(A) Statement of policy.
(1) The City Council finds that use of services provided by pawnbrokers provides an opportunity for the commission of crimes and their concealment because pawn businesses have the ability to receive and transfer property stolen by others easily and quickly. The City Council also finds that consumer protection regulation is warranted in transactions involving pawnbrokers. The purpose of this section is to prevent pawn businesses from being used as facilities for the commission of crimes, and to assure that such businesses comply with basic consumer protection standards, thereby protecting the public health, safety, and general welfare of the citizens of the city.
(2) To help the city better regulate pawn businesses, decrease and stabilize costs associated with the regulation of the pawn industry, and increase identification of criminal activities in the pawn industry through the timely collection and sharing of pawn transaction information, this section also implements and establishes the required use of the Automated Pawn System (APS).
(B) Definitions. As used herein, unless otherwise indicated, the following terms are defined as follows:
PAWNBROKER. Any natural person, partnership or corporation, either as principal, agent or employee thereof, who loans money on deposit or pledge of personal property or other valuable thing, or who deals in the purchasing of personal property or other valuable thing, on condition of selling the same back again at a stipulated price, or who loans money secured by chattel mortgage on personal property, taking possession of the property or any part thereof so mortgaged. To the extent that a pawnbroker's business includes buying personal property previously used, rented or leased, or selling it on consignment, the provisions of this section shall be applicable.
REPORTABLE TRANSACTION. Every transaction conducted by a pawnbroker in which merchandise is received through a pawn, purchase, consignment or trade, or in which a pawn is renewed, extended or redeemed, or for which a unique transaction number or identifier is generated by their point-of-sale software, or an item is confiscated by law enforcement, is reportable except:
(a) The bulk purchase or consignment of new or used merchandise from a merchant, manufacturer or wholesaler having an established permanent place of business, and the retail sale of the merchandise, provided the pawnbroker must maintain a record of such purchase or consignment that describes each item, and must mark each item in a manner that relates it to that transaction record.
(b) Retail and wholesale sales of merchandise originally received by pawn or purchase, and for which all applicable hold and/or redemption periods have expired.
(C) License required. It is unlawful for any pawnbroker to engage in business as a pawnbroker, or otherwise portray the person or business as a pawnbroker, unless the pawnbroker has a valid license authorizing engagement in the business. Any pawn transaction made without benefit of a license is void.
(D) License fees.
(1) The annual license fee for each premise licensed is $250.
(2) A billable transaction fee shall be established by the City Council and shall reflect the cost of processing transactions and other related regulatory expenses as determined by the City Council. License holders shall be notified in writing 30 days before any increase in this fee is implemented. Billable transaction fees shall be billed monthly and are due and payable within 30 days. Failure to pay the billable transaction fee to the city is a violation of this chapter.
(E) Application.
(1) Form. Each application for a license by this section shall be made at the office of the City Clerk, upon such form as may be prescribed, and must be completed by every applicant for a new license or for renewal of an existing license.
(2) New manager. When a license holder places a manager in charge of a business, or if the named manager(s) in charge of a licensed business changes, the license holder must complete and submit the appropriate application within 14 days of the change in managers. This application to change managers must be accompanied with payment of the investigation fee as required by division (E)(4).
(3) Application execution. All applications for a license under this section must be signed and sworn to under oath or affirmation by the applicant. If the application is that of a natural person, it must be signed and sworn to by such person; if that of a corporation, by an officer thereof; if that of a partnership, by one of the general partners; and if that of an unincorporated association, by the manager or managing officer thereof.
(4) Criminal investigation. Each application for a new license or to change managers, required by the provisions of this section, submitted by an applicant shall be accompanied by payment of an investigation fee of $500, if the investigation process is conducted solely within the State of Minnesota. If the investigation is conducted outside the State of Minnesota, the issuing authority may recover the actual investigation costs not exceeding $5,000.
(F) Term. Each license issued pursuant to the provisions of this section shall expire on December 31 immediately following such issuance.
(G) Records required. At the time of any reportable transaction other than renewals, extensions or redemptions, every license holder must immediately record, in English, the following information by using ink or other indelible medium on forms, or in a computerized record approved by the city:
(1) A complete and accurate description of each item, including but not limited to, any trademark, identification number, serial number, model number, brand name or other identifying mark on such an item.
(2) The purchase price, amount of money loaned upon, or pledged therefor.
(3) The maturity date of the transaction and the amount due, including monthly and annual interest rates and all pawn fees and charges.
(4) Date, time and place the item of property was received by the license holder, and the unique alpha and/or numeric transaction identifier that distinguishes it from all other transactions in the license holder's records.
(5) Full name, current residence address, current residence telephone number, date of birth and accurate description of the person from whom the item of the property was received, including: sex, height, weight, race, color of eyes and color of hair.
(6) The identification number and state of issue from any of the following forms of identification of the seller:
(a) Current valid Minnesota driver's license.
(b) Current valid Minnesota identification card.
(c) Current valid photo identification card issued by another state or province of Canada.
(7) The signature of the person identified in the transaction.
(8) (a) The license holder must also take a color photograph or color video recording of:
1. Each customer involved in a billable transaction; and
2. Every item pawned or sold that does not have a unique serial or identification number permanently engraved or affixed.
(b) Color photograph.
1. If a photograph is taken, it must be at least 2 inches in length 2 inches in width, and must be maintained in such a manner that the photograph can be readily matched and correlated with all other records of the transaction to which they relate.
2. Such photographs must be available to the city's Police Chief, or his or her designee, upon request.
3. The major portion of the photograph must include an identifiable front facial close-up of the person who pawned or sold the item.
4. Items photographed must be accurately depicted.
5. The license holder must inform the person that he or she is being photographed by displaying a sign of sufficient size in a conspicuous place in the premises.
(c) Color video taping.
1. If a video photograph is taken, the video camera must zoom in on the person pawning or selling the item so as to include an identifiable close-up of that person's face.
2. Items photographed by video must be accurately depicted.
3. Video photographs must be electronically referenced by time and date so they can be readily matched and correlated with all other records of the transaction to which they relate.
4. The license holder must inform the person orally that he or she is being videotaped, and by displaying a sign of sufficient size in a conspicuous place on the premises.
5. The license holder must keep the exposed videotape for 3 months.
(9) Digitized photographs. License holders must fulfill the color photograph requirements in division (G)(8) by submitting them as digital images, in a format specified by the issuing authority, electronically cross-referenced to the reportable transaction with which they are associated. Notwithstanding that digital images may be captured from required video recordings, this provision does not alter or amend the requirements in division (G)(8).
(10) Renewals, extensions and redemptions. For renewals, extensions and redemptions, the license holder shall provide the original transaction identifier, the date of the current transaction, and the type of transaction.
(11) Inspection of records. The records must at all reasonable times be open to inspection by the city's Police Department. Data entries shall be retained for at least 3 years from the date of transaction. Entries of required digital images shall be retained a minimum of 90 days.
(H) Daily reports to the Police Department.
(1) Daily reports. The city's Police Department provides license holders with the current version of the Automated Pawn System Interchange File Specification. License holders must submit every reportable transaction to the city's Police Department daily in the following manner:
(a) License holders must provide to the city's Police Department with all reportable transaction information by transferring it from their computers to the Automated Pawn System via modem using the current version of the Automated Pawn System Interchange File Specification.
(b) All required records must be transmitted completely and accurately after the close of business each day, in accordance with standards and procedures established by the city.
(c) Any transaction that does not meet the Automated Pawn System Interchange File Specification must be corrected and resubmitted the next business day.
(d) The license holder must display a sign of sufficient size, in a conspicuous place in the premises, which informs patrons that all transactions are reported to the city's Police Department daily.
(2) Billable transaction fees. License holders will be charged for each billable transaction reported to the city's Police Department.
(a) If a license holder is unable to successfully transfer the required reports by modem, the license holder must provide the city's Police Department, upon request, with printed copies of all reportable transactions, along with the video tape(s) for that date, by noon the next business day.
(b) If the problem is determined to be in the license holder's system and is not corrected by the close of the first business day following the failure, the license holder must continue to provide the required reports as detailed in division (H)(1) above and must be charged a $50 reporting failure penalty, daily, until the error is corrected; or
(c) If the problem is determined to be outside the license holder's system, the license holder must continue to provide the required reports in division (H)(1) above, and resubmit all such transactions via modem when the error is corrected.
(d) If a license holder is unable to capture, digitize or transmit the photographs required in division (G)(8), the license holder must immediately take all required photographs with a still camera, cross-reference the photographs to the correct transaction, and make the pictures available to the city's Police Department upon request.
(e) Regardless of the cause or origin of the technical problems that prevented the license holder from uploading their reportable transactions, upon correction of the problem, the license holder shall upload every reportable transaction from every business day the problem had existed.
(f) Notwithstanding the provisions of division (H)(2)(a) through (c), the city's Police Department may, upon presentation of extenuating circumstances, delay the implementation of the daily reporting penalty.
(I) Receipt required. Every license holder must provide a receipt to the party identified in every reportable transaction, and must maintain a duplicate of that receipt for 3 years. The receipt must include at least the following information:
(1) The name, address and telephone number of the licensed business.
(2) The date and time the item was received by the licensee.
(3) Whether the item was pawned or sold, or the nature of the transaction.
(4) An accurate description of each item received, including but not limited to, any trademark, identification number, serial number, model number, brand name or other identifying mark on such an item.
(5) The signature or unique identifier of the license holder or employee that conducted the transaction.
(6) The amount advanced or paid.
(7) The monthly and annual interest rates, including all pawn fees and charges.
(8) The last regular day of business by which the item must be redeemed by the pledger without risk that the item will be sold, and the amount necessary to redeem the pawned item on that date.
(9) The full name, current residence address, current residence telephone number, and date of birth of the pledger or seller.
(10) The identification number and state of issue for any of the following forms of identification of the seller:
(a) Current valid Minnesota driver's license.
(b) Current valid Minnesota identification card.
(c) Current valid photo driver's license or identification card issued by another state or province of Canada.
(11) Description of the pledger or seller, including approximate sex, height, weight, race, color of eyes and color of hair.
(12) The signature of the pledger or seller.
(13) All printed statements as required by M.S. § 325J.04, Subd. 2, or any other applicable statutes.
(J) Redemption period. Any person pledging, pawning or depositing an item for security must have a minimum of 60 days from the date of that transaction to redeem the item before it may be forfeited and sold. During the 60-day redemption period, items may not be removed from the licensed location except as provided in division (Q). License holders are prohibited from redeeming any item to anyone other than the person to whom the receipt was issued, or to any person identified in a written and notarized authorization to redeem the property identified in the receipt, or to a person identified in writing by the pledger at the time of the initial transaction and signed by the pledger, or with approval of the city's Police Department. Written authorization for release of property to persons other than original pledger must be maintained along with original transaction record in accordance with division (G).
(K) Holding period. Any item purchased or accepted in trade by a license holder must not be sold or otherwise transferred for 30 days from the date of the transaction. An individual may redeem an item at any time.
(L) Police order to hold property.
(1) Investigative hold. Whenever a law enforcement official from any agency notifies a license holder not to sell an item, the item must not be sold or removed from the premises. The investigative hold shall be confirmed in writing by the originating agency within 72 hours, and will remain in effect for 15 days from the date of initial notification, or until the investigative order is canceled, or until an order to hold/confiscate is issued, pursuant to division (L)(2), whichever comes first.
(2) Order to hold. Whenever the city's Police Chief, or his or her designee, notifies a license holder not to sell an item, the item must not be sold or removed from the licensed premises until authorized to be released by the city's Police Chief or his or her designee. The order to hold shall expire 90 days from the date it is placed unless the city's Police Chief, or his or her designee, determines the hold is still necessary and notifies the license holder in writing.
(3) Order to confiscate. If an item is identified as stolen or evidence in a criminal case, the city's Police Chief, or his or her designee, may:
(a) Physically confiscate and remove it from the shop, pursuant to a written order from the city's Police Chief, or his or her designee; or
(b) Place the item on hold or extend the hold as provided in division (L)(2), and leave it in the licensed premise.
(4) Confiscation. When an item is confiscated, the person doing so shall provide identification upon request of the license holder, and shall provide the license holder the name and phone number of the confiscating agency, a contact person, and the case number related to the confiscation.
(5) Notification when order no longer necessary. When an order to hold/confiscate is no longer necessary, the city's Police Chief, or his or her designee, shall so notify the license holder.
(M) Inspection of items. At all times during the terms of the license, the license holder must allow law enforcement officials to enter the premises where the licensed business is located, including all off-site storage facilities as authorized in division (Q), during normal business hours, except in an emergency, for the purpose of inspecting such premises, and inspecting the items, wares, merchandise and records therein, to verify compliance with this section or other applicable laws.
(N) Label required. License holders must attach a label to every item at the time it is pawned, purchased or received in inventory from any reportable transaction. Permanently recorded on this label must be the number or name that identifies the transaction in the license holder's records, the transaction date, the name of the item, and the description or the model and serial number of the item as reported to the city's Police Department, whichever is applicable, and the date the item is out of pawn or can be sold, if applicable. Labels shall not be re-used.
(O) Prohibited acts.
(1) No person under the age of 18 years may pawn or sell, or attempt to pawn or sell, goods with any licensee, nor may any license holder receive any goods from a person under the age of 18 years.
(2) No license holder may receive any goods from a person of unsound mind or an intoxicated person.
(3) No license holder may receive any goods, unless the seller presents identification in the form of a valid State of Minnesota driver's license, a valid State of Minnesota identification card, or current valid photo driver's license or identification card issued by the state or providence of residency of the person from whom the item was received.
(4) No license holder may receive any item of property that possesses an altered or obliterated serial number or operation identification number, or any item of property that has had its serial number removed.
(5) No person may pawn, pledge, sell, consign, leave or deposit with any license holder:
(a) Any article of property not their own;
(b) The property of another, whether with permission or without; or
(c) Any article of property in which another has a security interest.
(6) No person seeking to pawn, pledge, sell, consign, leave or deposit any article of property with any license holder shall:
(a) Give a false or fictitious name;
(b) Give a false date of birth;
(c) Give a false or out-of-date address of residence or telephone number; or
(d) Present a false or altered identification, or the identification of another.
(P) Denial, suspension or revocation of license. Any license issued under this section may be denied, suspended or revoked for one or more of the following reasons:
(1) The proposed use does not comply with the applicable zoning code.
(2) The proposed use does not comply with any health, building, building maintenance or other provisions of the city code or state law.
(3) The applicant or license holder has failed to comply with one or more provisions of this section.
(4) The applicant is not a citizen of the United States or a resident alien, or upon whom it is impractical or impossible to conduct an investigation due to the unavailability of information.
(5) The applicant has been convicted of a felony.
(6) Fraud, misrepresentation or bribery in securing or renewing a license.
(7) Fraud, misrepresentation or false statements made in the application and investigation for, or in the course of, the applicant's business.
(8) Violation within the preceding 5 years, of any law relating to theft, damage or trespass to property, sale of a controlled substance, or operation of a business.
(9) The owner of the premises licensed or to be licensed would not qualify for a license under the terms of this section.
(Q) Business at only one location. A license under this chapter authorizes the license holder to carry on its business only at the permanent place of business designated in the license. However, upon written request, the city's Police Chief may approve an off-site locked and secured storage facility. The license holder shall permit inspection of the facility in accordance with division (M). All provisions of this section regarding record keeping and reporting apply to the facility and its contents. Property shall be stored in compliance with all provisions of the city code. The license holder must either own the building in which the business is conducted, and any approved off-site storage facility, or have a lease on the business premise that extends for more than 6 months.
(R) Refusal and revocation. The Council may, for any reasonable cause, refuse to grant any application or revoke any license. No license shall be granted to a person of questionable moral character or business reputation. Before revocation of any license, the Council shall give notice to the licensee and grant such licensee opportunity to be heard. Notice to be give and the exact time of hearing shall be stated in the resolution calling for such hearing.
(Ord. 39, 4th Series, passed 7-18-2011) Penalty, see § 10.99