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					                                   South Carolina General Assembly
                                       117th Session, 2007-2008

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
  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

2/6/2007
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 7
 8
 9                       A BILL
10
11   TO AMEND SECTION 40-39-10, CODE OF LAWS OF SOUTH
12   CAROLINA, 1976, RELATING TO DEFINITIONS OF TERMS
13   RELATED TO THE REGULATION OF PAWNBROKERS, SO
14   AS TO ADD DEFINITIONS OF “APPROPRIATE LAW
15   ENFORCEMENT OFFICIAL” AND “BENEFICIAL OWNER”,
16   AND TO ARRANGE ALL DEFINITIONS IN ALPHABETICAL
17   ORDER; TO AMEND SECTION 40-39-20, RELATING TO THE
18   REGULATION OF PAWNBROKERS, SO AS TO ADD
19   REQUIREMENTS        REGARDING        BACKGROUND
20   INVESTIGATIONS OF APPLICANTS FOR A CERTIFICATE
21   OF AUTHORITY TO OPERATE A PAWNSHOP, AND TO
22   PROVIDE REQUIREMENTS FOR AN APPLICANT SEEKING
23   A CERTIFICATE OF AUTHORITY AND MISCELLANEOUS
24   PROVISIONS    REGARDING     THE    ISSUANCE    OF
25   CERTIFICATES OF AUTHORITY; TO AMEND SECTION
26   40-39-40, RELATING TO THE PROHIBITION OF
27   UNAUTHORIZED FEES, SO AS TO ALLOW ADDITIONAL,
28   SPECIFIC CHARGES; TO AMEND SECTION 40-39-50,
29   RELATING     TO     FINANCIAL      RESPONSIBILITY
30   REQUIREMENTS, SO AS TO PROVIDE THAT LETTERS OF
31   CREDIT APPROVED BY THE ADMINISTRATOR MAY BE
32   SUBMITTED TO FULFILL FINANCIAL RESPONSIBILITY
33   REQUIREMENTS; TO AMEND SECTION 40-39-100,
34   RELATING TO CHARGES ON LOANS, SO AS TO CHANGE
35   RATE PERIODS FROM A THIRTY-DAY PERIOD TO “A
36   MONTH”, TO LIMIT THE AMOUNT A PAWNBROKER MAY
37   LOAN TO TWENTY-FIVE THOUSAND DOLLARS, TO
38   FURTHER LIMIT THE AMOUNT OF INTEREST A
39   PAWNBROKER MAY CHARGE TO FIFTY CENTS A MONTH
40   FOR EACH TEN DOLLARS LOANED ON THE PORTION OF
41   THE LOAN EXCEEDING TWO THOUSAND DOLLARS, AND
42   TO PROVIDE THAT INTEREST MAY BE PRO RATED AT

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 1   REDEMPTION BUT NOT AT RENEWALS OR EXTENSIONS,
 2   AND TO LIMIT WHEN A PAWNBROKER MAY ACCEPT AN
 3   INTEREST PAYMENT OR EXTEND A LOAN; TO AMEND
 4   SECTION 40-39-150, RELATING TO THE IMPOSITION OF
 5   FINES AND PENALTIES FOR VIOLATIONS, SO AS TO
 6   PROVIDE THE ADMINISTRATIVE LAW COURT THE
 7   DISCRETION TO FINE VIOLATORS UP TO ONE
 8   THOUSAND DOLLARS, IMPOSE A SENTENCE OF NOT
 9   MORE THAN SIXTY DAYS IMPRISONMENT, OR BOTH;
10   AND TO AMEND PART 4, CHAPTER 3, TITLE 37,
11   RELATING TO LIMITATIONS ON COMMERCIAL LOAN
12   AGREEMENTS; TO ADD SECTION 37-3-414 SO AS TO
13   PROVIDE A LENDER MAY NOT MAKE A SHORT-TERM
14   VEHICLE SECURED LOAN AT RATES EXCEEDING THOSE
15   PERMITTED FOR PAWNBROKERS, WHEN THE LOAN
16   AMOUNT IS MORE THAN SIX HUNDRED DOLLARS BUT
17   NOT MORE THAN TWENTY-FIVE THOUSAND DOLLARS.
18
19   Be it enacted by the General Assembly of the State of South
20   Carolina:
21
22   SECTION 1. Section 40-39-10 of the 1976 Code is amended to
23   read:
24
25      “Section 40-39-10. The following definitions apply for purposes
26   of this chapter:
27   (1) “Person” means an individual, partnership, corporation, joint
28   venture, trust, association, or any other legal entity however
29   organized.
30   (2) “Pawnbroker” means any person engaged in the business of
31   lending money on the security of pledged goods, or engaged in the
32   business of purchasing tangible personal property on condition that
33   it may be redeemed or repurchased by the seller for a fixed price
34   within a fixed period of time.
35   (3) “Pledged goods” means tangible personal property other than
36   choses in action, title, securities, or printed evidences of
37   indebtedness, which property is deposited with or otherwise
38   actually delivered into the possession of a pawnbroker in the
39   course of his business in connection with a pawn transaction.
40   (4) “Pawnshop” means the location at which or premises in which
41   a pawnbroker regularly conducts business.
42   (5) “Month” means that period of time from one date in a calendar
43   month to the corresponding date in the following calendar month,

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 1   but if there is no corresponding date, then the last day of the
 2   following month, and when computations are made for a fraction
 3   of a month, a day is one-thirtieth of a month.
 4   (6) “Administrator” means the administrator of the Department of
 5   Consumer Affairs.
 6   (7) “Pawn transaction” means the pledging with a pawnbroker
 7   under this chapter of a single item of goods or tangible personal
 8   property as security for a loan of money. Items that are usually
 9   sold as a set are considered a single item and must be included in
10   the same transaction, and a pledged item together with items that
11   are accessories to the pledged item are considered a single item
12   and must be included in the same transaction. A separate pawn
13   transaction retains its separate character when it is renewed, unless
14   the parties agree otherwise
15      (1) „Administrator‟ means the administrator of the Department
16   of Consumer Affairs.
17      (2) „Appropriate law enforcement official‟ means the sheriff of
18   the county in which a pawnshop is located or, in case of a
19   pawnshop located within a municipality, the police chief of the
20   municipality in which the pawnshop is located; however, any
21   sheriff or police chief may designate as the appropriate law
22   enforcement official for the county or municipality, as applicable,
23   any law enforcement officer working within the county or
24   municipality headed by that sheriff or police chief.
25      (3) „Beneficial Owner‟ means one who does not have legal title
26   to property but has rights in the property that are a normal incident
27   of owning the property; an equitable as opposed to a legal interest
28   in property. For purposes of this chapter, a person who is a spouse
29   of the legal owner is deemed a beneficial owner.
30      (4) „Month‟ means that period of time from one date in a
31   calendar month to the corresponding date in the following calendar
32   month, but if there is no corresponding date, then the last day of
33   the following month, and when computations are made for a
34   fraction of a month, a day is one-thirtieth of a month.
35      (5) „Pawnbroker‟ means any person engaged in the business of
36   lending money on the security of pledged goods, or engaged in the
37   business of purchasing tangible personal property on condition that
38   it may be redeemed or repurchased by the seller for a fixed price
39   within a fixed period of time.
40      (6) „Pawn transaction‟ means the pledging with a pawnbroker
41   under this chapter of a single item of goods or tangible personal
42   property as security for a loan of money. Items that are usually
43   sold as a set are considered a single item and must be included in

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 1   the same transaction, and a pledged item together with items that
 2   are accessories to the pledged item are considered a single item
 3   and must be included in the same transaction. A separate pawn
 4   transaction retains its separate character when it is renewed, unless
 5   the parties agree otherwise.
 6      (7) „Pawnshop‟ means the location at which or premises in
 7   which a pawnbroker regularly conducts business.
 8      (8) „Person‟ means an individual, partnership, corporation,
 9   joint venture, trust, association, or any other legal entity however
10   organized.
11      (9) „Pledged goods‟ means tangible personal property other
12   than choses in action, title, securities, or printed evidences of
13   indebtedness, which property is deposited with or otherwise
14   actually delivered into the possession of a pawnbroker in the
15   course of his business in connection with a pawn transaction.”
16
17   SECTION 2. Section 40-39-20 of the 1976 Code is amended to
18   read:
19
20      “Section 40-39-20. (A) All pawnbrokers conducting business in
21   this State are under the authority of and regulated by the
22   Department of Consumer Affairs, the administrator of which has
23   the authority to promulgate regulations as he considers necessary
24   to carry out the conditions and intent of this chapter. No person
25   may carry on the business of a pawnbroker in any location in this
26   State without first having obtained a Certificate of Authority for
27   each location from the Department of Consumer Affairs. Upon
28   receipt of the application for the Certificate of Authority, the
29   Department of Consumer Affairs shall notify the law enforcement
30   agency having jurisdiction where the applicant intends to do
31   business. The appropriate law enforcement agency official shall
32   conduct a criminal background investigation of the applicant and
33   any prospective employees. Upon its completion, the law
34   enforcement official shall make the results of the investigation
35   known to the administrator of the Department of Consumer Affairs
36   along with its appropriate recommendation on the issuance of the
37   Certificate of Authority to the applicant and on the employment of
38   any prospective employee.
39      (B) The department shall conduct a background investigation
40   of each individual applicant and of each employee of the applicant
41   and require fingerprinting of each applicant and each employee to
42   determine whether the applicant or employee is qualified under
43   this chapter. The department may deny an application for the

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 1   issuance or renewal of a license if it finds that an applicant is not
 2   qualified under this chapter. Fingerprints submitted pursuant to
 3   this section may be submitted to the South Carolina Law
 4   Enforcement Division and the Federal Bureau of Investigation for
 5   state and national criminal history checks.
 6      (C) A person convicted of a felony may not be issued a
 7   Certificate of Authority to carry on the business of a pawnbroker,
 8   act as a pawnbroker, or in any manner engage in the business of a
 9   pawnbroker, except that any person who is in the business of a
10   pawnbroker on July 1, 1988, and who has been convicted of a
11   felony before this date may be issued a Certificate of Authority and
12   upon receiving it may continue in the business of a pawnbroker but
13   if this person is convicted of a felony on or after July 1, 1988, he
14   may not thereafter be issued a Certificate of Authority, act as an
15   employee, or carry on the business of a pawnbroker after the date
16   of this subsequent felony conviction.
17      (D) To be eligible to receive a Certificate of Authority, an
18   applicant must:
19         (1) be of good moral character;
20         (2) not have been convicted of, or found guilty of, or pled
21   guilty or nolo contendere to, or not have been incarcerated as a
22   result of having previously been convicted of, or found guilty of,
23   or pled guilty or nolo contendere to, regardless of adjudication, a
24   felony and not be acting as a beneficial owner for someone who
25   has been convicted of, or found guilty of, or pled guilty or nolo
26   contendere to, regardless of adjudication, a felony;
27         (3) not have been convicted of, or found guilty of, or pled
28   guilty or nolo contendere to, or not have been incarcerated within
29   the last ten years as a result of having previously been convicted
30   of, or found guilty of, or pled guilty or nolo contendere to,
31   regardless of adjudication, a crime that involves theft, larceny,
32   dealing in stolen property, receiving stolen property, burglary,
33   embezzlement, obtaining property by false pretenses, possession of
34   altered property, or any other fraudulent or dishonest dealing
35   within the last ten years, and not be acting as a beneficial owner
36   for someone who has been convicted of, or found guilty of, or pled
37   guilty or nolo contendere to, or has been incarcerated within the
38   last ten years as a result of having previously been convicted of, or
39   found guilty of, or pled guilty or nolo contendere to, regardless of
40   adjudication, a crime that involves theft, larceny, dealing in stolen
41   property, receiving stolen property, burglary, embezzlement,
42   obtaining property by false pretenses, possession of altered


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 1   property, or any other fraudulent or dishonest dealing within the
 2   last ten years;
 3         (4) not have been convicted of, or found guilty of, or pled
 4   guilty or nolo contendere to, or not have been incarcerated within
 5   the last ten years as a result of having previously been convicted
 6   of, or found guilty of, or pled guilty or nolo contendere to,
 7   regardless of adjudication, a crime directly relates to the duties and
 8   responsibilities of a pawnbroker; and
 9         (5) show that the pawnshop will be operated lawfully and
10   fairly;
11         (6) meet the net asset requirements of Section 40-39-50.
12      (E) If the administrator finds that the financial responsibility,
13   experience, character and general fitness of the applicant are such
14   as to warrant belief that the business will be operated lawfully and
15   fairly, and the applicant meets the eligibility requirements of this
16   chapter, the administrator shall grant the application and issue to
17   the applicant a Certificate of Authority evidencing his authority to
18   do business under the provisions of this chapter.
19      (F) This section applies to each operator and legal or beneficial
20   owner if the applicant is a business entity; and officer, owner of at
21   least five percent of the shares outstanding, and director if the
22   applicant is a corporation. In addition, subsections (D)(2) and (3)
23   apply to employees of the pawnbroker.
24      (G) A person currently holding a Certificate of Authority on the
25   effective date of these amendments may continue to conduct
26   business under that Certificate. However, any applicant or
27   employee applying after the effective date of these amendments is
28   subject to the prohibitions.”
29
30   SECTION 3. Section 40-39-40 of the 1976 Code is amended to
31   read:
32
33     “Section 40-39-40. (A) No pawnbroker may charge or collect
34   any fees, costs, or assessments of any kind or nature other than
35   those specifically allowed under this chapter. Charges for
36   redemption or pick-up by mail may be assessed in the amount of
37   the actual mailing costs.
38     (B) Notwithstanding subsection (A) of this section, a
39   pawnbroker may pass along fees, costs or assessments to the
40   pledgor that are mandated by this State or the United States
41   government. The fees may be assessed to the pledgor only in the
42   amount required by the government entity, and may be assessed to
43   the pledgor only if directly related to a transaction involving a

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 1   particular pledgor. Fees, costs, or assessments not meeting this
 2   requirement must be borne by the pawnbroker.”
 3
 4   SECTION 4. Section 40-39-50 of the 1976 Code is amended to
 5   read:
 6
 7      “Every person seeking a Certificate of Authority to carry on the
 8   business of a pawnbroker shall at the time of application for his
 9   certificate file with the Department of Consumer Affairs a bond in
10   favor of the department to be executed by the person granted the
11   certificate and by two responsible sureties or a surety company
12   licensed to do business in this State in the penal sum of twenty-five
13   thousand dollars to be approved by the administrator. The bond
14   must be conditioned for the faithful performance of the duties and
15   obligations pertaining to the business so authorized. In lieu of the
16   above, other evidence of financial responsibility approved by the
17   administrator must be submitted, including, but not limited to,
18   letters of credit or certificates of deposit letters of credit approved
19   by the administrator may be submitted to fulfill the financial
20   responsibility requirements. Each applicant shall also file proof of
21   his net worth which must be a minimum of thirty-five thousand
22   dollars until that time as liability insurance covering the contents
23   of the pawn location is secured by the pawnbroker. The amount of
24   the liability insurance required must be set by regulations
25   promulgated by the administrator.”
26
27   SECTION 5. Section 40-39-100 of the 1976 Code, is amended to
28   read:
29
30      “Section 40-39-100. (A) Pawnbrokers may charge interest on
31   loans not exceeding the following amounts:
32         (1) at the rate of two dollars and fifty cents per thirty-day
33   period a month for each ten dollars loaned for the first fifty dollars
34   loaned;
35         (2) at the rate of two dollars per thirty-day period a month
36   for each ten dollars loaned on that portion of the loan exceeding
37   fifty dollars but not exceeding one hundred dollars;
38         (3) at the rate of one dollar and fifty cents per thirty-day
39   period a month for each ten dollars loaned on that portion of the
40   loan exceeding one hundred dollars but not exceeding two hundred
41   dollars;



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 1        (4) at the rate of one dollar per thirty-day period a month for
 2   each ten dollars loaned on that portion of the loan exceeding two
 3   hundred dollars but not exceeding one thousand dollars;
 4        (5) at the rate of fifty cents per thirty-day period a month for
 5   each ten dollars loaned on that portion of the loan exceeding one
 6   thousand dollars but not exceeding two thousand dollars.; or
 7        (6) at the rate of fifty cents a month for each ten dollars
 8   loaned on that portion of the loan exceeding one thousand dollars
 9   but not exceeding two thousand dollars.
10      (B) No pawnbroker may separate or divide a pawn transaction
11   into two or more transactions for the purpose or with the effect of
12   obtaining a total pawn interest rate in excess of that authorized for
13   an amount financed equal to the total of the amounts financed in
14   the resulting transactions.
15      (C) No pawnbroker may make a loan in excess of two
16   twenty-five thousand dollars. Every pawnbroker shall post these
17   rates in a form which is prescribed by the administrator. The
18   following statement must be included in the posted rate schedule:
19   „Consumers: All pawnbrokers operating in South Carolina are
20   required by law to post a schedule showing the maximum rate of
21   LOAN FINANCE CHARGES stated as dollars for each ten dollars
22   for each thirty-day period month that the pawnbroker intends to
23   charge for various types of pawn transactions. The purpose of this
24   requirement is to assist you in comparing the maximum rates that
25   pawnbrokers charge, thereby furthering your understanding of the
26   terms of pawn transactions and helping you to avoid the
27   uninformed use of credit.
28      (D) Interest on loans may not be pro-rated on renewals or
29   extensions. However, interest may be pro-rated at redemption
30   when early pay-off of a loan is made. A pawnbroker may not
31   accept interest payments or otherwise extend a loan beyond the
32   vesting period pursuant to Section 40-39-16, if applicable, timely,
33   and proper notice of forfeiture has been sent.
34   NOTE: Pawnbrokers are prohibited only from granting credit at
35   rates higher than those specified above. A pawnbroker may be
36   willing to grant you credit at rates that are lower than those
37   specified, depending on the amount, terms, collateral, and your
38   credit worthiness.”
39
40   SECTION 6. Section 40-39-150(B) of the 1976 Code, as
41   amended by Act 128 of 2005, is further amended to read:
42


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 1      “(B) The administrative law judge also may impose
 2   administrative fines of up to seven hundred fifty dollars for each
 3   offense upon persons violating any of the provisions of this chapter
 4   up to a maximum of fifteen thousand dollars for the same set of
 5   transactions or occurrences. Each violation constitutes a separate
 6   offense. In addition, a person violating the provisions of Sections
 7   40-39-20 and 40-39-30 is guilty of a misdemeanor and, upon
 8   conviction, must may be punished by a fine not exceeding fined up
 9   to one thousand dollars, or by imprisonment for a term not
10   exceeding sixty days imprisoned not more than sixty days, or both.
11   The administrative law judge may revoke or suspend a
12   pawnbroker‟s certificate of authority in addition to the penalties
13   provided in this section.”
14
15   SECTION 7. Part 4, Chapter 3, of Title 37 is amended by adding:
16
17     “Section 37-3-414. A lender may not make a short-term vehicle
18   secured loan, as defined in Section 37-3-413(1), at rates exceeding
19   those permitted by pawnbrokers in Section 40-39-100 if the
20   amount of the loan is more than six hundred dollars but does not
21   exceed twenty-five thousand dollars.”
22
23   SECTION 8. If any section, subsection, paragraph, subparagraph,
24   sentence, clause, phrase, or word of this act is for any reason held
25   to be unconstitutional or invalid, such holding shall not affect the
26   constitutionality or validity of the remaining portions of this act,
27   the General Assembly hereby declaring that it would have passed
28   this act, and each and every section, subsection, paragraph,
29   subparagraph, sentence, clause, phrase, and word thereof,
30   irrespective of the fact that any one or more other sections,
31   subsections, paragraphs, subparagraphs, sentences, clauses,
32   phrases, or words hereof may be declared to be unconstitutional,
33   invalid, or otherwise ineffective.
34
35   SECTION 9. This act takes effect upon approval by the Governor.
36                            ----XX----
37




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