BILL NUMBER: ACR 101	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Jones-Sawyer

                        FEBRUARY 19, 2014

   Relative to pawnbrokers and secondhand dealers.


	LEGISLATIVE COUNSEL'S DIGEST


   ACR 101, as introduced, Jones-Sawyer. Pawnbrokers and secondhand
dealers: Internet transactions.
   This measure would request the Department of Justice to convene
meetings in 2014 with representatives from law enforcement,
prosecutors, and the secondhand dealer and pawnbroker industry to
determine the changes to existing law that would (1) allow California
pawnbrokers and secondhand dealers to fairly compete with
out-of-state internet pawnbrokers, (2) keep available to law
enforcement merchandise pawned over the Internet that would otherwise
go out-of-state and not be reported or held for inspection, and (3)
protect California consumers transacting pawn loans over the Internet
from higher interest rates and fees than those permitted in
California.
   Fiscal committee: yes.



   WHEREAS, In the past decade, a new business model has emerged in
other states called "Internet pawn." Operators in other less
regulated states are aggressively and openly operating in California
over the Internet, but are not in compliance with the laws governing
California pawnbrokers and secondhand dealers; and
   WHEREAS, Existing law requires that California pawnbrokers and
secondhand dealers report transactions involving tangible personal
property using a statewide, uniform electronic reporting system
developed by the Department of Justice; and
   WHEREAS, Although pawnbrokers and secondhand dealers are required
to make these electronic reports, existing law poses several barriers
to electronic pawn loans in California; and
   WHEREAS, Existing law requires the report made by a pawnbroker or
secondhand dealer to include a legible fingerprint taken from the
intended seller or pledger. Existing law further requires a
pawnbroker or secondhand dealer to retain the reported tangible
personal property for 30 days for possible inspection by law
enforcement. Out-of-state pawnbrokers are not required to collect a
fingerprint, nor are they subject to a 30-day hold of the property;
and
   WHEREAS, As a result, a significant amount of reportable
merchandise pawned over the Internet that would otherwise be reported
to the Department of Justice goes unreported and is not held for law
enforcement; and
   WHEREAS, This puts California pawnbrokers and secondhand dealers
at a competitive disadvantage. In addition, merchandise pawned over
the Internet escapes detection by law enforcement and is physically
absent from the state as soon as the transaction is completed; and
   WHEREAS, California has been a leader in consumer protection for
decades; and
   WHEREAS, California pawnbrokers and secondhand dealers provide
loans at the lowest interest rates in the United States. California
law caps interest rates and fees applicable to these transactions at
very low levels. In other states, the interest rates are either
capped at much higher levels or are completely unregulated; and
   WHEREAS, There are impediments to a licensed pawnbroker or
secondhand dealer in California transacting business solely on the
Internet. Unlike any other lending model in California, the physical
presence of the borrower is required in order to obtain the legally
required fingerprint; and
   WHEREAS, The convenience of transacting a pawn loan over the
Internet from one's home is proving to be a powerful lure to
Californians who would ordinarily transact that loan at a physical
pawn shop. As the world becomes more dependent on the Internet,
secondhand dealers and pawnbrokers in California will lose a greater
market share to out-of-state Internet pawn; Californians who choose
that form of pawn will also be subject to higher interest rates and
fees. In addition, law enforcement will lose a greater percentage of
tangible personal property reports and will lose the ability to
inspect and seize property needed for criminal investigation and
prosecution; and
   WHEREAS, Good public policy demands that the Legislature address
this inequity that is so harmful to California business, California
consumers, and law enforcement; now, therefore, be it
   Resolved by the Assembly of the State of California, the Senate
thereof concurring, That the Legislature requests the Department of
Justice to convene meetings in 2014 with representatives from law
enforcement, prosecutors, and the secondhand dealer and pawnbroker
industry to determine the changes to existing law that would (1)
allow California pawnbrokers and secondhand dealers to fairly compete
with out-of-state Internet pawnbrokers, (2) keep available to law
enforcement merchandise pawned over the Internet that would otherwise
go out-of-state and not be reported or held, and (3) protect
California consumers transacting pawn loans over the Internet from
higher interest rates and fees than those permitted in California;
and be it further
   Resolved, The Department of Justice is requested to report its
findings and recommendations for statutory change to the Legislature
by January 1, 2015; and be it further
   Resolved, That the Chief Clerk of the Assembly transmit copies of
this resolution to the Department of Justice and to the author for
appropriate distribution.