Are You A Pawnbroker? You Could Be
Your business may not be a pawnbroker or a pawn shop and you may not be involved in pawning items at all. Or so you think. What you don’t know is that if your business is involved in buying any kind of used property or reselling it there’s a chance that the government could consider you a pawnbroker—which means that you need to know the laws that apply to pawnbrokers.
The Purpose of Pawning Laws
Pawn laws exist to keep people from selling stolen goods to pawnbrokers for money and to stop pawnbrokers from being complicit in these crimes if in fact they are knowingly reselling stolen goods. Stolen goods must be turned over to law enforcement—even if you as the reseller/pawnbroker are innocent and had no way to know the item that was pawned was stolen.
When an item is turned over to law enforcement, the pawnbroker is still the legal owner of the property, at least until the original owner can prove their ownership of the stolen goods.
Getting a Pawnbroker License
Getting a pawnbrokers license in Florida isn’t easy either—it requires multiple licenses and governmental applications. You even have to show that you are of “good moral character,” which includes that you have not been a convicted felon in the last 10 years and that you haven’t owned a business with someone that was a felon in the last 10 years.
You must have a personal net worth of $50,000 to get a license backed up by an affidavit or an audit by an accountant.
Certain transfers must be reported to the IRS and records and background checks of firearm purchasers must be kept by a pawnbroker. Items that you purchase from customers must be specifically described in documentation, including any unique or identifying characteristics of the item.
Law enforcement is allowed to search your property at any time to ensure that you have the proper paperwork on site and on file that the law requires that you have.
When someone wants to sell an item, the pawnbroker must hold it for 60 days before reselling it, if the original owner wants to get or purchase the item back. Any items that are lost by, or sold by, the pawnbroker, must be replaced with an item of equal value.
Who Has to Comply?
Pawnbroker laws have been held to apply to consignment shops, resellers, and even retail stores that buy and resell used video console games. All you have to do to be considered a pawnbroker is to buy and resell goods.
It doesn’t matter that the resale of used or purchased goods is just a small part of your overall business—the law doesn’t make an exception for businesses that resell pawned items as just a small part of their overall business, revenue, or income.
We can help you with government regulations that your business needs to comply with. Call the West Palm Beach business litigation attorneys at Pike & Lustig today for help with your business.