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Hobby Protection Act - NIA Input

The FTC has requested public comment on the Hobby Protection Act of 1973.  The NIA has provided the following input to be considered in any amendment to this act


Cover Letter


16 CFR Part 304 Comment--Hobby Protection Act Rule

NATIONAL INSULATOR ASSOCIATION STATEMENT TO THE FEDERAL TRADE COMMISSION SUPPORTING MODIFICATIONS TO THE HOBBY PROTECTION ACT

APRIL 28, 2003

Introduction: 

In the 35 years of organized insulator collecting, glass and porcelain insulators have become highly collectable and prices of these artifacts have escalated.  Along with the price increases, there have been increasing problems with forgeries and alterations.  With prices in insulator auctions commonly exceeding $5,000 for a rare piece, it is now quite profitable for parties to manufacture and distribute imitation items.  Many of these artificial insulators defy the experts when it comes to authenticating the pieces. 

The National Insulator Association (NIA) spends a considerable amount of its resources in conducting research and educating the insulator hobby about imitation and altered insulators.  However, with the dramatic increase in interest in the hobby, the NIA is unable to keep pace with those attempting to defraud the collector. 

While the NIA has the authority to ban individuals from the organization for unethical behavior, like making and/or selling fake items, it has little recourse under criminal law to have people committing such fraud held accountable for their illegal activities.   

As a result, the NIA strongly supports modifications to the Hobby Protection Act of 1973 to include other hobbies across the board, but in particular the insulator hobby.

  

History of the Insulator Hobby

 

Insulator collecting had its grass-roots start in the early 1960s when telephone and power company linemen were in the process of converting overhead wire runs to microwave and underground systems.  The insulators were often discarded and buried in local landfills during this period.  However, many of the glass and porcelain insulators of unusual shape and color found their way into the early collections of these phone company and power workmen.

By the late '60s, collectors had formed small groups of likeminded enthusiasts and informal swapmeets took place.  The description and cataloging of insulators began, and several small books were published about insulators, as well as an early price list.  In 1969, the first National insulator magazine started publication The Crown Jewels of the Wire and is still in publication today.

Rapid growth of the hobby took place during the early 1970s with the organization of several regional insulator clubs around the country and the establishment of the NIA in 1973.  A corresponding surge of new collectors attended the increasingly popular insulator shows and regional and National events began to be held annually.

In the 1980s, the rate of the growth slowed somewhat allowing the organizational aspects of the hobby to catch up.  At the same time, the hobby spread to nearly every state in the country and many more local insulator shows began to occur.  The one aspect that did not slow was the rise in prices of these collectibles.  Prices doubled, and in some cases tripled, during this period.

The 90's saw a resurgent growth of the hobby, with the number of NIA member clubs doubling.  There are now 25 local/regional insulator clubs scattered around the country!  During this period, catalog auctions of rare insulators began and it became common knowledge that many insulators had multi-thousand dollar values.  Perhaps the largest impact on the hobby during this period was the uniting of the collectors through the Internet.  The establishment of insulator collecting websites likely accounts for the latest surge in the hobby.

Two websites stand out in the group of 50 plus insulator related sites and these have been instrumental in providing information and education to the hobby.  First is the NIA website (www.nia.org), and second, the notable and primary site (www.insulators.info).  This latter site also is the focus for a 1500 member web-based collectors organization know as ICON, or "Insulator Collectors on the Net".

In modern times, the most recent significant impact on insulator collecting appears to be the Internet auctions, notably eBay.  This has provided an additional and wide-reaching venue for trading insulators.  On any given day, one can find over a thousand insulators for sale on eBay alone!  

Background on the National Insulator Association

Objectives and Purpose:  The NIA, as stated in its By-Laws, is a non-profit educational and scientific organization; its aim is to encourage insulator collecting and to protect the interests of its members and collectors.  The NIA has established standards and ethics by which its members may fairly deal with each other.

General Information:  The National Insulator Association (NIA) was established in 1973, and is an international organization of collectors and individuals interested in communication and electrical insulators, as well as other artifacts connected with insulators, such as telephone, telegraph, power transmission, railroad, and lightning protection devices.

In recent times, the annual paid membership has averaged 1,900 members.  The total number of insulator collectors is estimated to be at 10,000.  Residents from each of the states of the United States and all the provinces of Canada have been NIA members, as well as many foreign nations, including Germany, Great Britain, Australia, New Zealand, Czechoslovakia, Holland, Colombia, and The Netherlands.

In addition to protecting the interests of collectors and establishing standards, the NIA promotes insulator collecting in many ways, including sponsoring local, regional and national shows where awards for exhibits are presented.  Education and historical information are stressed in the NIA's judging criteria. 

NIA Administration:  The governing body of the NIA is its ten member Board of Directors, the core of which are the elected President and three elected regional Vice-Presidents. 

Membership Information:  Any person or club interested in insulators, lightning rod equipment or items related to collecting or historical activity, are eligible to apply for membership. 

Effect of Forgeries and Alterations on the Hobby

First, it is important to define the relevant terms concerning insulator reproductions.  These definitions are incorporated into the ethics section of the NIA Bylaws, the relevant portions of which are at Attachment 1.  The concerns of the hobby revolve around two types of "reproductions":  Imitation insulators and altered insulators. 

Imitation Insulators are ones that purport to be, but in fact are not, original insulators, commemorative insulators, or salesman samples.  This category includes, but is not limited to, reproductions, copies, replicas, or counterfeits of original insulators, commemorative insulators or salesman samples. 

Altered insulators include original insulators, commemorative insulators or salesman samples which have been intentionally altered from their originally manufactured condition.  This category includes mechanical actions (e.g. sandblasting, grinding, embossing modifications), heating, cutting and re-gluing, irradiation, dying and painting, and non-factory carnival coating.  (A discussion of one specific aspect of insulator altering, changing the color of the glass, is presented at Attachment. 2. This is a good example of the complexity of the altered insulator problem. )

The NIA Bylaws state that no one can produce imitation or altered insulators unless they are permanently marked so that there can be no mistake as to their authenticity.  The wording in the bylaws was directly patterned after the verbiage set forth in the Hobby Protection Act as applied to other collectibles.

Early on in the insulator hobby cases of altered insulators were noted.  In the late '70s, numerous insulators started showing up with an iridescent coating that gave them a "carnival glass look".  The problem is that the carnival coating was sometimes applied to insulators at the factory for pieces used in a high radio frequency environment; it became quite difficult to tell the original pieces from the altered specimens.  In the mid 1980s, imitation (fake) insulators began to appear.  First in limited quantities, but as the values of insulators escalated, the incentive to make forgeries surged as well.

The NIA was able to keep track of such items and to alert fellow collectors to the specific problems.  However, there has been an ever-increasing number of imitation and altered insulators appearing, and since the mid '90s, it has been almost impossible to keep the hobby adequately informed of the flood of fraudulent examples.  It is now to the point that hobby members are at risk of their collections losing value due to the onslaught of reproductions and altered products.  Future generations of insulator collectors are particularly at risk through purchases at antique malls, flea markets, etc.

The hobby has been constrained from stopping the manufacture and sale of bogus items by the lack of laws that would make such activities illegal.  Pursuing the perpetrators in civil court has been most difficult due to the high cost of proving an insulator is bogus.  The only avenue for criminal proceedings has been through the application of mail fraud laws.  In fact, not until this past year has the NIA been able to gather enough evidence on a particularly egregious case of imitation insulator manufacturing and distribution in California.  This particular case (which has documented losses of over $100,000), is now in the hands of the U.S. Postal Inspectors and U.S. Attorney in Sacramento, California but it could be years before a verdict is reached.  Without Federal laws specifically set forth to regulate the manufacture and distribution of imitation and altered insulators, there is little incentive for people to stop making bogus items.

Summary and Recommendations

The collecting of glass and porcelain insulators began in the early 1960s and developed into a popular hobby by the mid-1970s.  Today there are some 10,000 insulator enthusiasts throughout the country.  The primary organization representing the hobby is the National Insulator Association the mainstay of the hobby since 1973.

Imitation and altered insulators have been an increasing problem for the hobby since the early days of insulator collecting.  Without a means to press criminal charges for fraudulent activity, the growth in the manufacture and sale of fakes continues to rise at an ever-increasing rate.

In light of these problems, the NIA strongly supports enlarging the list of hobbies under the auspices of the Hobby Protection Act to include the insulator hobby.

[NOTE:  The NIA would be pleased to provide detailed information about fakes in the hobby and can provide draft sections for incorporation into the revised Hobby Protection Act.  Please address all inquires to:

          Thomas Katonak

          President, National Insulator Assn.

          1024 Camino de Lucia

          Corrales, NM  87048

 

          Phone:  (505) 898-5592

          Email:  tkatonak@comcast.net


Link To Attachment 1 (NIA Code of Ethics)

Link To Attachment 2 (Fake and Altered Insulators)


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