§ 111.07  PAWNBROKERS AND PRECIOUS METAL DEALERS.
   (A)   Purpose.
      (1)   The City Council finds that pawnbrokers and precious metal dealers potentially provide an opportunity for the commission of crimes and their concealment because these businesses have the ability to receive and transfer stolen property quickly and easily. The City Council also finds that consumer protection regulation is warranted in transactions involving pawnbrokers and precious metal dealers. The City Council further finds that the pawnbroker and precious metal industries have outgrown the city’s current ability to effectively or efficiently identify criminal activity related to pawnshops and precious metal dealers. The purpose of this section is to prevent pawnbroker and precious metal businesses from being used as facilities for the disposition of illegally-obtained property, to aid in the identification of individuals involved in criminal activities through the timely collection and sharing of transaction information, and to ensure that the 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 Police Department better regulate current and future pawnbroker and precious metal businesses, decrease and stabilize costs associated with the regulation of the pawnbroker and precious metal industries, and increase identification of criminal activities in the pawnbroker and precious metal industries through the timely collection and sharing of pawnbroker and precious metal transaction information, this section also implements and establishes the required use of an automated pawn system (APS), as approved by the Police Department.
   (B)   Definitions. For the purpose of this section, the following definitions shall apply unless the context clearly indicates or requires a different meaning.
      BILLABLE TRANSACTION. A reportable transaction conducted by a pawnbroker or precious metal dealer except renewals, redemptions or extensions of existing pawns on items previously reported and continuously in the licensee’s possession, voided transactions and confiscations.
      ITEM CONTAINING PRECIOUS METAL. An item made in whole or in part of metal and containing more than 1% by weight of silver, gold or platinum.
      LICENSEE. The person to whom a license is issued under this section, including any employees or agents of the person.
      PAWNBROKER. A person engaged in whole or in part in the business of lending money on the security of pledged goods left in pawn, or in the business of purchasing tangible personal property to be left in pawn on the condition that it may be redeemed or repurchased by the seller for a fixed price within a fixed period of time. Notwithstanding the foregoing, the following are exempt from this definition: any bank, savings and loan association, or credit union.
      PAWNSHOP. The location at which or premises in which a pawnbroker regularly conducts business.
      PERSON. An individual, partnership, corporation, limited liability company, joint venture, trust, association or any other legal entity, however organized.
      PRECIOUS METAL. Silver, gold, platinum or sterling silver, whether as a separate item or in combination, or as a piece of jewelry or other crafted item, except items plated with precious metal or metals when the plating equals less than 1% of the item’s total weight.
      PRECIOUS METAL DEALER. A person engaging in the business of buying secondhand items containing precious metals, including, but not limited to, coins, jewelry, watches, eating utensils, candlesticks and religious and decorative objects.
      REPORTABLE TRANSACTION. Every transaction conducted by a pawnbroker or precious metal dealer in which items are received through a pawn, purchase, consignment or trade, or in which a pawn is renewed, extended or redeemed, 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 maintains a record describing the items in each transaction and marks each item in a manner that relates it to the particular transaction record; and
         (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.
      SECONDHAND ITEM. Tangible personal property, excluding a motor vehicle, that has been previously used, rented, owned or leased.
   (C)   License required.
      (1)   General rule. No person shall engage in the business of pawnbroker or precious metal dealer within the city unless the person is currently licensed under this section, and in the case of a precious metal dealer, a license must be obtained from both the county and the city. The city license must be obtained pursuant to Chapter 110.
      (2)   Dual licenses required. A person conducting both pawnbroker and precious metal dealer activity at the same location shall be required to obtain both a pawnbroker’s license and a precious metal dealer’s license. Only the license fee for a pawnbroker license shall be required. The license fee for the precious metal dealer license shall be waived.
      (3)   Number of licenses issued. The maximum allowable number of pawnbroker licenses at any one time shall be one. The maximum number of allowable precious metal dealer licenses at any one time shall be six.
      (4)   License transfer not allowed. Each license issued under this section shall be issued to a specific person and for a specific location. The license is not transferable.
      (5)   Investigation. Prior to issuance of a pawnbroker or precious metal dealer license, an application and investigation is required pursuant to § 110.03. An applicant applying for both licenses shall only be required to pay one background investigation fee. If there is a manager in charge of the business, the manager must also undergo a background investigation. A separate fee shall be required for each background investigation conducted.
      (6)   License display. The licensee must display a sign of sufficient size and in a location that makes it visible to all patrons which informs all patrons that all pawn and precious metal transactions are reported to the Police Department.
   (D)   Exemptions.
      (1)   The following persons shall be exempt from the licensing requirements regarding precious metal dealers:
         (a)   Transactions at occasional “garage” or “yard” sales, or estate sales or farm auctions held at the decedent’s residence, except that precious metal dealers must comply with the requirements of Minn. Stat. §§ 325F.734 to 325F.742, as they may be amended from time to time, for these transactions;
         (b)   Transactions regulated by Minn. Stat. Chapter 80A, as it may be amended from time to time;
         (c)   Transactions regulated by the Federal Commodity Futures Commission Act, Pub. L. No. 93 463;
         (d)   Transactions involving the purchase of precious metal grindings, filings, slag, sweeps, scraps or dust from a dental lab, dentist or agent thereof;
         (e)   Transactions involving the purchase of precious metal grindings, filings, slag, sweeps, scraps or dust from an industrial manufacturer with whom the precious metal dealer has a contractual relationship;
         (f)   Transactions in which a secondhand item containing precious metal is exchanged for a new item containing precious metal and the value of the new item exceeds the value of the secondhand item, except that a natural person, partnership or corporation who is a precious metal dealer by engaging in a transaction that is not exempted by this section must comply with the requirements of Minn. Stat. §§ 325F.734 to 325F.742, as they may be amended from time to time;
         (g)   Transactions between precious metal dealers if both dealers are licensed under Minn. Stat. § 325F.733, as it may be amended from time to time, or if the seller’s business is located outside of the state and the item is shipped from outside the state to a dealer licensed under Minn. Stat. § 325F.733, as it may be amended from time to time;
         (h)   Transactions in which the buyer of a secondhand item containing precious metal is engaged primarily in the business of buying and selling antiques, and the items are resold in an unaltered condition except for repair, and the items are resold at retail, and the buyer paid less than $2,500 for secondhand items containing precious metals purchased within any period of 12 consecutive months; and
         (i)   Transactions in which the secondhand item containing precious metal is exchanged for an in store credit to be used only for merchandise offered for sale at the business where the transaction occurs.
      (2)   The following persons shall be exempt from the licensing requirements for pawnbrokers:
         (a)   Persons selling used personal property or items in connection with an occasional “garage” or “yard” sale, estate sale or farm auction;
         (b)   Repurchasers of agricultural machinery or implements pursuant to Minn. Stat. §§ 325E.05 and 325E.06, as they may be amended from time to time;
         (c)   Recyclers, including but not limited to motor oil, aluminum, iron, scrap metal, glass, plastic and paper recyclers;
         (d)   Dealers of used motor vehicles;
         (e)   Retail stores in connection with the repurchase of returned merchandise by a customer after the initial retail sale from the retail store;
         (f)   Dealers of secondhand items for consignment or for resale only;
         (g)   Dealers of wire and cable pursuant to Minn. Stat. § 325E.21, as it may be amended from time to time;
         (h)   Persons making occasional private purchases or sales of secondhand items;
         (i)   Licensed auctioneers;
         (j)   Retail or wholesale businesses who purchase secondhand items as part of payment, in full or a portion thereof, for new goods or personal property purchases from the business when the business transactions are incidental to and not the primary business; and
         (k)   Banks, savings and loan associations or credit unions.
   (E)   Persons and locations ineligible for a license.
      (1)   In addition to the grounds enumerated in § 110.05, no license shall be issued to an applicant if:
         (a)   The applicant, general partner, managing partner of a partnership, or manager, proprietor or agent in charge of a business or a corporation holds an intoxicating liquor license under §§ 112.01 through 112.06;
         (b)   The person is not of good moral character and repute;
         (c)   In the judgment of the City Council, the person is not the real party in interest or beneficial owner of the business operated under the license; or
         (d)   The person has had a pawnbroker or precious metal dealer’s license issued by any governmental authority revoked anywhere within five years of the license application.
      (2)   A licensee is only authorized to carry on its business at the permanent place of business designated in the license. No building other than that mentioned in the license application may be used in conjunction with the licensed business. No off site storage facilities shall be allowed.
      (3)   No license may be issued for a place or business ineligible for a license under city ordinance or state law.
      (4)   No license may be issued for a place or business that holds a liquor license.
      (5)   No license may be granted for operation on a premises for which taxes, assessments or other financial claims of the city or any other governmental entity are delinquent and unpaid.
   (F)   General license restrictions and conditions.
      (1)   Conduct. Every licensee is responsible for the conduct of his or her place of business and the conditions of order in it. The act of any employee of the licensed premises is deemed the act of the licensee as well, and the licensee will be liable for all penalties provided by this section equally with the employee, except for criminal penalties.
      (2)   Zoning requirements met. No pawnbroker or precious metal dealer license shall be granted until all applicable zoning requirements are met or until all conditions for approval of the use have been satisfied.
      (3)   Gambling. No licensee under this section may keep, possess, operate or permit the keeping, possession or operation of dice, slot machines, roulette wheels, punchboards, blackjack tables or pinball machines that return coins or slugs, chips or tokens of any kind, which are redeemable for merchandise or cash. No gambling equipment authorized under Minn. Stat. §§ 349.11 through 349.61, as they may be amended from time to time, may be kept or operated and no raffles may be conducted on the licensed premises and/or adjoining rooms. The purchase of lottery tickets may take place on the licensed premises as authorized by the director of the lottery pursuant to Minn. Stat. §§ 349A.01 through 349A.15, as they may be amended from time to time.
      (4)   Hours of operation. Monday through Saturday, a licensee may not be open for business before 7:00 a.m. or after 9:00 p.m. On Sundays, a licensee may not be open for business before 11:00 a.m. or after 6:00 p.m. A licensee may not be open for business on Thanksgiving Day or Christmas Day.
      (5)   Stolen or lost property. A pawnbroker or precious metal dealer must report to the Police Department an item pledged, received, purchased or traded, or sought to be pledged, received, purchased or traded, if the pawnbroker or precious metal dealer has reason to believe that the article was stolen or lost.
      (6)   Recordkeeping. At the time of receipt of an item of property, whether sold or pawned, the licensee shall immediately and legibly record, in English, the following information by computerized or electronic record, including storage on a backup disk or other electronic storage medium, according to the standards and procedures approved by the Chief of Police:
         (a)   An accurate and complete description of the item of property, including, but not limited to, brand name, model name, serial number, trademark, identification number or any other identifying mark on the item;
         (b)   The date, time and place the item of property was received by the licensee, and the unique alpha and/or numeric transaction identifier that distinguishes it from all other transactions in the licensee’s records;
         (c)   The purchase price or loan amount and the check number by which the money was advanced or paid, or the nature of the transaction if not a loan or sale. For pawnbrokers, the information must include:
            1.   The maturity date of the transaction and the amount due, including monthly and annual interest rates; and
            2.   All pawn fees and charges and the last regular date of business by which the item must be redeemed by the pledgor without risk that the item will be sold, and the amount necessary to redeem the pawned item on that date.
         (d)   Full name, residence address, residence telephone number, date of birth and accurate physical description of the person from whom the item of the property was received, including: gender, height, weight, race, color of eyes and color of hair;
         (e)   The identification number and state or agency of issue from one of the following forms of identification of the person from whom the item was received:
            1.   A current valid Minnesota driver’s license;
            2.   A current valid Minnesota identification card; or
            3.   A current, valid photo driver’s license or identification card issued by another state or province of Canada and one other form of identification.
         (f)   The signature or unique identifier of the licensee or employee that conducted the transaction; and
         (g)   The signature of the person identified in the transaction.
      (7)   Photographic record.
         (a)   A licensee must obtain a digital color photograph or digital color video recording of:
            1.   Each customer involved in a billable transaction; and
            2.   Every item pawned or purchased that does not have a unique serial or identification number permanently engraved or affixed.
         (b)   If a photograph is taken, it must be at least two inches in length by two inches in width and must be maintained in such a manner that the photograph can be readily referenced with the information regarding the person and the item sold or pawned. The photographs must be in digital format and must be made available to the Police Department, upon request. The major portion of the photograph must include an identifiable front facial close up of the person who pawned or sold the item. Items photographed must be accurately depicted. The licensee 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. If a video photograph is taken, the video camera must zoom in on the person pawning or selling the item to include an identifiable close up of that person’s face. Items photographed by video must be accurately depicted. 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. The licensee must retain the videotape for 90 days from the date of the transaction.
      (8)   Labeling requirement. A label must be attached 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 licensee’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 Police Department, and the date the item can be sold, if applicable. The labels shall not be re used.
      (9)   Receipts. The licensee shall provide a receipt to the seller or pledger of any item of property received, containing the following information:
         (a)   The name, address and telephone number of the licensee;
         (b)   The date and time on which the item was received by the licensee;
         (c)   A description of the item received and amount paid to the pledger or seller in exchange for the item pawned or sold;
         (d)   The signature of the pledger or seller and the licensee or designee;
         (e)   For pawnbrokers, the information must include the last regular business day, if any, by which the item must be redeemed by the pledger or seller without risk that the item will be sold and the amount necessary to redeem the transaction goods on that date and the monthly and annual interest rates charged by the licensee, if any, including all pawn fees and charges;
         (f)   The full name and address of the seller or pledger, and a blank line for the pledger’s signature;
         (g)   The following statements shall be printed on all pawn transaction receipts:
            “Any personal property pledged to a pawnbroker within this state is subject to sale or disposal when there has been no payment made on the account for a period of not less than 60 days past the date of the pawn transaction, renewal or extension; no further notice is necessary. There is no obligation for the pledger to redeem pledged goods. The pledger of this item attests that it is not stolen, that it has no liens or encumbrances against it, and the pledger has the right to sell or pawn the item. This item is redeemable only by the pledger to whom the receipt was issued, or any person identified in a written and notarized authorization to redeem the property identified in the receipt, or a person identified in writing by the pledger at the time of the initial transaction and signed by the pledger. Written authorization for release of property to persons other than the original pledger must be maintained along with the original transaction record.”
      (10)   Disposition of pawned articles.
         (a)   When any article is sold or disposed of by the licensee, the records shall contain the article sold with the date, the amount for which the article was sold, interest and charges accrued, and identification of the person to whom sold.
         (b)   For renewals, extensions and redemptions, the licensee shall provide the original transaction identifier, the date of the current transaction, and the type of transaction.
      (11)   Daily reports to Police Department using APS. All required transaction record data must be transmitted electronically to the State Police Department at the close of each business day using APS. If the licensee is unable to report using APS due to technology failures or interruptions, then all required records, including printed copies of all reportable transactions along with the required photographs or video tape for that day, must be maintained at the licensed premises and be made immediately available for inspection upon request by a police officer. If the electronic transmission failure is determined to be in the licensee’s system, the licensee must take all reasonable steps including the replacement of its computer system and related components in order to return the electronic reporting system to working condition as soon as possible. If the nonfunctioning system or repair will require more than ten days to return the system to a working condition, the licensee must notify the Police Department. Failure by the licensee to correct a problem with its computer or other systems causing the licensee’s inability to electronically transmit required transaction data to APS or failing to notify the Police Department of the malfunction within ten days is a violation of this section. Regardless of the origin of the technical problems that prevented the licensee from transmitting the required reports electronically, upon correction of the problem, the licensee must electronically transmit every reportable transaction to APS from each business day that the problem existed.
      (12)   Monthly transaction fee. In addition to the annual license fee, a licensee must pay a monthly transaction fee based on the actual number of billable transactions conducted by the licensee at the rate established in the fee schedule.
      (13)   Inspection of records. The records referred to in this section shall be open to the inspection of the Police Department at all reasonable times and shall be retained by the licensee on the licensed premises for at least four years, except the video records, which must be retained for 90 days.
      (14)   Inspection of premises and items. At all times during the terms of the license, the licensee must allow law enforcement officials to enter the premises where the licensed business is located during normal business hours, except in an emergency, for the purpose of inspecting the premises and inspecting the items, merchandise and records to verify compliance with this section or other applicable laws.
      (15)   Holding period for pawnbrokers.
         (a)   Pawned items. A 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, or in the case of precious metal, traded, melted down or dismantled. During the 60 days following the date of the pawn, pledged items may not be sold or otherwise removed from the licensed location, unless it is redeemed by the person who pawned or pledged the items.
         (b)   Purchased items. Any item purchased or accepted in trade by the licensee must not be sold or otherwise removed from the premises for 30 days from the date of the transaction, except gold and silver coins, as noted below.
      (16)   Holding period for precious metal dealers.
         (a)   General rule. Every precious metal dealer shall hold the following items for a period of 14 days from the time of the transaction:
            1.   Coins that are purchased because of their numismatic or antique value, (i.e., rare coin collection); and
            2.   All other secondhand items containing precious metal purchased by the precious metal dealer.
         (b)   Exception. Gold and silver coins that are purchased with the intent to refine (melt) or sell them to a refiner because of their precious metal value, are not subject to the 14-day holding period requirement. During the holding period, items shall not be removed from the licensed premises or altered from their original state.
      (17)   Release of property. Pawnbroker licensees are prohibited from redeeming any pawned item to anyone other than to:
         (a)   The person to whom the receipt was issued;
         (b)   Any person identified in a written and notarized authorization to redeem the property; or
         (c)   Any person identified in writing by the pledger at the time of the initial transaction and signed by the pledger.
      (18)   Pawning of motor vehicle titles. In addition to the other requirements of this section, a pawnbroker who holds a title to a motor vehicle as part of a pawn transaction must:
         (a)   Be licensed as a used motor vehicle dealer under Minn. Stat. § 168.27, as it may be amended from time to time, and post the license on the pawnshop premises;
         (b)   Verify that there are no liens or encumbrances against the motor vehicle with the State Department of Public Safety;
         (c)   Verify that the pledger has automobile insurance on the motor vehicle as required by law;
         (d)   Not sell a motor vehicle covered by a pawn transaction until 90 days after recovery of the motor vehicle; and
         (e)   Not store any pawned, pledged or purchased vehicles at the license premises in violation of the Zoning Ordinance (Chapter 153).
      (19)   Police order to hold property.
         (a)   Investigative hold. Whenever a law enforcement official from any agency notifies a licensee not to sell an item, the item must not be sold or removed, from the premises or melted or dismantled. The investigative hold shall be confirmed in writing by the originating agency within 96 hours and will remain in effect for 15 days from the date of initial notification, until the investigative order is canceled, or until an order to hold/confiscate is issued, pursuant to this section.
         (b)   Order to hold. Whenever the Police Department notifies a licensee not to sell an item, the item must not be sold or removed from the licensed premises until authorized to be released by the Police Department. The order to hold expires 90 days from the date it is placed, unless the Police Department determines additional time is necessary and notifies the licensee in writing to continue the hold.
         (c)   Order to confiscate. If an item is identified as stolen or evidence in a criminal case, the Police Department may:
            1.   Physically confiscate and remove the item from the licensed premises, pursuant to a written order from the Police Department; or
            2.   Place the item on hold or extend the hold pursuant to this section, and leave it on the licensed premises. When an item is confiscated, the person doing so shall provide identification upon request of the licensee, and shall provide the licensee the name and phone number of the confiscating agency and investigator, and the case number related to the confiscation. The Police Department shall provide the licensee with a property receipt for the item confiscated.
         (d)   Notification of release. When an order to hold/confiscate is no longer necessary, the Police Department will so notify the licensee.
   (G)   Prohibited acts.
      (1)   Minors. Persons under the age of 18 years may not pawn, sell or attempt to pawn or sell goods with any licensee, nor may any licensee receive any goods from a person under the age of 18 years.
      (2)   Incapacitated persons. Licensees may not receive or accept any goods from a person of unsound mind or who is intoxicated.
      (3)   Proper identification required. Licensees may not receive or accept any goods without proper identification of the seller pursuant to the requirements of this section.
      (4)   Tampered serial numbers. Licensees may not receive or accept 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)   Firearms. Licensees may not receive or accept firearms, including antique firearms, without a valid federal firearm dealer license.
      (6)   Requirements of pledgers.
         (a)   No person may pawn, pledge, sell, consign, leave or deposit any article of property with a licensee unless the person is the owner of the property and the property is free from any security interests.
         (b)   No person seeking to pawn, pledge, sell, consign, leave or deposit any article of property with any licensee shall give false information to the licensee.
      (7)   Requirements of licensees. A pawnbroker or precious metal dealer or an agent or employee of a pawnbroker or precious metal dealer must not:
         (a)   Make a false entry in the records of pawn or precious metal transactions;
         (b)   Falsify, obliterate, destroy or remove from the place of business the records, books or accounts relating to the licensee’s pawn transactions or transactions involving precious metals;
         (c)   Refuse to allow the appropriate law enforcement agency, the attorney general or any other duly authorized state or federal law enforcement officers to inspect the pawn or precious metal records or pawn or precious metal goods in the person’s possession during the ordinary hours of business or other times acceptable to both parties;
         (d)   Fail to comply with any of the requirements of this section, or other relevant city code provisions or state statutes related to pawnbrokers and precious metal dealers; or
         (e)   Sell or lease, or agree to sell or lease, pledged or purchased goods back to the pledger or seller in the same, or a related transaction.
(Ord. 20-005, passed 3-23-2020)