Relates to collateral loan brokers; repealer

Summary of provisions of bill

The bill amends varies sections of the general business law pertaining to collateral loans:

§ 40. Licenses: establishes the New York State Department of Financial Services as the licensing authority for collateral loan brokers (or pawnbrokers), replacing local government bodies and/or officials.

§ 41. Licenses, how obtained; penalty for carrying on business without license - replaces local governments with the Department of Financial Services as the licensing authority for purposes of collecting licensing fees, filing and approval of bonds, and authority to revoke licenses for cause.

§ 41-A. Continuing Education Requirement - replaces local governments with the Department of Financial Services as the entity with authority to approve continuing education courses and programs.

§ 42. Action on Bond: No change from existing General Business Law.

§ 43. Certain entries to be made in book - imposes much more extensive, comprehensive and detailed bookkeeping/recording requirements, including significant additional information describing the item pledged or sold and significant additional information regarding the customer. These additional recording requirements will put pawnbrokers and law enforcement in a much better position to identify, monitor and track pawnbroker transactions, customers and the items sold and pledged.

§ 44. Memorandum to be Given - replaces the existing statutory "service" charges and imposes a statutory maximum of thirteen (13) per cent of the amount of the loan for each thirty-day period for any and all fees that a pawnbroker may charge, including but not limited to service fees, storage fees, transaction fees, handling fees, insurance fees, bookkeeping fees, recording fees and/or reporting fees. This section of our bill also modifies the existing holding requirement of four months to thirty (30) days, with the option to extend the holding period up to four months upon mutual consent of the pawnbroker and the pledgor. Also, if and when the holding period expires (plus an additional 30-day period from the maturity date of the loan to the default date), title to the pledged item passes to the pawnbroker.

§ 45. Book to be open to inspection (Inspection and Reporting Requirements) - in addition to the current statutory requirement of keeping the pawnbroker's books and records "open to the inspection of the relevant authorities, our bill adds the requirement that, at the end of each business day, the pawnbroker deliver to the appropriate law enforcement official the original pawnbroker transaction forms for each transaction occurring that day, unless other arrangements have been agreed to between the pawnbroker and the appropriate law enforcement official. Our bill also adds that if the law enforcement agency supplies the appropriate software and the pawnbroker has the computer capability, pawn transactions shall be electronically transferred to law enforcement.

§ 46. Rate of Interest - maintains the current statutory maximum interest rate of four (4) per cent. Accordingly, the maximum total amount that any pawnbroker may charge for interest (4%) and any and all fees (capped at 13% in § 44, paragraph 4) will be seventeen (17) per cent for any thirty-day period of a loan.

§ 47-A: Collateral Loan Broker Dealing with a Child: No change from existing General Business Law

§ 48: Sale of Unclaimed Pledge by Collateral Loan Broker - this section would be deleted as no longer applicable, as title to the pledged item would pass to the pawnbroker thirty days after the maturity date of the loan.

§ 49: Notice of Such Sale; Report - this section would be deleted as no longer applicable, as title to the pledged item would pass to the pawnbroker thirty days after the maturity date of the loan.

§ 50: Disposition of Proceeds - this section would be deleted as no longer applicable, as title to the pledged item would pass to the pawnbroker thirty days after the maturity date of the loan.

§ 51: Violation of this Article - replaces local governments with the Department of Financial Services as the entity having authority to impose fines and penalties for violation of this Article.

§ 52: Term "Collateral Loan Broker", how to be construed: No change from existing General Business Law

§ 53: Registration Statements - replaces the state comptroller with the Department of Financial Services as the entity with which pawnbrokers shall file their Collateral Loan Broker's Registration Statements.

§ 54: Violation of Article: No change from existing General Business Law.

§ 55: Rules and Regulations - replaces the state comptroller with the Department of Financial Services as the entity authorized to impose additional requirements under this Article as it may deem necessary.

Justification

The provisions of the bill are two folded. First by enacting the strict licensure provisions contained in the n w language added to the general business law, the state can insure to the public that only responsible and a e entities are carrying the business of pawning; that violations of the duties pawnbrokers owe to the public with whom the deal are severely dealt with, and that the best interests of the state are realized by a systematic and dependable enforcement procedure. Secondly, the statutes as altered in the bill recognize and address the need to modernize the oversight of the business of pawnbroking so that the public can be confident with the business with whom they are partnering.

Legislative history

This is a new bill for the 2013 Session

Fiscal implications for state and local governments

Considerable revenue will be realized to offset any increase in enforcement and regulatory requirements to the benefit of the state.

Effective date

This act shall take effect immediately and shall apply to collateral loans made on and after such date.