S 997 Session 112 (1997-1998)
S 0997 General Bill, By Short, Gregory and Jackson
Similar(H 4608)
A BILL TO AMEND CHAPTER 39, TITLE 40, OF THE CODE OF LAWS OF SOUTH CAROLINA,
1976, RELATING TO PAWNBROKERS, SO AS TO INCLUDE WITHIN THE DEFINITION OF
"PLEDGED GOODS," A MOTOR VEHICLE CERTIFICATE OF TITLE, OTHER THAN A
CERTIFICATE OF TITLE TO A MOBILE HOME; AND TO PROVIDE THAT IF ANY LOAN IN
WHICH THE PLEDGED GOODS IS A MOTOR VEHICLE CERTIFICATE OF TITLE REMAINS UNPAID
AFTER A PERIOD OF SIXTY DAYS FROM THE DUE DATE OR ANY RENEWAL OR EXTENSION
THEREOF, THE PAWNBROKER AND THE PLEDGOR HAVE THE SAME RIGHTS AS ACCORDED UNDER
PART 5, CHAPTER 9, TITLE 36 OF THE UNIFORM COMMERCIAL CODE.
02/05/98 Senate Introduced and read first time SJ-9
02/05/98 Senate Referred to Committee on Judiciary SJ-9
02/12/98 Senate Recalled from Committee on Judiciary SJ-1
02/12/98 Senate Committed to Committee on Banking and Insurance SJ-1
A BILL
TO AMEND CHAPTER 39, TITLE 40, OF THE CODE OF LAWS
OF SOUTH CAROLINA, 1976, RELATING TO PAWNBROKERS,
SO AS TO INCLUDE WITHIN THE DEFINITION OF "PLEDGED
GOODS," A MOTOR VEHICLE CERTIFICATE OF TITLE,
OTHER THAN A CERTIFICATE OF TITLE TO A MOBILE
HOME; AND TO PROVIDE THAT IF ANY LOAN IN WHICH
THE PLEDGED GOODS IS A MOTOR VEHICLE CERTIFICATE
OF TITLE REMAINS UNPAID AFTER A PERIOD OF SIXTY
DAYS FROM THE DUE DATE OR ANY RENEWAL OR
EXTENSION THEREOF, THE PAWNBROKER AND THE
PLEDGOR HAVE THE SAME RIGHTS AS ACCORDED UNDER
PART 5, CHAPTER 9, TITLE 36 OF THE UNIFORM
COMMERCIAL CODE.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. Chapter 39, Title 40 of the 1976 Code is amended to
read:
"Section 40-39-10. The following definitions apply for purposes
of this chapter:
(1) 'Person' means an individual, partnership, corporation, joint
venture, trust, association, or any other legal entity however
organized.
(2) 'Pawnbroker' means any person engaged in the business of
lending money on the security of pledged goods, or engaged in the
business of purchasing tangible personal property on condition that
it may be redeemed or repurchased by the seller for a fixed price
within a fixed period of time.
(3) 'Pledged goods' means:
(a) tangible personal property other than choses in action,
title, securities, or printed evidences of indebtedness, which property
is deposited with or otherwise actually delivered into the possession
of a pawnbroker in the course of his business in connection with a
pawn transaction; or
(b) a motor vehicle certificate of title that is deposited with or
otherwise delivered into the possession of a pawnbroker in the course
of his business in connection with a pawn transaction. For purposes
of this item, `motor vehicle certificate of title' does not include a
certificate of title to a mobile home or a certificate of title to any
other item, regardless of whether it is motorized or self-propelled,
which is designed as a dwelling unit.
(4) 'Pawnshop' means the location at which or premises in
which a pawnbroker regularly conducts business.
(5) 'Month' means that period of time from one date in a calendar
month to the corresponding date in the following calendar month, but
if there is no corresponding date, then the last day of the following
month, and when computations are made for a fraction of a month,
a day is one-thirtieth of a month.
(6) 'Administrator' means the administrator of the Department of
Consumer Affairs.
(7) 'Pawn transaction' means the pledging with a pawnbroker
under this chapter of a single item of goods, or
tangible personal property, or a motor vehicle certificate of
title, as security for a loan of money. Items that are usually sold
as a set are considered a single item and must be included in the same
transaction, and a pledged item together with items that are
accessories to the pledged item are considered a single item and must
be included in the same transaction. A separate pawn transaction
retains its separate character when it is renewed, unless the parties
agree otherwise.
Section 40-39-20. All pawnbrokers conducting business in this
State are under the authority of and regulated by the Department of
Consumer Affairs, the administrator of which has the authority to
promulgate regulations as he considers necessary to carry out the
conditions and intent of this chapter. No person may carry on the
business of a pawnbroker in any location in this State without first
having obtained a Certificate of Authority for each location from the
Department of Consumer Affairs. Upon receipt of the application for
the Certificate of Authority, the Department of Consumer Affairs
shall notify the law enforcement agency having jurisdiction where the
applicant intends to do business. The law enforcement agency shall
conduct a criminal background investigation of the applicant and
upon its completion shall make the results of the investigation known
to the administrator of the Department of Consumer Affairs along
with its appropriate recommendation on the issuance of the
Certificate of Authority.
A person convicted of a felony may not be issued a Certificate of
Authority to carry on the business of a pawnbroker or in any manner
engage in the business of a pawnbroker, except that any person who
is in the business of a pawnbroker on July 1, 1988, and who has been
convicted of a felony before this date may be issued a Certificate of
Authority and upon receiving it may continue in the business of a
pawnbroker but if this person is convicted of a felony on or after July
1, 1988, he may not thereafter be issued a Certificate of Authority or
carry on the business of a pawnbroker after the date of this
subsequent felony conviction.
Section 40-39-30. No person may carry on the business of a
pawnbroker in any location other than the one designated in his
Certificate of Authority, under penalty of administrative fine,
revocation of his Certificate of Authority, or other action by the
administrator pursuant to regulation or criminal prosecution as set out
in this chapter.
Section 40-39-40. No pawnbroker may charge or collect any fees,
costs, or assessments of any kind or nature other than those
specifically allowed under this chapter.
Section 40-39-50. Every person seeking a Certificate of Authority
to carry on the business of a pawnbroker shall at the time of
application for his certificate file with the Department of Consumer
Affairs a bond in favor of the department to be executed by the
person granted the certificate and by two responsible sureties or a
surety company licensed to do business in this State in the penal sum
of five thousand dollars to be approved by the administrator. The
bond must be conditioned for the faithful performance of the duties
and obligations pertaining to the business so authorized. In lieu of the
above, other evidence of financial responsibility approved by the
administrator must be submitted, including, but not limited to, letters
of credit or certificates of deposit. Each applicant shall also file proof
of his net worth which must be a minimum of thirty-five thousand
dollars until that time as liability insurance covering the contents of
the pawn location is secured by the pawnbroker. The amount of the
liability insurance required must be set by regulations promulgated
by the administrator.
Section 40-39-60. If any person is aggrieved by the misconduct of
any licensed pawnbroker and recovers judgment against him
thereafter, he may, after the return unsatisfied, either in whole or in
part, of any execution issued upon the judgment, maintain an action
in his own name upon the bond of the pawnbroker in any court
having jurisdiction of the amount claimed.
Section 40-39-70. Every pawnbroker shall keep a record, at the
time of any loan, containing an account and description of the goods,
articles, or things pawned, pledged, or purchased, the amount of
money loaned thereon, the time of pledging them, the charges, or the
rate of interest to be paid on the loan, and the name and residence of
the person pawning or pledging the goods, articles, or things.
Section 40-39-80. Every pawnbroker at the time of each loan shall
deliver to the person pawning or pledging any articles, at no charge,
a memorandum signed by the pawnbroker and the person pawning or
pledging any articles containing the substance of the entry required
by Section 40-39-70. If the memorandum is lost, the pledgor may
receive a duplicate upon payment of a fee not exceeding three dollars.
The administrator may prescribe the form to be used.
Section 40-39-90. Records kept by pawnbrokers pursuant to this
chapter must at all reasonable times be open to the inspection by
court officials, law enforcement officers, the administrator of the
Department of Consumer Affairs, and their designees. Any loan
records identifying any individual must be handled in a confidential
manner at all times.
Section 40-39-100. Pawnbrokers may charge interest on loans not
exceeding the following amounts:
(1) at the rate of two dollars and fifty cents per thirty-day period
for each ten dollars loaned for the first fifty dollars loaned;
(2) at the rate of two dollars per thirty-day period for each ten
dollars loaned on that portion of the loan exceeding fifty dollars but
not exceeding one hundred dollars;
(3) at the rate of one dollar and fifty cents per thirty-day period for
each ten dollars loaned on that portion of the loan exceeding one
hundred dollars but not exceeding two hundred dollars;
(4) at the rate of one dollar per thirty-day period for each ten
dollars loaned on that portion of the loan exceeding two hundred
dollars but not exceeding one thousand dollars;
(5) at the rate of fifty cents per thirty-day period for each ten
dollars loaned on that portion of the loan exceeding one thousand
dollars but not exceeding two thousand dollars.
No pawnbroker may separate or divide a pawn transaction into two
or more transactions for the purpose or with the effect of obtaining a
total pawn interest rate in excess of that authorized for an amount
financed equal to the total of the amounts financed in the resulting
transactions.
No pawnbroker may make a loan in excess of two thousand dollars.
Every pawnbroker shall post these rates in a form which is prescribed
by the administrator. The following statement must be included in the
posted rate schedule:
'Consumers: All pawnbrokers operating in South Carolina are
required by law to post a schedule showing the maximum rate of
LOAN FINANCE CHARGES stated as dollars for each ten dollars
for each thirty-day period that the pawnbroker intends to charge for
various types of pawn transactions. The purpose of this requirement
is to assist you in comparing the maximum rates that pawnbrokers
charge, thereby furthering your understanding of the terms of pawn
transactions and helping you to avoid the uninformed use of credit.
NOTE: Pawnbrokers are prohibited only from granting credit at
rates higher than those specified above. A pawnbroker may be
willing to grant you credit at rates that are lower than those specified,
depending on the amount, terms, collateral, and your credit
worthiness.'
Section 40-39-105. In the case of a pawn transaction in which
the pledged goods is a motor vehicle certificate of title:
(A) a pawnbroker may charge the maximum interest allowed by
Section 40-39-100 on renewals only during the first ninety days of
the pawn transaction; and
(B) after ninety days, a pawnbroker may charge interest on
renewals at the rate of one half of the amount per thirty-day period
allowed by Section 40-39-100.
Section 40-39-110. (A) Except as provided in
subsection (B) of this section, if If any loan remains unpaid
for a period of sixty days from the due date or any renewal or
extension thereof, the title of the borrower or pledgor to the property
pledged to secure the loan shall vest in the pawnbroker, without
advertising, sale, or accountability to the pledgor, if the pawn ticket
or memorandum delivered to the borrower in accordance with
Section 40-39-80, contains on the back thereof a notice to that effect,
and if a printed or written notice of the impending forfeiture is mailed
to the pledgor at the address given on the pawn ticket, at least ten
days prior to the forfeiture date. This notice must contain a
description of the article pledged, and the amount due thereon as of
the date of the notice. No notice is required on loans of fifty dollars
or less.
(B) If any loan in which the pledged goods is a motor vehicle
certificate of title remains unpaid after a period of sixty days from the
due date or any renewal or extension thereof, the pawnbroker has the
same rights as a secured party accorded under Part 5, Chapter 9, Title
36 when a debtor is in default under a security agreement. All
collections, takings of possession, and dispositions of collateral after
default shall be conducted in accordance with Part 5, Chapter 9, Title
36. All rights accorded a debtor under Part 5, Chapter 9, Title 36
shall apply to a pledgor of a motor vehicle certificate of title.
(C)(1) No pawnbroker may use any rights or remedies provided in
subsection (B):
(a) unless the loan amount for the initial pawn transaction is
at least fifty-five percent of the fair market value of the motor vehicle
at the time of the pawn transaction; or
(b) if the borrower or pledgor has made payments on the
principal amount of the original pawn transaction equal to at least one
hundred percent of the principal amount of the original pawn
transaction plus thirty percent of the interest accrued from the time of
the original pawn transaction, provided, that no pawnbroker shall
refuse any partial payment of principal offerred by a borrower or
pledgor.
(2) For purposes of item (1) of this subsection, the fair market
value of the motor vehicle shall be determined in the same manner as
county auditors determine the assessed value of motor vehicles for
property tax purposes pursuant to Section 12-36-2640.
Section 40-39-120. Each pawnbroker applying for a Certificate
of Authority shall tender to the department a fee of two hundred
seventy-five dollars plus all other applicable fees required by other
agencies to process the application. The administrator may revoke
any Certificate of Authority if the pawnbroker has violated this
chapter or any regulation or order lawfully made pursuant to this
chapter, or if facts or conditions exist which would clearly have
justified the administrator in refusing to grant a Certificate of
Authority had these facts or conditions been known to exist at the
time the application for Certificate of Authority was made. The
administrator may promulgate regulations for obtaining and revoking
the Certificate of Authority. Certificates of Authority must be
renewed on a yearly basis. Applications for renewal must be
accompanied by a renewal fee of two hundred seventy-five dollars.
Section 40-39-130. All pawnbrokers shall comply with the
Federal Truth in Lending Act. The administrator has the
administrative enforcement powers set forth in Section 108 of the
Federal Truth in Lending Act.
Section 40-39-140. No pawnbroker shall accept property from a
pledgor upon which there is evidence of ownership by a third party
without first taking reasonable steps to ascertain its true ownership.
Any such item accepted for pawn by a pawnbroker must be returned
on demand without fee to the third party owner.
Section 40-39-150. (A) Upon the finding that an action of a
pawnbroker is in violation of this chapter, or of a law or regulation of
this State or of the federal government or an agency of the state or
federal government, the administrator, after reasonable notice to the
pawnbroker and an opportunity for the pawnbroker to be heard, shall
order the pawnbroker to cease and desist from the action.
(B) The Administrator of the Department of Consumer Affairs
may impose also administrative fines of up to seven hundred fifty
dollars for each offense upon persons violating any of the provisions
of this chapter up to a maximum of fifteen thousand dollars for the
same set of transactions or occurrences. Each violation constitutes a
separate offense. In addition, any person violating the provisions of
Sections 40-39-20 and 40-39-30 is guilty of a misdemeanor and,
upon conviction, must be punished by a fine not exceeding one
thousand dollars or by imprisonment for a term not exceeding sixty
days, or both. The administrator may revoke or suspend a
pawnbroker's certificate of authority in addition to the penalties
enumerated in this section.
Section 40-39-160. (1) If a pawnbroker violates Section
40-39-80, 40-39-100, 40-39-110, or 40-39-130, the pledgor has a
cause of action to recover from the pawnbroker actual damages and
the right in an action other than a class action to recover from the
person violating these provisions a penalty in an amount to be
determined by the court of not less than one hundred nor more than
one thousand dollars. No action pursuant to this subsection may be
brought more than one year after the scheduled or accelerated
maturity of the debt.
(2) A pledgor is not obligated to pay a charge in excess of that
allowed by this chapter, and has a right of refund of any excess
charge paid within ten days of written demand. A refund may not be
made by reducing the consumer's obligation by the amount of the
excess charge unless the pawnbroker has notified the pledgor that the
pledgor may request a refund and the pledgor has not so requested
within ten days thereafter.
(3) In an action in which it is found that a pawnbroker has violated
this chapter, the court shall award to the pledgor the costs of the
action and to the pledgor's attorney reasonable fees. In determining
attorney's fees the amount of recovery on behalf of the consumer is
not controlling.
(4) Liability to the pledgor for violation of Section 40-39-130 is
in lieu of and not in addition to his liability under the Federal Truth
in Lending Act. No action with respect to the same violation may be
maintained pursuant to both subsection (1) of this section and the
Federal Truth in Lending Act."
SECTION 2. This act takes effect upon approval by the Governor.
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