1.1                          A bill for an act 
  1.2             relating to consumer protection; providing for the 
  1.3             licensing and regulation of pawnbrokers; providing 
  1.4             penalties; amending Minnesota Statutes 1994, sections 
  1.5             471.924, subdivision 1; 471.925; and 471.927; 
  1.6             proposing coding for new law as Minnesota Statutes, 
  1.7             chapter 325J; repealing Minnesota Statutes 1994, 
  1.8             section 609.81. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10                     PAWNBROKER REGULATION ACT 
  1.11     Section 1.  [325J.01] [DEFINITIONS.] 
  1.12     Subdivision 1.  [SCOPE.] As used in this chapter, the 
  1.13  following terms have the meanings given them unless the context 
  1.14  clearly indicates otherwise. 
  1.15     Subd. 2.  [APPROPRIATE LAW ENFORCEMENT AGENCY.] 
  1.16  "Appropriate law enforcement agency" means the attorney general 
  1.17  of the state of Minnesota, the sheriff of each county in which a 
  1.18  pawnbroker maintains an office, or the police chief of the 
  1.19  municipality or law enforcement officers of the municipality in 
  1.20  which a pawnbroker maintains an office. 
  1.21     Subd. 3.  [MUNICIPALITY.] "Municipality" means any town, 
  1.22  home rule charter or statutory city, or county that elects to 
  1.23  regulate and license pawnbrokers within its jurisdiction 
  1.24  pursuant to local ordinance. 
  1.25     Subd. 4.  [PAWNBROKER.] (a) Except as provided in paragraph 
  1.26  (b), "pawnbroker" means a person engaged in whole or in part in 
  1.27  the business of lending money on the security of pledged goods 
  2.1   left in pawn, or in the business of purchasing tangible personal 
  2.2   property to be left in pawn on the condition that it may be 
  2.3   redeemed or repurchased by the seller for a fixed price within a 
  2.4   fixed period of time. 
  2.5      (b) The following are exempt from the definition of 
  2.6   "pawnbroker":  any bank regulated by the state of Minnesota, the 
  2.7   comptroller of the currency of the United States, the Federal 
  2.8   Deposit Insurance Corporation, the board of governors of the 
  2.9   Federal Reserve System or any other federal or state authority 
  2.10  and their affiliates; any bank or savings association whose 
  2.11  deposits or accounts are eligible for insurance by the Federal 
  2.12  Deposit Insurance Corporation or any successor to it and all 
  2.13  affiliates of those banks and savings associations; any state or 
  2.14  federally chartered credit union; and any industrial loan and 
  2.15  thrift company or regulated lender subject to licensing and 
  2.16  regulation by the department of commerce. 
  2.17     Subd. 5.  [PAWNSHOP.] "Pawnshop" means the location at 
  2.18  which or premises in which a pawnbroker regularly conducts 
  2.19  business. 
  2.20     Subd. 6.  [PAWN TRANSACTION.] "Pawn transaction" means any 
  2.21  loan on the security of pledged goods or any purchase of pledged 
  2.22  goods on the condition that the pledged goods are left with the 
  2.23  pawnbroker and may be redeemed or repurchased by the seller for 
  2.24  a fixed price within a fixed period of time. 
  2.25     Subd. 7.  [PERSON.] "Person" means an individual, 
  2.26  partnership, corporation, limited liability company, joint 
  2.27  venture, trust, association, or any other legal entity, however 
  2.28  organized. 
  2.29     Subd. 8.  [PLEDGED GOODS.] "Pledged goods" means tangible 
  2.30  personal property other than choses in action, securities, bank 
  2.31  drafts, or printed evidence of indebtedness, that are purchased 
  2.32  by, deposited with, or otherwise actually delivered into the 
  2.33  possession of a pawnbroker in connection with a pawn transaction.
  2.34     Sec. 2.  [325J.02] [MUNICIPAL LICENSING AND REGULATION.] 
  2.35     (a) For the purpose of promoting the public health, safety, 
  2.36  morals, and welfare, a municipality may adopt an ordinance, 
  3.1   issue licenses to qualified applicants, and regulate pawn 
  3.2   transactions.  Ordinances must contain the minimum provisions of 
  3.3   this chapter. 
  3.4      (b) A person may not engage in business as a pawnbroker or 
  3.5   otherwise portray the person as a pawnbroker unless the person 
  3.6   has a valid license authorizing engagement in the business.  Any 
  3.7   pawn transaction made without benefit of a license is void.  
  3.8      (c) A separate license is required for each place of 
  3.9   business.  A municipality may issue more than one license to a 
  3.10  person if that person complies with this chapter for each 
  3.11  license. 
  3.12     (d) Each license shall remain in full force and effect 
  3.13  until surrendered, suspended, revoked, or expired.  A license 
  3.14  may be suspended or revoked for failure to comply with the 
  3.15  municipality's ordinance. 
  3.16     (e) No expiration, revocation, suspension, or surrender of 
  3.17  any license shall impair or affect the obligation of any 
  3.18  preexisting lawful contract between the licensee and any pledgor.
  3.19     (f) The appropriate local law enforcement agency shall be 
  3.20  notified by the municipality of any licensee whose license has 
  3.21  expired or been surrendered, suspended, or revoked as provided 
  3.22  by this chapter. 
  3.23     Sec. 3.  [325J.03] [LICENSEE ELIGIBILITY.] 
  3.24     (a) To be eligible for or to maintain a pawnbroker license, 
  3.25  a person must operate lawfully and fairly within the purposes of 
  3.26  this chapter and the applicable local ordinance and: 
  3.27     (1) may not be a minor at the time that the application for 
  3.28  a pawnbroker's license is filed; 
  3.29     (2) may not have been convicted of any crime directly 
  3.30  related to the occupation licensed as prescribed by section 
  3.31  364.03, subdivision 2, unless the person has shown competent 
  3.32  evidence of sufficient rehabilitation and present fitness to 
  3.33  perform the duties of a licensee under this chapter as 
  3.34  prescribed by section 364.03, subdivision 3; and 
  3.35     (3) must be of good moral character or repute. 
  3.36     (b) Any change, directly or beneficially, in the ownership 
  4.1   of any licensed pawnshop shall require the application for a new 
  4.2   license and the new owner must satisfy all current eligibility 
  4.3   requirements. 
  4.4      Sec. 4.  [325J.04] [PAWN TICKETS.] 
  4.5      Subdivision 1.  [ENTRIES OF PAWN TICKETS.] At the time of 
  4.6   making the pawn or purchase transaction, the pawnbroker shall 
  4.7   immediately and legibly record in English the following 
  4.8   information by using ink or other indelible medium on forms or 
  4.9   in a computerized record approved by the municipality: 
  4.10     (1) a complete and accurate description of the property, 
  4.11  including model and serial number if indicated on the property; 
  4.12     (2) the full name, residence address, residence telephone 
  4.13  number, and date of birth of the pledgor or seller; 
  4.14     (3) date and time of pawn or purchase transaction; 
  4.15     (4) the identification number and state of issue from one 
  4.16  of the following forms of identification of the seller or 
  4.17  pledgor:  current valid Minnesota driver's license; current 
  4.18  valid Minnesota identification card; or current valid photo 
  4.19  identification card issued by another state or a province of 
  4.20  Canada; 
  4.21     (5) description of the pledgor including approximate 
  4.22  height, sex, and race; 
  4.23     (6) amount advanced or paid; 
  4.24     (7) the maturity date of the pawn transaction and the 
  4.25  amount due; and 
  4.26     (8) the monthly and annual interest rates, including all 
  4.27  pawn fees and charges. 
  4.28     Subd. 2.  [PRINTED PAWN TICKET.] The following shall be 
  4.29  printed on all pawn tickets: 
  4.30     (1) the statement that "Any personal property pledged to a 
  4.31  pawnbroker within this state is subject to sale or disposal when 
  4.32  there has been no payment made on the account for a period of 
  4.33  not less than 60 days past the date of the pawn transaction; no 
  4.34  further notice is necessary.  There is no obligation for the 
  4.35  pledgor to redeem pledged goods."; 
  4.36     (2) the statement that "The pledgor of this item attests 
  5.1   that it is not stolen, it has no liens or encumbrances against 
  5.2   it, and the pledgor has the right to sell or pawn the item."; 
  5.3      (3) the statement that "This item is redeemable only by the 
  5.4   pledgor to whom the receipt was issued, or any person identified 
  5.5   in a written and notarized authorization to redeem the property 
  5.6   identified in the receipt, or a person identified in writing by 
  5.7   the pledgor at the time of the initial transaction and signed by 
  5.8   the pledgor.  Written authorization for release of property to 
  5.9   persons other than the original pledgor must be maintained along 
  5.10  with the original transaction record."; and 
  5.11     (4) a blank line for the pledgor's signature. 
  5.12     Sec. 5.  [325J.05] [RECORDS; RETENTION.] 
  5.13     (a) The pledgor or seller shall sign a pawn ticket and 
  5.14  receive an exact copy of the pawn ticket. 
  5.15     (b) The pawnbroker shall maintain on the premises a record 
  5.16  of all transactions of pledged or purchased goods for a period 
  5.17  of three years.  These records shall be a correct copy of the 
  5.18  entries made of the pawn transactions.  A pawnbroker shall upon 
  5.19  request provide to the appropriate law enforcement agency a 
  5.20  complete record of pawn items. 
  5.21     Sec. 6.  [325J.06] [EFFECT OF NONREDEMPTION.] 
  5.22     (a) A pledgor shall have no obligation to redeem pledged 
  5.23  goods or make any payment on a pawn transaction.  Pledged goods 
  5.24  not redeemed within at least 60 days of the date of the pawn 
  5.25  transaction, renewal, or extension shall automatically be 
  5.26  forfeited to the pawnbroker, and qualified right, title, and 
  5.27  interest in and to the goods shall automatically vest in the 
  5.28  pawnbroker. 
  5.29     (b) The pawnbroker's right, title, and interest in the 
  5.30  pledged goods under paragraph (a) is qualified only by the 
  5.31  pledgor's right, while the pledged goods remain in possession of 
  5.32  the pawnbroker and not sold to a third party, to redeem the 
  5.33  goods by paying the loan fees and/or interest accrued up to the 
  5.34  date of redemption. 
  5.35     (c) A pawn transaction that involves holding only the title 
  5.36  to property is subject to chapter 168A or 336. 
  6.1      Sec. 7.  [325J.07] [PERMITTED CHARGES.] 
  6.2      (a) Notwithstanding any other statute, ordinance, rule, 
  6.3   regulation, or section 325G.15, a pawnbroker may contract for 
  6.4   and receive a pawnshop charge not to exceed three percent per 
  6.5   month of the principal amount advanced in the pawn transaction 
  6.6   plus a reasonable fee for storage and services.  A fee for 
  6.7   storage and services may not be charged if the property is not 
  6.8   in the possession of the pawnbroker.  
  6.9      (b) The pawnshop charge allowed under paragraph (a) shall 
  6.10  be deemed earned, due, and owing as of the date of the pawn 
  6.11  transaction and a like sum shall be deemed earned, due, and 
  6.12  owing on the same day of the succeeding month.  However, if full 
  6.13  payment is made more than two weeks before the next succeeding 
  6.14  date the pawnbroker shall remit one-half of the pawnshop charge 
  6.15  for that month to the pledgor. 
  6.16     (c) Interest shall not be deducted in advance, nor shall 
  6.17  any loan be divided or split so as to yield greater interest or 
  6.18  fees than would be permitted upon a single, consolidated loan or 
  6.19  for otherwise evading any provisions of this section. 
  6.20     (d) Any interest, charge, or fees contracted for or 
  6.21  received, directly or indirectly, in excess of the amount 
  6.22  permitted under this section, shall be uncollectible and the 
  6.23  pawn transaction shall be void. 
  6.24     (e) A schedule of charges permitted by this section shall 
  6.25  be posted on the pawnshop premises in a place clearly visible to 
  6.26  the general public. 
  6.27     Sec. 8.  [325J.08] [RECORDS; PROHIBITIONS.] 
  6.28     A pawnbroker and any clerk, agent, or employee of a 
  6.29  pawnbroker shall not: 
  6.30     (1) make any false entry in the records of pawn 
  6.31  transactions; 
  6.32     (2) falsify, obliterate, destroy, or remove from the place 
  6.33  of business the records, books, or accounts relating to the 
  6.34  licensee's pawn transactions; 
  6.35     (3) refuse to allow the appropriate law enforcement agency, 
  6.36  the attorney general, or any other duly authorized state or 
  7.1   federal law enforcement officer to inspect the pawn records or 
  7.2   any pawn goods in the person's possession during the ordinary 
  7.3   hours of business or other times acceptable to both parties; 
  7.4      (4) fail to maintain a record of each pawn transaction for 
  7.5   three years; 
  7.6      (5) accept a pledge or purchase property from a person 
  7.7   under the age of 18 years; 
  7.8      (6) make any agreement requiring the personal liability of 
  7.9   a pledgor or seller, or waiving any provision of this section, 
  7.10  or providing for a maturity date less than one month after the 
  7.11  date of the pawn transaction; 
  7.12     (7) fail to return pledged goods to a pledgor or seller, or 
  7.13  provide compensation as set forth in section 325J.09, upon 
  7.14  payment of the full amount due the pawnbroker unless either the 
  7.15  date of redemption is more than 60 days past the date of the 
  7.16  pawn transaction, renewal, or extension and the pawnbroker has 
  7.17  sold the pledged goods pursuant to section 325J.06, or the 
  7.18  pledged goods have been taken into custody by a court or a law 
  7.19  enforcement officer or agency; 
  7.20     (8) sell or lease, or agree to sell or lease, pledged or 
  7.21  purchased goods back to the pledgor or seller in the same, or a 
  7.22  related, transaction; 
  7.23     (9) sell or otherwise charge for insurance in connection 
  7.24  with a pawn transaction; or 
  7.25     (10) remove pledged goods from the pawnshop premises or 
  7.26  other storage place approved by a municipality at any time 
  7.27  before unredeemed, pledged goods are sold pursuant to section 
  7.28  325J.06. 
  7.29     Sec. 9.  [325J.09] [REDEMPTION; RISK OF LOSS.] 
  7.30     Any person to whom the receipt for pledged goods was 
  7.31  issued, or any person identified in a written and notarized 
  7.32  authorization to redeem the pledged goods identified in the 
  7.33  receipt, or any person identified in writing by the pledgor at 
  7.34  the time of the initial transaction and signed by the pledgor 
  7.35  shall be entitled to redeem or repurchase the pledged goods 
  7.36  described on the ticket.  In the event the goods are lost or 
  8.1   damaged while in possession of the pawnbroker, the pawnbroker 
  8.2   shall compensate the pledgor, in cash or replacement goods 
  8.3   acceptable to the pledgor, for the fair market value of the lost 
  8.4   or damaged goods.  Proof of compensation shall be a defense to 
  8.5   any prosecution. 
  8.6      Sec. 10.  [325J.10] [PAWNSHOP LOCATION.] 
  8.7      No pawnshop shall be located within ten driving miles of 
  8.8   any gambling casino.  No pawnshop, lawfully operating as of the 
  8.9   date of the enactment of this section, shall be required to 
  8.10  relocate or close as a result of this section. 
  8.11     Sec. 11.  [325J.11] [VIOLATION.] 
  8.12     A violation of this chapter by a pawnbroker or pledgor is a 
  8.13  misdemeanor. 
  8.14     Sec. 12.  [325J.12] [TRANSITION.] 
  8.15     (a) Pawnbrokers that are in business when a municipality 
  8.16  adopts an ordinance under this chapter must apply for a license 
  8.17  and pay the required fee within six months of adoption of the 
  8.18  ordinance. 
  8.19     (b) A county that has adopted an ordinance under Minnesota 
  8.20  Statutes 1994, sections 471.924 to 471.927, must conform the 
  8.21  ordinance to this chapter by August 1, 1997.  Pawnbrokers that 
  8.22  are in business when a municipality adopts a new ordinance under 
  8.23  this chapter must apply for a license and pay the required fee 
  8.24  within six months of the adoption of the new ordinance.  
  8.25     Sec. 13.  [325J.13] [ORDINANCES; CONSISTENCY.] 
  8.26     Nothing in this chapter preempts or supersedes any 
  8.27  ordinance adopted by a municipality that provides for more 
  8.28  restrictive regulation of pawnbrokers or pawn transactions. 
  8.29     Sec. 14.  Minnesota Statutes 1994, section 471.924, 
  8.30  subdivision 1, is amended to read: 
  8.31     Subdivision 1.  [AUTHORITY.] For the purpose of promoting 
  8.32  the health, safety, morals, and general welfare of its 
  8.33  residents, any county in the state may regulate the activities 
  8.34  of pawnbrokers, secondhand and junk dealers. 
  8.35     Sec. 15.  Minnesota Statutes 1994, section 471.925, is 
  8.36  amended to read: 
  9.1      471.925 [DEFINITIONS.] 
  9.2      For purposes of sections 471.924 to 471.929, the following 
  9.3   terms have the meanings given them: 
  9.4      (1) "pawnbroker" means a person who loans money on deposit 
  9.5   or pledge of personal property, or other valuable thing, or who 
  9.6   deals in the purchasing of personal property or other valuable 
  9.7   thing on condition of selling the same back again at a 
  9.8   stipulated price, or who loans money secured by chattel mortgage 
  9.9   or personal property, taking possession of the property or any 
  9.10  part thereof so mortgaged; and 
  9.11     (2) "secondhand goods" or "junk dealer" means a person 
  9.12  engaged in the business of buying secondhand goods of any kind, 
  9.13  including but not limited to coins, gold, silver, jewelry, 
  9.14  metals, guns, and wrecked or dismantled motor vehicles or motor 
  9.15  vehicles intended to be wrecked or dismantled, but not including 
  9.16  used goods and merchandise taken as part or full payment for new 
  9.17  goods and merchandise.  
  9.18     Sec. 16.  Minnesota Statutes 1994, section 471.927, is 
  9.19  amended to read: 
  9.20     471.927 [COOPERATION WITH MUNICIPALITIES.] 
  9.21     The governing body of any municipality may continue to 
  9.22  exercise the authority to regulate pawnbrokers and secondhand or 
  9.23  junk dealers as provided by law, but may contract with the 
  9.24  county board of commissioners for administration and enforcement 
  9.25  of countywide regulations or ordinance provisions within the 
  9.26  borders of the municipality. 
  9.27     Sec. 17.  [REPEALER.] 
  9.28     Minnesota Statutes 1994, section 609.81, is repealed.