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S. 396
STATUS INFORMATION
General Bill
Sponsors: Senators Fair, Williams and Jackson
Document Path: l:\council\bills\nbd\11145ab07.doc
Introduced in the Senate on February 6, 2007
Currently residing in the Senate Committee on Labor, Commerce and Industry
Summary: Pawnbrokers
HISTORY OF LEGISLATIVE ACTIONS
Date Body Action Description with journal page number
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2/6/2007 Senate Introduced and read first time SJ-3
2/6/2007 Senate Referred to Committee on Labor, Commerce and Industry
SJ-3
View the latest legislative information at the LPITS web site
VERSIONS OF THIS BILL
TO AMEND SECTION 40-39-10, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO DEFINITIONS OF TERMS RELATED TO THE REGULATION OF PAWNBROKERS, SO AS TO ADD DEFINITIONS OF "APPROPRIATE LAW ENFORCEMENT OFFICIAL" AND "BENEFICIAL OWNER", AND TO ARRANGE ALL DEFINITIONS IN ALPHABETICAL ORDER; TO AMEND SECTION 40-39-20, RELATING TO THE REGULATION OF PAWNBROKERS, SO AS TO ADD REQUIREMENTS REGARDING BACKGROUND INVESTIGATIONS OF APPLICANTS FOR A CERTIFICATE OF AUTHORITY TO OPERATE A PAWNSHOP, AND TO PROVIDE REQUIREMENTS FOR AN APPLICANT SEEKING A CERTIFICATE OF AUTHORITY AND MISCELLANEOUS PROVISIONS REGARDING THE ISSUANCE OF CERTIFICATES OF AUTHORITY; TO AMEND SECTION 40-39-40, RELATING TO THE PROHIBITION OF UNAUTHORIZED FEES, SO AS TO ALLOW ADDITIONAL, SPECIFIC CHARGES; TO AMEND SECTION 40-39-50, RELATING TO FINANCIAL RESPONSIBILITY REQUIREMENTS, SO AS TO PROVIDE THAT LETTERS OF CREDIT APPROVED BY THE ADMINISTRATOR MAY BE SUBMITTED TO FULFILL FINANCIAL RESPONSIBILITY REQUIREMENTS; TO AMEND SECTION 40-39-100, RELATING TO CHARGES ON LOANS, SO AS TO CHANGE RATE PERIODS FROM A THIRTY-DAY PERIOD TO "A MONTH", TO LIMIT THE AMOUNT A PAWNBROKER MAY LOAN TO TWENTY-FIVE THOUSAND DOLLARS, TO FURTHER LIMIT THE AMOUNT OF INTEREST A PAWNBROKER MAY CHARGE TO FIFTY CENTS A MONTH FOR EACH TEN DOLLARS LOANED ON THE PORTION OF THE LOAN EXCEEDING TWO THOUSAND DOLLARS, AND TO PROVIDE THAT INTEREST MAY BE PRO RATED AT REDEMPTION BUT NOT AT RENEWALS OR EXTENSIONS, AND TO LIMIT WHEN A PAWNBROKER MAY ACCEPT AN INTEREST PAYMENT OR EXTEND A LOAN; TO AMEND SECTION 40-39-150, RELATING TO THE IMPOSITION OF FINES AND PENALTIES FOR VIOLATIONS, SO AS TO PROVIDE THE ADMINISTRATIVE LAW COURT THE DISCRETION TO FINE VIOLATORS UP TO ONE THOUSAND DOLLARS, IMPOSE A SENTENCE OF NOT MORE THAN SIXTY DAYS IMPRISONMENT, OR BOTH; AND TO AMEND PART 4, CHAPTER 3, TITLE 37, RELATING TO LIMITATIONS ON COMMERCIAL LOAN AGREEMENTS; TO ADD SECTION 37-3-414 SO AS TO PROVIDE A LENDER MAY NOT MAKE A SHORT-TERM VEHICLE SECURED LOAN AT RATES EXCEEDING THOSE PERMITTED FOR PAWNBROKERS, WHEN THE LOAN AMOUNT IS MORE THAN SIX HUNDRED DOLLARS BUT NOT MORE THAN TWENTY-FIVE THOUSAND DOLLARS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 40-39-10 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 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.
(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 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
(1) 'Administrator' means the administrator of the Department of Consumer Affairs.
(2) 'Appropriate law enforcement official' means the sheriff of the county in which a pawnshop is located or, in case of a pawnshop located within a municipality, the police chief of the municipality in which the pawnshop is located; however, any sheriff or police chief may designate as the appropriate law enforcement official for the county or municipality, as applicable, any law enforcement officer working within the county or municipality headed by that sheriff or police chief.
(3) 'Beneficial Owner' means one who does not have legal title to property but has rights in the property that are a normal incident of owning the property; an equitable as opposed to a legal interest in property. For purposes of this chapter, a person who is a spouse of the legal owner is deemed a beneficial owner.
(4) '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.
(5) '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.
(6) 'Pawn transaction' means the pledging with a pawnbroker under this chapter of a single item of goods or tangible personal property 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.
(7) 'Pawnshop' means the location at which or premises in which a pawnbroker regularly conducts business.
(8) 'Person' means an individual, partnership, corporation, joint venture, trust, association, or any other legal entity however organized.
(9) 'Pledged goods' means 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."
SECTION 2. Section 40-39-20 of the 1976 Code is amended to read:
"Section 40-39-20. (A) 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 appropriate law enforcement agency official shall conduct a criminal background investigation of the applicant and any prospective employees. Upon its completion, the law enforcement official 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 to the applicant and on the employment of any prospective employee.
(B) The department shall conduct a background investigation of each individual applicant and of each employee of the applicant and require fingerprinting of each applicant and each employee to determine whether the applicant or employee is qualified under this chapter. The department may deny an application for the issuance or renewal of a license if it finds that an applicant is not qualified under this chapter. Fingerprints submitted pursuant to this section may be submitted to the South Carolina Law Enforcement Division and the Federal Bureau of Investigation for state and national criminal history checks.
(C) A person convicted of a felony may not be issued a Certificate of Authority to carry on the business of a pawnbroker, act as 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, act as an employee, or carry on the business of a pawnbroker after the date of this subsequent felony conviction.
(D) To be eligible to receive a Certificate of Authority, an applicant must:
(1) be of good moral character;
(2) not have been convicted of, or found guilty of, or pled guilty or nolo contendere to, or not have been incarcerated as a result of having previously been convicted of, or found guilty of, or pled guilty or nolo contendere to, regardless of adjudication, a felony and not be acting as a beneficial owner for someone who has been convicted of, or found guilty of, or pled guilty or nolo contendere to, regardless of adjudication, a felony;
(3) not have been convicted of, or found guilty of, or pled guilty or nolo contendere to, or not have been incarcerated within the last ten years as a result of having previously been convicted of, or found guilty of, or pled guilty or nolo contendere to, regardless of adjudication, a crime that involves theft, larceny, dealing in stolen property, receiving stolen property, burglary, embezzlement, obtaining property by false pretenses, possession of altered property, or any other fraudulent or dishonest dealing within the last ten years, and not be acting as a beneficial owner for someone who has been convicted of, or found guilty of, or pled guilty or nolo contendere to, or has been incarcerated within the last ten years as a result of having previously been convicted of, or found guilty of, or pled guilty or nolo contendere to, regardless of adjudication, a crime that involves theft, larceny, dealing in stolen property, receiving stolen property, burglary, embezzlement, obtaining property by false pretenses, possession of altered property, or any other fraudulent or dishonest dealing within the last ten years;
(4) not have been convicted of, or found guilty of, or pled guilty or nolo contendere to, or not have been incarcerated within the last ten years as a result of having previously been convicted of, or found guilty of, or pled guilty or nolo contendere to, regardless of adjudication, a crime directly relates to the duties and responsibilities of a pawnbroker; and
(5) show that the pawnshop will be operated lawfully and fairly;
(6) meet the net asset requirements of Section 40-39-50.
(E) If the administrator finds that the financial responsibility, experience, character and general fitness of the applicant are such as to warrant belief that the business will be operated lawfully and fairly, and the applicant meets the eligibility requirements of this chapter, the administrator shall grant the application and issue to the applicant a Certificate of Authority evidencing his authority to do business under the provisions of this chapter.
(F) This section applies to each operator and legal or beneficial owner if the applicant is a business entity; and officer, owner of at least five percent of the shares outstanding, and director if the applicant is a corporation. In addition, subsections (D)(2) and (3) apply to employees of the pawnbroker.
(G) A person currently holding a Certificate of Authority on the effective date of these amendments may continue to conduct business under that Certificate. However, any applicant or employee applying after the effective date of these amendments is subject to the prohibitions."
SECTION 3. Section 40-39-40 of the 1976 Code is amended to read:
"Section 40-39-40. (A) No pawnbroker may charge or collect any fees, costs, or assessments of any kind or nature other than those specifically allowed under this chapter. Charges for redemption or pick-up by mail may be assessed in the amount of the actual mailing costs.
(B) Notwithstanding subsection (A) of this section, a pawnbroker may pass along fees, costs or assessments to the pledgor that are mandated by this State or the United States government. The fees may be assessed to the pledgor only in the amount required by the government entity, and may be assessed to the pledgor only if directly related to a transaction involving a particular pledgor. Fees, costs, or assessments not meeting this requirement must be borne by the pawnbroker."
SECTION 4. Section 40-39-50 of the 1976 Code is amended to read:
"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 twenty-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 letters of credit approved by the administrator may be submitted to fulfill the financial responsibility requirements. 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 5. Section 40-39-100 of the 1976 Code, is amended to read:
"Section 40-39-100. (A) 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 a month for each ten dollars loaned for the first fifty dollars loaned;
(2) at the rate of two dollars per thirty-day period a month 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 a month 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 a month 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 a month for each ten dollars loaned on that portion of the loan exceeding one thousand dollars but not exceeding two thousand dollars.; or
(6) at the rate of fifty cents a month for each ten dollars loaned on that portion of the loan exceeding one thousand dollars but not exceeding two thousand dollars.
(B) 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.
(C) No pawnbroker may make a loan in excess of two twenty-five 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 month 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.
(D) Interest on loans may not be pro-rated on renewals or extensions. However, interest may be pro-rated at redemption when early pay-off of a loan is made. A pawnbroker may not accept interest payments or otherwise extend a loan beyond the vesting period pursuant to Section 40-39-16, if applicable, timely, and proper notice of forfeiture has been sent.
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 6. Section 40-39-150(B) of the 1976 Code, as amended by Act 128 of 2005, is further amended to read:
"(B) The administrative law judge also may impose 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, a person violating the provisions of Sections 40-39-20 and 40-39-30 is guilty of a misdemeanor and, upon conviction, must may be punished by a fine not exceeding fined up to one thousand dollars, or by imprisonment for a term not exceeding sixty days imprisoned not more than sixty days, or both. The administrative law judge may revoke or suspend a pawnbroker's certificate of authority in addition to the penalties provided in this section."
SECTION 7. Part 4, Chapter 3, of Title 37 is amended by adding:
"Section 37-3-414. A lender may not make a short-term vehicle secured loan, as defined in Section 37-3-413(1), at rates exceeding those permitted by pawnbrokers in Section 40-39-100 if the amount of the loan is more than six hundred dollars but does not exceed twenty-five thousand dollars."
SECTION 8. If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.
SECTION 9. This act takes effect upon approval by the Governor.
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