning is done by a lawyer. Additionally the warned competitor has to pay the lawyer’s fees. Those fees are fixed by the laws. So Tobias had, if he signed the written warning, the fees for the lawyer. We wouldn’t have received any cent of his payment.

  • I understand Tobias had many cards to sell on his account and he had a history of a lot of purchases, which formed the basis for your legal demand. However the amount of cards he bought from you and resold came to a total of four, quite an insignificant number. Therefore, my question is how did the activities on Tobias come to your attention and why did you choose to send him a legal letter.

Some days after his purchases we wanted to offer more Chromanticores for sale. As we checked actual prices we recognized that Tobias already offered several copies (23 I guess) for a higher price than we sold them to him. We were confused why he was buying 4 more if he has already nearly 20 copies. Because of the advertisement in his offer (“FullStock from Theros to Khans”) we checked his inventory and profile. He had a private seller account, but his sales and offers were, in our opinion, too high for just a private seller. Especially 150 sales in one month plus offering full stocks and sealed sets, combined with the intention of making profit on fresh bought Chromanticores, lead to the intention of making profit via card sales. Here we contacted our lawyer, because the e-commerce in Germany is highly regulated. Customers have a right of withdrawal when buying from a registered reseller but not when buying from a private seller. Registered resellers have to show all their contact information. Private resellers can hide their full address and contact information. Just check our profile on magiccardmarket against Tobias’ profile. Here you will see how much information we have to share with everybody in contrast to a private seller. So we sent him the written warning to not hide behind a private seller account.

  • Going further down that line of thought, 4 is a playset of cards in Magic the Gathering. If a person purchased such a playset to use and later attempted to resell them when they no longer need them, they are still running foul of the law you are utilising. Are you asserting that Magic players that are buying from you should only do so for personal use and not resell unless they are registered as a ‘commercial trader’?

No, they are not. Players can buy and sell any part of their collection as long as it’s not for running a business. If a player buys cards, reflects and wants to sell them the next day it’s fine. If he makes profit because the price went up we don’t care about it. But if someone is buying cards with the intention of making profit, like Tobias confirmed in his own post, it’s slightly different. It doesn’t matter if someone is buying cards from us or another seller. If someone is offering up to 10 copies of nearly each card from the last 2 years and is buying cards for reselling them for profit, in our opinion he is acting like a commercial trader and has to register for this kind of account.

  • If you claim that Tobias’s overall volume of sales is what prompted you to send the legal letter and the subsequent prohibition order, my question is this. There are many sellers on MKM currently that trade in the volumes Tobias did and more. Do you plan to send any more letters or seek prohibition orders on any of these sellers in the immediate or far future?

At this moment we are not aware of other commercial traders hiding behind a private account.

  • Are you aware that there is a petition targeted at you with over 6,000 signatures, here. What is your response to this.

Yes, we are. Unfortunately, while reading the comments on reddit, we recognized that several people just read that we sue Tobias because he was reselling cards he bought from us. But, as mentioned above, that’s not correct. Additionally the rules and laws here in Germany are different than in the USA or other countries. So we guess, most people who signed that petition, weren’t able to see the whole picture. Several comments on reddit, from people who checked similar decisions of the courts in Germany and checked Tobias profile agreed with us.

  • And finally are there any other statements or comments you would like to make in the matter?

In our opinion, every reseller should be open and honest and work under the same rights and obligations instead of hiding himself. Our only aim is to get fair and honest competition in our market, nothing more and nothing less.

As you can see, I didn’t pull any punches with my questions and TCGDiscounts was more than happy to answer them. In fact, they seemed eager to get their side of the story heard. I am forced to admit, when I first heard of this story I was quick to be outraged. Upon further deliberation after hearing more of the details, like most things in life, it no longer seemed so black and white.

TCGDiscounts is definitely in the right legally here, of that there’s no doubt. The court order obtained by them is a clear example of that. Under German law as it stands, Tobias’ activities in buying and selling cards for a profit, no matter how little and no matter what use it is put to, count as a commercial activity.

However, what is the law and what is right can often differ. It is true that an after market for cards is a core part of a trading card game. It is a matter of fact that mere ‘trading’ of cards is no longer sufficient once you graduate past the school yard games and regular buying and selling of trading cards become a regular part of the hobby. The idea that this simple activity, as a part of the hobby, could be considered a business is what immediately shocked us about this story.

However, upon closer inspection, it is no surprise how some of the activities of Tobias’ account can raise the ire of those registered as commercial sellers. He himself has admitted to ‘speculating’ on prices of some cards and buying low to sell high. He even said that he had 29 Chromanticores for sale at the time of the letter served, just under the limit of 30 cards MKM policy allow a private seller to sell. That is not to assert that the act of speculating on cards is immoral or wrong. It is simply a commercial activity under law. Tobias also claimed while he may partake in speculating on cards, it’s a small part of the activities on his account. He stated that the majority of the activities on his account come from sale of his winnings. While nobody would begrudge him making profits on the prizes he won, it is still worth noting that in many countries, including America, prizes won still attract taxes.

I think it is also worth noting that Tobias does not have to stop selling cards in any way, shape or form. He simply needs to register as a commercial seller and pay the required taxes and the court order would not prevent him from continuing to sell cards. In fact, I remain quite perplexed as to why Tobias still hasn’t registered as a commercial trader. I attempted to reach out to Tobias to ask just that but as of the time of this article, he remained unreachable.

The fact that the first contact Tobias had regarding this matter is a letter by a lawyer still leaves a bad taste in my mouth though, as it feels too close to bullying. What I found to be disturbing for other TCG players who happen to sell actively, especially on MKM, is that a legal prohibition order has been produced preventing one of the users of the platform from operating any further without the consent of the platform owner itself. Despite the merits or otherwise of the case itself , the very fact that such an order was obtained at all raises concern about how protected the users of the platform are from any such legal orders in the future. MKM has its own set of rules on what a professional seller and a private seller can do on their FAQ section, and as far as I know, Tobias has not violated those rules. Yet Tobias has been effectively stopped by a third party from being a private seller on the platform, which is alarming. I contacted MKM enquiring just how they aim to protect their users from such a fate in the future. So far, they have not responded.
So at this point, it’s clear this is about taxes. Tobias feels he shouldn’t have to pay them on the little money he makes as part of the hobby, which more then likely just contributes to growing his collection. TCGDiscounts feel that those in the hobby who are selling cards in high volume, especially those who are speculating in hope of turning a profit, should be paying the same taxes, lest they have an unfair advantage in the market. They both had valid points in my opinion, and at the end of the day I cannot tell you who is in the right since this is not 60 minutes and I am not some kind of moral judge. I will say I feel this should have been dealt with using a simple exchange of words instead of legal orders and petitions.

So the moral of the story here for TCG players is to know and adhere to the laws of your country when buying and selling cards. Because if you don’t, someone might just make sure you have to.

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