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Barter Exchanges

One way to market your goods or service is through bartering, in which goods are exchanged between two parties without an exchange of money. To facilitate barter, a number of exchanges have been formed, many of them on-line. These exchanges help you find other parties that: are interested in what you have to offer and that offer goods or services that you seek to obtain.

When choosing a barter exchange, consider these factors:

  • The current roster of members, what they have to offer, and what they are looking to get in exchange. If there is a fee to join, you should be given sufficient information to judge how likely you are to make successful trades through that exchange.
  • The membership fee. It can be annual, monthly, or a combination of both. Sometimes there can be a one-time initiation fee.
  • The fee you must pay for each barter transaction realized through the exchange. Sometimes it is a flat fee, more often a percentage commission. If it is a commission, understand in advance how transactions are valued by the exchange, and how you can appeal disputes.
  • Whether the exchange has any pending complaints or legal action against it. Check with the Better Business Bureau and your state department of commerce or department of consumer protection. See if either the Federal Trade Commission or the IRS has any pending action against the exchange.
  • What guarantees the exchange offers to ensure that both parties to a deal live up to their ends of the bargain. Does the exchange create an enforceable contract between you, and does it help you enforce it?
  • The exchange's policies on deadbeat participants. Does it kick them out?
  • The exchange's rating system for participants. Do parties to a swap score each other's performance? This would help you determine whether to enter into a transaction with a given member.
  • Your legal advisor's assessment of the protections offered by the exchange to its members.
  • Your tax advisor's assessment of the exchange's tax policies regarding the valuation of transactions and the generation of Forms 1099-B at year end.

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