Who Is In Charge Of Monitoring Pawn Shops
Okay, so let’s talk about this for a second shall we? Who is it exactly that regulates pawn shops anyways?
Is the bond industry like the Wild Wild West? Is there anyone that oversees how these businesses operate?
The fact of the matter is, pawn shops are regulated by state and local laws, and much more tightly than you might normally expect a business to be regulated.
You have to understand that pawn shops are often seen as a financial services industry.
Because of that, there are a variety of laws that will apply to how they handle money, transactions, customer information, and the fees and rates that they are able to charge.
On top of these regulations, contracts are regularly inspected by state and local officials to ensure that they are operating within compliance of the law.
This is not unlike other industries that you might typically be familiar with. For instance, banks, check cashers, and other lending institutions will often be regulated and inspected on a similar regular basis as are pawn shops.
This might seem odd if you are thinking that pawn shops are not a normal part of daily business for some people. However a pawn shops are mainstream these days. Almost everyone knows what a pawn shop is, and there are a large number of people that use them regularly to make ends meet.
On top of that, the pawn industry has attracted a lot of attention recently through television shows such as a Pawn Stars or Hardcore Pawn.
If you’re concerned with dealing with a pawn shop and whether or not they are a business you can trust, you might be curious to know who regulates pawn shops. Who makes sure they stick to the rules and follow state and local laws?
How Tightly Are Pawn Shops Regulated
The regulations governing pawn shops are going to vary on a state-by-state basis.
What is typically enforced by the state laws are things like the interest rate that pawn shops can charge, as well as any additional storage fees that they may charge in connection to a pawn loan.
Additionally, the amount of time the pawn shops have to hold items before they are able to turn around and resell them will also be governed and regulated by state and local law.
Not stopping there of course, the laws will also normally require that a pawn shop report to their local law enforcement officials on the daily transactions that they conduct with their customers.
What is typically not regulated by state or local laws is how much pawn shops are required to offer their customers for items.
This is something that will be determined on a store-by-store basis which is of great benefit to the customer as they are able to comparison shop between different pawn shops to get the best deal possible.
How Often Are Pawn Shops Inspected By State Regulators
Pawn shops are often inspected by their state regulators at least once a year.
That having said, this is something that is going to vary on a state level. There are some states that may inspect their pawn shops on a more regular basis while there are other states that may do it less frequently.
That having been said, these inspections are normally always by surprise. What that means is that pawn shops are always going to be on their toes and operating to the letter of the law.
So Pawn Shops Really Follow The Regulations
Absolutely! Almost every pawn shop I’ve ever dealt with was operated by a business owner whose only interest was in operating a perfectly legal, and ethical business. They are not looking to run afoul of the law for any reason.
The pawn industry is very well aware of the reputation that the public might attach to it. Sadly, this reputation is a throwback to years past and has almost nothing to do with how the pawn industry operates today.
Today’s pawn shop is not what your grandparents may remember that they once were. In the past, it might be difficult to track stolen items or know when somebody is bringing something that they might not own.
These days pawn shops work very closely with the local law enforcement officials to keep stolen merchandise out of their stores. Additionally, most everything is tied to a serial number these days making items easy to identify, particularly in the case of consumer electronics which will often have the owners information right in them.
Pawn shops are not interested in making a few extra dollars by doing anything that could be seen or otherwise perceived as illegal. It’s just not worth it to them. Contracts are profitable enough without having to do anything that could jeopardize their business, or worse, get them sued.
Most pawnbrokers are extremely moral and ethical people that just want to operate a good business that provides a value to the community in which they work in.
Mandy Dormain started working for Pawn Nerd in 2020. Mandy grew up in a small town in northern Tennessee. But moved to New York for university. Before joining Pawn Nerd, Mandy briefly worked as a freelance journalist for several radio stations. She covers politics and economy stories.