Thursday, Feb. 21, 2002 | 8:24 a.m.
At first, Burk Pinkus comes across as an average Joe offering testimony on a late-night infomercial.
But Pinkus isn't pitching a product. Nor is his testimony solicited. He is just a small Las Vegas shop owner European Hair on South Maryland Parkway with an interesting way of doing business.
Pinkus barters. To be more precise, he is a member of a bartering company, Millennium Exchange Inc., which is headquartered in Van Nuys, Calif. Through Millennium and one-on-one trades, Pinkus offers haircuts, manicures, hair-styling and acrylic nails in exchange for goods and services.
Over the years Pinkus has purchased cars and had them painted, put a $40,000 down payment on a home, had dental work done and his business cards printed all through barter.
"I can even go on vacation and not pay for anything," he said. "Restaurants, hotels, amusements, rental cars and even air fare. Everything but the tips are paid for."
Pinkus has been involved in bartering for 30 years, first in Salt Lake City, then in Las Vegas, his home for the past 15 years.
It all started when a client approached him about bartering as a form of payment for haircuts. In lieu of money, for example, a customer who owns a restaurant would offer an exchange of meals for manicures.
"I saw it as way to get more clients into the shop and to free up the cash flow," Pinkus said. And now about 5 to 10 percent of all his business is done in trades.
"Anything you can get in cash you can barter with," Pinkus said. "If it's done right, it's a profitable deal for everybody."
There's nothing new about bartering. Thousands of years before currency first made its appearance in China about 1000 BC, through the use of rudimentary metal money and coins sheep, cows and camels were exchanged for goods and services.
With advances in agriculture, this form of "barter cash" grew to include plants, fruits and vegetables and grain.
Even as economies were developed around cold, hard cash, bartering remains a routine practice among individuals, businesses and even nations.
Ever trade a baseball card, such as a 1974 Steve Garvey for a 1976 Graig Nettles? That was a barter. Or, how about helping a friend move, knowing full well that when it came time to relocate into your own new digs, your friend would help you? Again, that was a barter transaction.
But it wasn't until the last 30 years or so that the bartering industry became a common practice.
In 1974 there were about 17,000 barter clients registered to the International Reciprocal Trade Association (IRTA), which acts as a worldwide governing body for exchanges. Twenty-five years later, that number had grown to 470,960 members.
The system is simple, similar to banking.
Barter organizations, such as Millennium and ITEX (International Trade Exchange), the two largest companies in Las Vegas, act as banks. Instead of a customer opening an account based on cash deposits and withdrawals, they open an account based on "barter cash," credits from the sale of goods or services.
A client with either goods or a service to offer, such as a graphic artist, carpenter, mechanic or doctor, opens an account with a barter company.
For example, a mechanic joins a barter group (this usually requires a one-time membership fee that can range anywhere from a few hundred dollars to $1,100). As the mechanic works on other members' cars, he acquires credit in his account, based on the same price he charges for cash. So if he charges $1,200 to replace a transmission in cash, he would receive the same amount in credit.
If the mechanic wants to have his bathroom plumbing repaired, he can go to the bartering group, see if there is a member who is a plumber, and use his $1,200 in barter cash to have the work done.
If the plumbing job costs only $500, the mechanic will keep $700 in his account. If the plumbing work ends up costing $2,000, the mechanic could either pay the difference in cash or offer to work on the plumber's car. He could also get a loan from the barter company.
The barter companies, in turn, make their money from the membership fee but also a transaction fee -- basically a service charge -- that usually runs about 10 percent of the total cost of the exchange. Of course, the service fee is paid in cash.
And similar to a bank or a credit card company, the barter groups have to approve any transactions before any work is done or item is sold to make sure the member has enough credit.
If there are not enough credits, the transaction won't be approved. This is usually done on the spot with a phone call to corporate headquarters.
As far as Mark Savoy is concerned, there is no difference between his company and a bank.
"We're really only a third-party record-keeping system that allows (members) to bank their barter dollars," Savoy, chairman of the board for Millennium Exchange, said, "(and) then spend on either business expense or personal expense."
Bartering is completely legal. It is recognized by the Internal Revenue Service and is a taxable income, with a special form -- the 1099 B -- created especially for reporting bartering.
More members
When David Heller worked as a salesman for Western Barter Corp. just after it started 11 years ago, there were no members.
Western Barter is the licensed Las Vegas broker for ITEX Corp. And just as ITEX has grown into the nation's largest barter company with 15,000 members throughout the United States and Canada, Western Barter has surged in membership, too, to 230.
The group remains fairly active, he said, ranging from 500-1,000 transactions a month. And the bartering includes everything from medical exams and meals at restaurants to cremations and advertising. There are even specialty items that occasionally pop up that members can buy from other members, such as homes, time-share condos, airfare and even Super Bowl tickets.
"We do everything," Heller said. "One of my sales guys paid for an entire wedding in trade. He did the entire catered affair on a big 22-acre ranch from one of our members, got his ring on trade and the photographer. It ended up costing him just under $20,000 in bartered dollars."
The wedding is an example of one of the big benefits to bartering: new business.
Big Dog's Hospitality Group, which has restaurants in the Las Vegas Valley, relies on one-on-one bartering to help attract new customers.
The company will trade out coupons (or "scrips") for food and drinks in exchange for advertising with radio and TV stations and magazines. In turn, companies will often give out the coupons as incentives to its sales staff, who bring their friends and family or clients to the restaurants.
"We do it more for the type of exposure," Lynn Osmera, marketing director for Big Dog's Hospitality Group, said. "It gets people in the community more aware of our products. Of course it saves us some initial cost for whatever it is we're purchasing," such as air time for advertising, which frees up some cash.
David Saxe, producer of several Las Vegas shows including "Melinda, First Lady of Magic" at The Venetian and "Showgirls of Magic" at San Remo, uses barter to fill seats and also to reward cast members.
Through his membership in ITEX, as well as one-on-one bartering, Saxe said he trades out show tickets for dinners, gift baskets -- almost anything that can be given as a gift.
"At (our company) Christmas party, we had so many people to buy for between all the shows -- approximately 100 people -- that it was too expensive to buy everyone a $100 gift. But with trade, I can give a $100 gift and all it cost me are tickets.
"(Bartering) really makes sense for me; all I'm giving is air," he said. "And the people who get these tickets are mostly locals, so I'm not cutting into my tourist business."
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