Links of interest:
North Carolina Pawn Law:
Click here: North Carolina General Assembly - General Statutes - Chapter 91A: Pawnbrokers Modernization Act of 1989.
Pawn loans and the Military Lending Act (MLA)
The following is meant as informational only and not legal advice. Please consult your attorney for advice before determining your plan of action.
On October 3, 2016, the Dept. of Defense's (DOD), 2015 regulation becomes mandatory for pawn transactions. It applies to pawns loans if the pledgers are active duty service members and/or their spouse or other dependent who receives 51% or more of their support from the service member. Pawn loans prior to October 3 are unaffected.
The MLA caps the charges at 36 % APR; which is the Military Annual Percentage Rate (MAPR). It is inclusive of all other pawn fees and charges. In order to determine if the MAPR rate applies, the pawnbroker must get the social security number from the customer and check it on the DOD's Defense Manpower Data Center (DMDC) website database of active-duty service members and dependents (see below). If you do this it will entitle you to a "safe harbor" from federal and state enforcement proceedings, criminal prosecution, and consumers' private lawsuits, as long as the transaction also complies with the DOD regulation's requirements. You must do this check at the time of the loan as the MLA prohibits "Back-end checks" after the transaction has occurred. Many people plan on printing out the determination page from the DMDC and attaching it to the pawn contract and keeping them for at least 5 years as your proof of "safe harbor". You must also disclose the MLA to the customers. Companies such as Burrell Printing I believe has such forms. If the customer does not or will not provide the social security number, you will not be able to check them at DMDC and will not have a "safe harbor." There has been no guidance on how to handle early redemptions. NC pawn law states that we do not have to prorate, but we are unsure if the DOD will allow this.
What if you do not comply? You will face possible state or federal regulatory enforcement investigations or misdemeanor prosecutions. You could also be sued by your customers.
Things that you outright purchase (buys) are not subject to MLA, however structured buy/sell agreements with customers are. And they are illegal in NC.
Example of how to perform a check on the DMDC:
Under the Tab "Single Record Request" you must enter the consumer's last name, date of birth, and Social Security Number in order to perform a search of the MLA database.
You need to be aware that the consumer's last name, date of birth, and SSN is shown on page 2 of the "verification" you receive, and accordingly should be securely stored.
We suggest that you join the National Pawnbrokers Association as they have much more in-depth guidance and information.
Bob Moulton, President
North Carolina Pawnbrokers Association
Precious Metals Act:
This year the North Carolina Pawnbroker's Association acted as advisor for the North Carolina Legislature during the modernizing of the Precious Metals Act. Due to the success and history of our law and the wisdom of the Legislature, anyone wishing to deal in precious metals will be subject to many more restrictions and responsibilities. The efforts of our members and lobbyists assured that we'd be exempted from these changes.
These changes severely regulate and limit the abilities of the "fly by nights" and those operating most in parallel with us, but without the constraints. We believe that this will prove to be a great help to law enforcement in their search for stolen merchandise as well as leveling the playing field for us.
Please note that while this looks like a draft, it is the law that is on the books. The updated version on the legislative sites is due soon. To Apply, click to download our application:NCPA membership application.doc
If anyone (member of the NCPA) has any suggestions for website links of interest, please feel free to email to KFarson@aol.com.