BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
ACR 101 (Jones-Sawyer) - Pawnbrokers and secondhand dealers:
internet transactions.
Amended: June 16, 2014 Policy Vote: Judiciary 5-1
Urgency: No Mandate: No
Hearing Date: June 30, 2014
Consultant: Jolie Onodera
This bill meets the criteria for referral to the Suspense File.
Bill Summary: ACR 101 would request the Department of Justice
(DOJ) to convene stakeholder meetings in 2014 to discuss
concerns regarding California pawnbrokers' ability to compete in
the emerging internet pawn industry. This bill also requests the
DOJ to report to the Legislature on its findings and
recommendations by January 1, 2015.
Fiscal Impact: Potential one-time costs in the range of $50,000
to $100,000 (General Fund) for the DOJ to hold stakeholder
meetings and to report to the Legislature.
Background: As stated in part in the body of the resolution:
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.
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. Although pawnbrokers and secondhand dealers
are required to make these electronic reports, existing
law poses several barriers to electronic pawn loans in
California.
The convenience of transacting a pawn loan over the
Internet from one's home is proving to be a powerful
ACR 101 (Jones-Sawyer)
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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.
Good public policy demands that the Legislature address
this inequity that is so harmful to California
business, California consumers, and law enforcement.
Proposed Law: This bill requests the DOJ to convene meetings in
2014 with representatives from law enforcement, prosecutors,
interested members of the public, and the secondhand dealer and
pawnbroker industry to determine the changes to existing law
that would do the following:
Allow California pawnbrokers and secondhand dealers to
fairly compete with out-of-state internet pawnbrokers.
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.
Protect California consumers transacting pawn loans over
the internet from higher interest rates and fees than those
permitted in California.
This bill requests that DOJ report its findings and
recommendations for statutory change to the Legislature by
January 1, 2015.
Prior Legislation: SB 782 (Hill) Chapter 318/ 2013 clarifies the
interests of licensed pawnbrokers and secondhand dealers
relating to the seizure and disposition of property during a
criminal investigation or case.
AB 391 (Pan) Chapter 172/2012 requires secondhand dealers and
coin dealers to report certain information using the electronic
reporting system developed by the DOJ on and after the date the
system is implemented.
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Staff Comments: To the extent the DOJ complies with the request,
the DOJ would incur one-time costs in the range of $50,000 to
$100,000 to the extent DOJ facilitates the stakeholder meetings
in 2014, as well as develops and submits the report of
recommendations to the Legislature by January 1, 2015, as
requested by the resolution. The estimated costs include
facilities costs, in-state travel to hold meetings in northern
and southern California, and staff time to compile and edit the
report.