The CEO is unhinged and also really dishonest. He actually told his customers - his source of cash flow - to take a hike! I've never known a successful business that stayed afloat by telling their customers to take their business elsewhere. Good luck surviving in this economic climate with that attitude. Here is the email he sent:

"Dear Shop Owners,

As CEO, I am compelled to write this note to you following a whirlwind of misunderstandings, false claims, and rather unprofessional remarks made about Ruby Lane, myself and my staff that need to be addressed.

Thankfully, these observations and recommendations do not apply to all of our dealers, but there were enough to warrant this note.

First and Foremost - Sales Tax

I think by now most shops know and understand that Ruby Lane is required by state laws to collect and remit Sales Tax for you and your buyers. We fought this for 2 years, incurring costly legal fees, hoping for the conclusion that we would not be required by law to do so because we were not involved in your transactions, but that did not happen. Because Ruby Lane is now potentially liable for all of your Sales Tax prior to various dates starting in 2018 and 2019, plus all Sales Tax going forward, we had to start collecting Sales Tax immediately in the 4th quarter of 2019 -- we had no choice. You can thank your local lawmakers for that. If you think Ruby Lane, or in fact any other website now charging Sales Tax, is making money off of it, you are misinformed.

If you're currently selling on any marketplace, show or event and you or someone on your behalf is not collecting and remitting Sales Tax for you, then you are potentially liable for all back taxes and penalties in the state for which you have triggered a Sales Tax collection obligation. The penalties and interest for many states are very severe.

We estimated the cost to administer the collection and remittance of Sales Tax to us was about 4% of total sales based on 2018 numbers. This includes, but is not limited to, additional staffing for collection and filings, 3rd party assistance, tax advisors and attorneys in 37 states, accounting for our liability to pay the Sales Tax when shops leave but don't pay what they owe or try to evade the system (unfortunately this is already happening), existing staff resources for administration, tech work and communication, and future audits. And yes, this is tied to sales amounts, and not a flat fee because of our liability. Sales Tax not paid or skirted is a lot more on a $1,000 item than on a $10 one.

Also, as previously communicated, we are working with PayPal and other 3rd party processors for options so Ruby Lane can take the Sales Tax directly, rather than have to have you take the Sales Tax amount from your buyer. As it is not quite clear to some, this is not a trivial thing to do. We cannot go from a system where we never touch the transaction, to one where we are involved in the transaction overnight. If we could do it now we would, but we cannot.

Buyer Service Fee

Since Ruby Lane is traditionally dealer-centric, we decided to implement a Buyer Service Fee to help offset the cost to our dealers. But after the announcement, it was obvious that shops were very concerned about this Buyer Service Fee. So after a few weeks, we decided to invite shop owners to take a survey and find out how the majority felt.

That survey showed the majority of shops wanted to take control of the cost by paying the fee themselves. And no, we did not rig the survey as we've been accused of doing. I would have hoped that after 22 years I would have gained more trust and respect, but obviously some don't understand my moral integrity and frankly, it's deeply disheartening.

Seller Service Fee

As stated in other communications, we decided it was time to add a 3.75% fee on the seller side, as we had not raised fees in years. The maintenance fee would be reduced slightly for smaller shops but basically remain as is because we would leave the site open for unrestricted buyer and seller communications, knowing full well some shop owners would not be so honest in reporting sales.

As it turns out, this was a wise choice as many shops are unfortunately trying to skirt paying Sales Tax and Ruby Lane fees. It's one thing to be dishonest to Ruby Lane; it's another to evade State Sales Tax laws. Some interesting facts: Year Over Year reported sales volume last week was down 85%, while site sales were just down single digits which we attribute to sales happening off site and not being reported, and the introduction of Sales Tax and Buyer Service Fee.

As the year progresses, we most likely are going to be forced to take a tougher stance against dishonest sellers. If you are one of those sellers, I would prefer that you sell on a different site for the good of Ruby Lane and its dealers. If we see immediate improvement in shop behavior we won't need to do anything and just let the states handle the shops not playing by the rules. But as they say, a few bad apples spoil the barrel, so let's all try to be honest here folks and do the right thing. Sellers actively promoting tax evasion, which is in violation of the law and Ruby Lane's Terms of Use Seller Agreement, will be closed immediately upon discovery.

That said, 2.75% of the 3.75% is meant mainly to support our continued cost of running Ruby Lane, and so we can invest more in marketing efforts. One key marketing avenue we've never been able to do is anything related to a profit share or affiliate programs, where a 3rd party advertises your products in emails, texts, blogs, Instagram, Pinterest and other websites, and in return gets a small commission on the sale. We now are able to do that.

Ridiculous and Greedy

Some shop owners have told us about how greedy and ridiculous we are to charge additional fees and that we are making money hand over fist. Again this is far from the truth. We've always gone out of our way to help dealers in this tough market as best we can. We try to be as fair as possible and charge fees to make our ends meet. We listen to our dealers and try to do what's best for them, and Ruby Lane as a company.

Please remember we provide a website platform, host your shop, create reports, do SEO, AIP images, have fraud prevention, protect you and your customers from hackers, provide award-winning customer support to buyers and sellers, market your items and the site, collect, report, and remit Sales Tax for you, curate items, keep up with desktop and mobile technology, create newsletters, handle wish lists, create and promote sales, plus much more.

Those shops who are disparaging Ruby Lane in public (forums, reviews, and in communication with customers) are in turn disparaging each and every shop owner. This is not only true for Ruby Lane but really any marketplace. Complaints and concerns should be addressed in forums for shop owners or sent directly to Ruby Lane. Buyers are free, of course, to address their concerns in public but shop owners should hopefully strive to use their best business sense.

Choices

We know there are other choices out there for marketplaces, shows, events, and your own sites. We feel strongly that we offer the best marketplace for curated vintage and antiques at a competitive price, run with high integrity and a general respect and well-being for our dealers.

If you do choose to go to one of the large publicly traded sites, remember to compare apples to apples - final value fees, commission, "free shipping" subsidizing, closed communication, fees on top of fees. And if you're trying a new site, show or event, please make sure they handle the Sales Tax for you.

Wrapping Up

Although I hope you find the above information helpful, this note concerning Sales Tax does not offer a substitute for professional legal or tax advice. If you have questions about your tax liability or concerns about compliance, please consult your qualified legal, tax, or accounting professional.

I truly appreciate all the shops over our 22 years that have helped build Ruby Lane together. If we work together, we can continue to grow and prosper. We hope our long relationship can weather these growing pains and continue to evolve and thrive.

We look forward to a strong year in 2020 and thank you for working with us.

Sincerely,

Tom Johnson
President & CEO
Ruby Lane Inc."