"The Gun Control Act of 1968 requires anyone engaged in the business of selling guns to have a Federal Firearms License (FFL) and keep a record of their sales. However, this law does not cover all gun sellers. If a supplier is selling from his or her private collection and the principal objective is not to make a profit, the seller is not "engaged in the business" and is not required to have a license. Because they are unlicensed, these sellers are not required to keep records of sales and are not required to perform background checks on potential buyers, even those prohibited from purchasing guns by the Gun Control Act. The gun show loophole refers to the fact that prohibited purchasers can avoid required background checks by seeking out these unlicensed sellers at gun shows."
http://www.csgv.org/issues-and-campaigns/gun-show-loophole/gun-show-loophole-faq
"Undercover investigators working on behalf of the New York City mayor's office repeatedly bought guns from unlicensed dealers at gun shows even though they disclosed they probably couldn't pass a background check.
That finding is among those outlined in a 36-page report released Wednesday by Mayor Michael Bloomberg's office that documents alleged illegal gun sales by private and licensed dealers earlier this year at seven gun shows in three states."
http://www.washingtonpost.com/wp-dyn/content/article/2009/10/07/AR2009100702261.html
"Although federal law requires licensed gun dealers to screen buyers for criminal records, mental health history and more, those rules don't apply to private sellers. States oversee them, and in Virginia, private sellers aren't even asked to check a buyer's ID."
http://www.roanoke.com/news/roanoke/wb/152970
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