[*] Professor, Florida State University College of Law. B.A., 1965, University of Nebraska; J.D., 1968, University of Nebraska; Bigelow Fellow, 1968-69, University of Chicago College of Law. The author is a member of the Nebraska and Florida bars. The research assistance of Josette Chack-On and Barbara Sanders is gratefully acknowledged. Return to text.

[1] Barry Newman, New Kids on the Block, FLA. PAWNBROKER, Fall 1994, at 22, 22. Return to text.

[2] Statutes such as FLA. STAT. §§ 538.04, .05 (1995) require pawnbrokers to pay close attention to the sources of the pawns. Barry Newman, a fourth-generation pawnbroker in Jacksonville, Florida, exemplifies the attempt to dispel the stereotype:

Any hint of wrong and I sent [sic] the customer home without a transaction. Occasionally the customer is insulted, but the result is a very high reputation, no police citations and a very low rate of property seizures. Integrity is something you should strive for . . . . You can bet that if you are charged with a crime as a pawnbroker, it will be front page news. Remember, your customers will never forget.
Newman, supra note 1, at 22; see Mindy Steiner & Dev Strischek, Lending to Pawnshops, J. COM. LENDING, Apr. 1992, at 43, 43. Return to text.

[3] PETER SCHWED, GOD BLESS PAWNBROKERS 21 (1975). Return to text.

[4] Equitable Securities Research, Purchase Recommendation, Cash America International, Inc., Oct. 5, 1993, at 2. And for the rest of the story, "Alfred Hardaker . . . relates that one nineteenth century author facetiously remarked, 'If Americans had duly reflected on this incident . . . they certainly, with the stars and stripes had quartered the three balls in their national flag.' Although colorful, the story of Isabella pawning her jewels . . . is apparently historically inaccurate . . . ." JOHN P. CASKEY, FRINGE BANKING, CHECK-CASHING OUTLETS, PAWNSHOPS, AND THE POOR 15 (1994) (citations omitted). Return to text.

[5] See 54 AM. JUR. 2D Money Lenders and Pawnbrokers 1 (1971 & Supp. 1995); WEBSTER'S NINTH NEW COLLEGIATE DICTIONARY 864, 903 (1989) (defining "pledge" and "pawn"). Under Article 9 of the Uniform Commercial Code, "pledge" could also be security for performance of an obligation (as opposed to a loan). See FLA. STAT. §§ 538.04, 538.05, 671.201(37), 679.102, 679.305 (1995). Return to text.

[6] As reported by Empire Loan Jewelers and Pawnbrokers of Boston, the "top ten" most commonly pawned items are, in order of rank, gold rings, gold chains and bracelets, earrings, VCRs, cameras, guitars and other musical instruments, gold watches, TVs, computers, and fine art. Empire Pawn Lists "Top Ten," TODAY'S PAWNBROKER, Summer 1994, at 48, 48. Return to text.

[7] FLA. STAT. § 679.504(2) (1995). Return to text.

[8] That is to say that the pawner is not personally liable for repayment of the amount received for the pawn. While the pawner also loses, upon failure to repay the loan, the difference between the loan and the value of the goods, only the pawned goods are at risk. Return to text.

[9] See a discussion of the origin of the globes and a collection of authorities in Jarret C. Oeltjen, Pawnbroking on Parade, 37 BUFF. L. REV. 751, 757 (1989) [hereinafter Oeltjen, Parade]. Return to text.

[10] J. SHIPLEY, DICTIONARY OF WORD ORIGINS 263 (2d ed. 1945). Return to text.

[11] Id. Return to text.

[12] CASKEY, supra note 4, at 17. Return to text.

[13] Barry Newman, Ramblings of a Fourth-Generation Pawnbroker!, FLA. PAWNBROKER, Fall 1994, at 15, 15. "The times have changed. My store is much different than my grandpa's and my dad's. . . . I don't sell or pawn clothes, hats and shoes. We specialize in fine jewelry although we always try to keep a few clean electronic items as well as an array of weaponry." Id.

In an informal survey in 1994 of the 441 pawnshop ads in the Tallahassee, Jacksonville, St. Augustine, Tampa, Miami, and Orlando telephone directories, 248 of those ads specified a particular type of property to be pawned. Of these 248, 206 advertised for jewelry, 86 for guns, and 60 for electronics. See Natalie Nice, Survey of Florida Pawn Shop Advertising (Apr. 1995) (unpublished Florida State University College of Law student survey, on file with author). Return to text.

[14] Daytona Beach residents inform me that this is particularly the case following the nationally famous "Bikers' Week," which is held in Daytona during the first week in March of each year. Return to text.

[15] Jarret C. Oeltjen, Pawnbroking: An Historical, Comparative Perspective, 8 ARIZ. J. INT'L & COMP. L. 53, 68 (1991). Two examples cited are the Massachusetts Pawners' Bank of Boston, later named the Collateral Loan Company, and New York's Provident Loan Society. Id. at 68-69. Return to text.

[16] What is now Cash America International, Inc. (Cash America) was founded in 1983 by Jack R. Daugherty, who had owned and operated pawnshops since 1971. His private company, begun with one pawnshop in 1983, was incorporated in 1984 and went public in 1987. Mr. Daugherty has been Chairman of the Board and Chief Executive Officer of Cash America since its founding. From that humble beginning, Cash America "proudly loaned its billionth dollar in June 1994 . . . ." CASH AMERICA INTERNATIONAL, INC., 1994 ANNUAL REPORT 6 (1995). See RAYMOND JAMES & ASSOCIATES, SOUTHEAST/FLORIDA RESEARCH BUREAU, SUMMARY UPDATE REPORT (June 5, 1995). Return to text.

[17] CASH AMERICA INTERNATIONAL, INC., THIRD QUARTER REPORT (1995). Of these outlets, 49 are in Florida. Id. Return to text.

[18] JAMES & ASSOCIATES, supra note 16, at 4; 60 STANDARD & POOR'S, STANDARD NASDAQ STOCK REPORTS §16, No. 109 (9/23/94, 3769K). Return to text.

[19] Until the new ventures open, the Mexican government has a pawnshop monopoly; all the stores are government-owned and run. Super Pawn, which has been extended a $10 million line of credit by a Mexican bank, has put expansion plans on hold because of the devaluation of the peso. Super Pawn Still North of the Border, TODAY'S PAWNBROKER, Summer 1995, at 42, 42. Return to text.

[20] For example, as a leader in pawnbroking technology, Cash America International, Inc. utilizes a computer network to value pawns, track merchandise inventory levels, and trace borrowers' repayment histories. Interview with Mary Jackson, Public Relations Officer, Cash America International, Inc., in Fort Worth, Tex. (Jan. 19, 1996). Return to text.

[21] According to data from a spring 1990 report authored for the Federal Reserve Bank of Kansas City (FRB Report) (Spring 1990), in 1911, there were 1976 licensed pawnshops in the U.S., one for every 47,000 Americans. In 1988, there were 6900 licensed pawnshops, one for every 35,700 persons. Today, there are approximately 9000 pawnshops, which is about one for every 28,400 residents. CASKEY, supra note 4, at 47. The FRB Report also noted that the number of pawnshops in the urban Northeast declined, while the South, Southeast, and Central Mountain states were responsible for most of the growth. The growth of pawnbroking in these areas was attributed to less restrictive usury laws, increased poverty, and below-average levels of education. Id. (Professor Caskey was also one of the authors of the FRB Report). Return to text.

[22] Annetta Miller, Pawnshops Make a Comeback, NEWSWEEK, Dec. 1990, at 44, 44. Return to text.

[23] It would be interesting to study what the economic impact of this "negative image" has been. One could posit that this image—so in contrast with the stuffiness of the more "conventional" financial institutions—could have been an asset in times prior to the coming of the financial institutions' "consumer relations" departments. Return to text.

[24] Walt Disney could have sent Mary Poppins to the home of a pawnbroker to bring harmony to that household. Return to text.

[25] Published by BKB Publications, Inc. Return to text.

[26] The official publication of the National Pawnbrokers Association. Return to text.

[27] E.g., The Florida Pawnbroker, the official publication of the Florida Pawnbrokers Ass'n, Inc. At the time of publication, there are at least 41 state pawnbroker associations. For a current list with references to a contact person for each, see State Ass'n Contacts, NAT'L PAWNBROKER, Fall 1995, at 63, 63. Return to text.

[28] "It's time to take the next step in changing our image, by hiring a public relations firm. With the superior service we have in our staff, . . . as well as by hiring additional public relations professionals to help us, we can truly change our image around." Bob Stogner, Message from the President . . . Professional Public Relations, NAT'L PAWNBROKER, Fall 1993, at 3, 3.

"At this point, the pawn industry has no credibility. This must change immediately. Tell the pawnbroker story. Get a copy of the NPA's new public relations slide presentation, '20th Century Pawnbroker,' and show it to your city councilors, law enforcement officials, civic clubs and congressional representatives." Charles Jones, Chairman's Message, NAT'L PAWNBROKER, Summer 1994, at 6, 6. Return to text.

[29] "Right now, 85 percent of my business is with women between the ages of 21 and 42. This is something that has surprised me and I believe it is because the pawn industry is gaining more and more recognition as being an honorable business." People 'n Pawn: Jim Starnes, American Loan Exchange, Greenville, S.C., NAT'L PAWNBROKER, Fall 1993, at 38, 38. Return to text.

[30] In Crown Point, Indiana, the arrest of a pawnshop patron who later admitted to 40 burglaries could have been a public relations disaster, but the pawnbroker called the local newspaper and asked whether it would like to know the rest of the story and how a pawnshop operates. After an affirmative response and the scheduling of interviews, a front-page story, Police and Pawn Brokers on Same Side of the Law, was published. Media Watch, TODAY'S PAWNBROKER, Spring 1995, at 35, 35 [hereinafter Media Watch].

On the other hand, a pawnbroker in Rifle, Colorado (on the west slope of the Colorado Rockies), whose shop hosted "Psycho Brain Food," a live, swap-shop radio program, may be using the media to perpetuate the pawnshop stereotype. "I tell people, 'Drive by, flip me the bird, let me know you're alive.' And they do," says disc jockey Doug Lauderdale. "Everybody wants to flip somebody the bird, and they hear this guy on the radio telling them to come by and flip him." R.G. Edmonson, Pawnshop on the Air, TODAY'S PAWNBROKER, Fall 1995, at 34, 34. Return to text.

[31] "One of the most effective ways that all pawnshops can proactively overcome preconceived images of the industry is to give back to and take an active role in the communities where they make their living." Nancy Michaels, Creating a Connection in Your Community, NAT'L PAWNBROKER, Summer 1995, at 16, 16 (Nancy Michaels is President of Impression Impact, a marketing consulting firm). Return to text.

[32] Nancy Michaels, Self-Made in America, NAT'L PAWNBROKER, Fall 1995, at 14, 14. Return to text.

[33] Nancy Michaels, Creating a Newsletter with Impact, NAT'L PAWNBROKER, Winter 1995, at 40, 40. Return to text.

[34] "There are also pawnbrokers who haven't heard the word—there are still nasty-looking, dimly-lit stores. Same goes for friendly service: the store that gave me the surliest service also was one of the most slovenly-looking. I don't think the two were unrelated." R.G. Edmonson, Pawnbrokers Spruce Up To Change Their Image, TODAY'S PAWNBROKER, Winter 1994, at 6, 9 [hereinafter Edmonson, Spruce]. Return to text.

[35] Id. at 9:

Somewhere back in the Dark Ages, some printer made a fortune selling pawnbrokers a package of signs that contain every negative in the book: No Refunds, No Personal Checks, No Layaways, etc.
. . . .
The message [sent by these signs] reminds me of the old joke: "No drinking, no eating, no loud music, no dancing. Now, you all have a good time." These signs have so many negatives in them, I think the real message is clear: "No customers."
Return to text.

[36] Id. at 10:

"We have this penchant for seeing how large we can make the word 'pawn,'" White said. [Bill White, Vice President for Public Affairs, Cash America International]. He said any neighborhood quickly learns whether the new business down the street is a pawnshop, but some stores have signs the size of highway billboards to advertise the fact. "It's an affront to the community."
Return to text.

[37] Both interior and exterior security is possible without the traditional iron bars. For exterior security, several solutions are available: glass laminated with plastic, roll-down shutters or small windows through which a person could not squeeze. See id. at 6. A recent innovation, Safetell, Security Corporation's rising security screen, has made interior bars and even the bulletproof cages obsolete.

Installed into the counter-tops of businesses, the rising barrier allows for a friendly, open customer service counter. Yet, in the event of a threatening robbery, the cashier can activate a screen that rises to the ceiling in less than half a second .
. . . .
. . . [T]he Safetell rising security screen is constructed of carbon steel and anti-ricochet, high-density composite armor. It can withstand close range firings from a .44 magnum, officials say.
. . . .
. . . The screen, although new to the U.S., has been installed in more than 2,500 locations across the U.K. and Australia.
New Products: Security System Starts Counter Revolution, TODAY'S PAWNBROKER, Summer 1995, at 36, 36. Return to text.

[38] "The chamber of commerce award may have been a first for a pawnshop, but Schlader [the owner] was not there to receive it . . . . [Because he] didn't suspect his business could possibly win, . . . he was out of town on a golfing weekend." News Notes: Pacific Pawnbrokers Local "Business of Year," TODAY'S PAWNBROKER, Summer 1994, at 37, 38. Return to text.

[39] "Philadelphia has begun to crack down on 'nuisance businesses,' pawnshops and check-cashing stores included, by more aggressive enforcement of zoning laws by the city's Department of Licensing and Inspection." News Notes: Pawnshops Called "Nuisance," TODAY'S PAWNBROKER, Fall 1995, at 42, 42. Return to text.

[40] A few months after an Indiana newspaper printed a news story about a pawnshop patron's arrest and confession to multiple burglaries, a letter to the editor of the newspaper warned "that the presence of a pawnshop was the precursor to an invasion of all kinds of unsavory businesses: tattoo shops and massage parlors." Media Watch, TODAY'S PAWNBROKER, Spring 1995, at 35, 35. Return to text.

[41] "A move is afoot within the Anchorage Assembly to punish pawnbrokers by creating rules that would render their social status to a level somewhere between liquor stores and houses of prostitution." State Association News, NAT'L PAWNBROKER, Fall 1993, at 55, 55. Return to text.

[42] Cash Inn of Dade, Inc. v. Metropolitan Dade County, 938 F.2d 1239, 1242 (11th Cir. 1991). Return to text.

[43] State Association News: Warning, Warning, NAT'L PAWNBROKER, Summer 1994, at 63, 63. Return to text.

[44] The general power to affect pawnshops and other real estate and business entities is under FLA. STAT. § 538.17 (1995) ("Nothing in this chapter shall preclude political subdivisions of the state and municipalities from enacting laws more restrictive than the provisions of this chapter."). Return to text.

[45] In 1994, the city of Baltimore drafted a new ordinance that would limit pawnshops to 42, the current number; it also increased the bond requirement from $10,000 to $50,000. New Pawnshop Laws Passed Around Country, TODAY'S PAWNBROKER, Fall 1994, at 36, 36 [hereinafter New Laws]. "[Officials are] concerned that Baltimore County will be overrun with pawnshops since an ordinance last year limited the number of stores in the city of Baltimore." County Moves To Curtail Pawnshops, TODAY'S PAWNBROKER, Summer 1995, at 40, 41. "In February the county council imposed a six-month moratorium on new pawnshops [in the city of Baltimore], and solicited recommendations from the county planning board." Id. at 40. Return to text.

[46] "The Fairfax, Virginia City Council has voted to limit the number of pawnshops to one; there is one store in the city now." New Laws, supra note 45, at 36. The burden placed on police department resources is cited as the reason for the limit. Id.

On the other hand, some police officers state that pawnshops make their job easier.

"It's meeting a need," says Sgt. Raymond Henry, of the Tallahassee Police Department's burglary unit. "If they all closed down, I think the crime rate would go up as far as racketeering and fencing, because there would be no legitimate means for these people to get money and they would use these illicit means to get money."
Averil Guiste, Pawns in the Game of Commerce, TALL. DEM., Jan. 2, 1994, at C2. Return to text.

[47] News Notes: Relocation Bid Rejected, TODAY'S PAWNBROKER, Winter 1994, at 41, 41:

City commissioners in Royal Oak, Mich., . . . turned down a bid by [a pawnshop dealing only in jewelry] to relocate in their city.
. . . .
. . . The main opposition came from a neighborhood association led by one of the commissioners. That city official lived two blocks from the proposed store, and [was said to have stated that] she was determined not to have a pawnshop in her neighborhood.
Return to text.

[48] News Notes: Casino Gambling Produces Pawnshop Boom, TODAY'S PAWNBROKER, Winter 1994, at 40, 40-41:

Casinos and pawnshops in Louisiana are becoming good neighbors, since casino gambling recently was legalized. In Bossier City, La., pawn transactions increased 72 percent between May and August according to police records, said the Shreveport (La.) Times. Individual pawnbrokers reported business up 10 to 30 percent.
. . . .
[It was noted by one pawnshop owner] that most of his patrons are from Texas.
News Notes: Big Easy Hard on Pawnbrokers, TODAY'S PAWNBROKER, Summer 1995, at 41, 41:
New Orleans . . . is trying to restrict pawnshops, to keep them away from gambling casinos and the tourists who patronize them. According to newspaper reports, city officials have imposed a moratorium on new stores in the central business district, and proposed an ordinance that would exclude new stores from the tourist-portions of downtown, including the French Quarter.
"If the city fathers are concerned about a penniless patron who leaves a casino to pawn his watch, they also should be as concerned about that patron withdrawing his bank account from an ATM." Id. at 42.

"Clark County commissioners banned pawnshop advertising along the Las Vegas Strip. The commission also turned down a pawnshop application by a jewelry store already in business on the Strip." News Notes: Give and Take in Las Vegas, TODAY'S PAWNBROKER, Fall 1995, at 41, 41. Return to text.

[49] The very term "title pawn" is an anomaly. The basic notion of pawn is that of a pledge of personal property, the result of which is to transfer the possession of that property to the pledgee or pawnbroker. In the traditional sense, if an automobile is pawned, both the automobile and its title are going to be in the possession of the pawnbroker.

As title pawns have developed,

[i]n exchange for a loan, the borrower signs over his title and hands over a set of keys. The borrower then pays a monthly fee of as much as 22 percent [the Florida statutory maximum] until the loan amount is repaid. Say you need $500. You would pay a fee of $110 a month until you repaid the loan. If you kept the loan six months, the fees alone would total $660. None of that money would be earmarked to pay off the underlying loan; you would still owe the initial $500. If you can't make your payments, the lender eventually can repossess your car.
Tim Gray, Title Lenders Get Keys To Drive a Hard Bargain, ST. PETE. TIMES, Oct. 29, 1995, at H2.
[In a true car pawn situation], you would no more let [the owner of the automobile] drive as you would let him wear his [pawned] watch. . . . [T]he possessory aspect of our industry allows us to charge the rates we do. Unlike a bank, our overhead costs must include storage, insurance and handling of the items we pawn, not to mention the credibility of our customers in general.
. . . .
. . . By allowing the customer to hold onto the item, or to drive it, we may damage our ability to earn these rates . . . .
. . . .
To put it simply, you can't pawn a title.
. . . .
. . . Those of you who do not pawn cars are still at risk from those calling themselves pawnbrokers and acting like loansharks.
Cameron Swanson, Can't You Just Hold the Title?, NAT'L PAWNBROKER, Summer 1994, at 30, 30.

A "title pawn" is indistinguishable from an Article 9 secured transaction. Should Article 9 apply or the exceptions found in the pawnbroker statute? The distinctive differences in treatment is discussed, infra notes 60-72 and accompanying text. Return to text.

[50] Ric Blum, Check-Cashers . . . Friend or Foe?, NAT'L PAWNBROKER, Summer 1994, at 16, 16 (Ric Blum is president of the Ohio Pawnbrokers Ass'n):

Lately a new twist has developed. [C]heck-cashers are getting into the loan business. . . . A [traditional] check-casher derives most of his income from fees charged for cashing checks.
. . . .
Check-cashers are [now] making loans on personal checks. There are many names for this—check-holding, cashing postdated checks, payday loans. . . . Check-cashers around the country find this very profitable.
. . . .
A check-casher might ask you to write a check for $125 in order for you to receive $100 in cash. They agree to hold your check for a period of time (often two weeks), until you can cover it. At the end of two weeks, the check is cashed at a bank.
To obtain such a loan is simple. Usually you must show your last two pay stubs, your last two months' bank statements, and personal identification. Many require a "loan" application and some even run a credit check at the customer's expense. To the consumer, this may be an attractive alternative to pawning goods. Here the customer receives the loan and does not have to give up any property. That is probably worth the slightly higher fees involved. Id.
One big difference between this transaction and a pawn, is, if you default on a pawn, there will be no legal recourse (except forfeiture of your item). What happens if you make a deposit and the checks won't clear? Fines, penalties, warrants, jail, lawyer fees, ruined credit ratings.
Id. Generally pawners do not harbor ill will against a pawnbroker when goods are forfeited for failure to redeem. Such would not be the case if the held check bounced and collection procedures and the possible civil and criminal penalties were levied. Id. at 18. Return to text.

[51] See supra notes 49-51. Of the two, the title "pawn" (loan) is the most worrisome to pawnbrokers because it is immediately identified with them. In Florida, when the title loan industry sought to be legitimatized, pawnbrokers insisted that the title loan industry be prohibited from using the pawn, pawner, pawnshop, pawnbroker lingo. See infra note 56; FLA. STAT. § 538.15(5) (1995).

On the other hand, check cashing in whatever form is not limited to pawnshops. Even your friendly neighborhood grocery store cashes checks. Nor do the vast majority of check cashers engage in questionable activities. Return to text.

[52] See, e.g., Auto Pawn vs. Title Pawn, NAT'L PAWNBROKER, Winter 1995, at 18, 18 (discussing a 1994 Colorado Attorney General opinion); La. Acts 1062, § 1801 (1995); Steven M. Geary, Missouri's Pawnshop Law, J. MO. B., July-Aug. 1994, at 201 (discussing changes to the laws affecting pawnshops in Missouri). Return to text.

[53] Title loans have been authorized or permitted in a number of jurisdictions. See, e.g., Floyd v. Title Exch. & Pawn of Anniston, Inc., 620 So. 2d 576 (Ala. 1993); 1995, Fla. Laws ch. 95-287; O.C.G.A. § 44-12-131 (Supp. 1995) (Georgia); TENN. REV. STAT. § 45-15-101 (1995); NEV. REV. STAT. §244.348 (1993). Most states have not yet considered this issue. Return to text.

[54] 1995, Fla. Laws ch. 95-287; see also infra notes 141-43, 201-08 and accompanying text. Return to text.

[55] News Notes: Title Loans Come to Florida, TODAY'S PAWNBROKER, Fall 1995, at 37, 37:

"We fought it, but we knew title loans were going to come in," said Ruth Barnett, executive director of the Florida Pawnbrokers Association [FPA]. The group turned back an effort to legalize title pawns in 1993. This year [1995] FPA helped write the bill and imposed some restrictions on vehicle loans.
[The 1995 enactment] prohibits title loan businesses from using the term "pawn," "pawnbroker," or any of the pawn symbols in their names, advertising or any other presentation to the public. . . ."That separated the title loan people from the pawnbrokers," Barnett said . . . . "There are a number of government agencies that are watching [title loans] very closely."
In Georgia, where the term "title pawns" is freely used, the entire pawn industry is painted with the stigma created by the title loan segment of the industry. For example, "a growing number of dissatisfied customers . . . have filed lawsuits against an industry that has grown so lucrative it has spawned pawn chains. Two of them [EZ Cash and Cash America] are listed on the New York Stock Exchange." Shelly Emling, More Borrowers Challenge Car-Title Pawn Practices, ATLANTA CONST., Sept. 24, 1994, at C9. Cash America does not make automobile title loans. Interview with Hugh Simpson, General Counsel, Cash America International, Inc., in Tallahassee, Fla. (Nov. 13, 1995). Return to text.

[56] Gray, supra note 49, at H1. With emphasis on the up to 300% per annum service charge authorized by the Legislature, the reporter refers to title lenders as "vacuum lenders" and "predators." Id. The bill that successfully authorized title loans was introduced by Representative Ed Healey, a West Palm Beach Democrat who "calls his measure pro-consumer." Id. Return to text.

[57] "'Title loan' means a loan of money secured by bailment of a certificate of title to a motor vehicle. A title loan is not a pawn if the secondhand dealer does not maintain physical possession of the vehicle throughout the term of the transaction." FLA. STAT. § 583.03(1)(i) (1995).

It is unlawful to "[u]se the word 'pawn' or 'pawnbroker' in any transaction, documentation, advertising or promotional materials, signs, displays, banners, or other materials of any nature relating to the secondhand dealer's business if the secondhand dealer engages in title loan transactions." Id. § 538.15(5). Return to text.

[58] In Florida, if the pawnbroker retains possession of the automobile, it is not a "title loan" subject to the title loan rules. Id. §§ 538.03(i), .06(5)(a). Indeed, one cannot "[e]ngage in both pawn transactions and title loan transactions from the same secondhand dealer location." Id. § 538.15(4). Return to text.

[59] Jeff Kramer, Loaner Cars, A Pawnshop Where the Owners Drive In, but Usually Walk Out, L.A. TIMES, June 17, 1993, at J1 ("If it has wheels and an engine, we'll take it."); Kelly Kroeninger, Denver-Based U.S. PAWN Leads Trend Toward Pawning Cars for Cash Loans, DENVER BUS. J., Dec. 11, 1989, at V41 n.12, § 1. Return to text.

[60] Cf. FLA. STAT. §§ 679.104, 671.201(37) (1995). Return to text.

[61] Section 679.203, Florida Statutes, requires a security agreement; section 679.302(3)(b), Florida Statutes, requires the security interest to be "perfected" by compliance with the automobile certificate of title statute, which requires notation of the creditor's interest on the automobile title, id. § 319.27(1), and possession of the title by the lienholder, id. § 319.24(3).

Chapter 538, Florida Statutes, has no express requirement of an agreement for title loans. However, by implication, a "[customer] shall sign a statement verifying that [the customer] is the rightful owner of the goods or is entitled to . . . pledge the goods," id. § 538.04(3), and reasonableness would dictate that requirement. Likewise, the title lender would want its interest noted on the title in accordance with section 319.27(1), and it must have possession of the title, although it cannot have possession of the automobile. Id. § 538.06(5)(a), (b). Return to text.

[62] Mark Canning, an official in the Florida Department of Banking and Finance, has stated that Department personnel are investigating ways to make the title loan act more consumer-friendly. Gray, supra note 49, at H2. Return to text.

[63] FLA. STAT. § 687.03 (1995). The most significant exception to this limit is for lenders licensed under the Consumer Finance Act, chapter 516, Florida Statutes. This exception permits a 30% per annum charge for the first $1000 loaned; 24% for an amount exceeding $1000 but not exceeding $2000; and 18% for those amounts exceeding $2000 but not exceeding $25,000 (the most a licensee may lend under the usury exceptions created by the statute). Id. § 516.031(1). Return to text.

[64] Id. § 538.06(5)(e). Return to text.

[65] Compare id. § 679.503(1) with id. § 538.06(d). Return to text.

[66] Id. § 679.503. Return to text.

[67] See id. § 679.501(2), (3). Return to text.

[68] Id. § 679.504(3). Return to text.

[69] Id. § 538.06(d). The licensing requirements for a motor vehicle dealer are not particularly onerous, but they do offer some measure of protection to those who have transactions with the dealer. See id. § 320.27. Return to text.

[70] Id. § 538.16. Compare the title loan redemption (with its absolute 60- or 90-day cutoff) with the secured transactions redemption rights, which grant the debtor the right to redeem the property until it is sold, a contract is made for its sale, the debtor signs a written waiver after default, or the creditor has taken the property, without objection from the debtor, as payment in full for the obligation. Id. § 679.506. But any protection that this "limitation" is to the defaulting debtor is purely illusory. At the time the dealer is to sell the automobile, the debtor has already given up her rights to redeem. See id. § 538.16. Return to text.

[71] Id. § 679.504(2). Return to text.

[72] Id. § 538.16. Return to text.

[73] Jones, supra note 28, at 6. "Pawnshops make most of their money from jewelry and guns . . . ." Edmonson, Spruce, supra note 34, at 10 (noting that the pawnbroker who was to be interviewed "even thought about where the newspaper's photographer should make a picture: not standing in front of the gun display, because that would be projecting the wrong image"); see also Media Watch, supra note 30, at 57. When gun control legislation was passed that mistakenly, it was argued, governed pawns of guns, Bill White, discussing the possibility of litigation, stated:

Can you conceive of a scenario where guns and pawnshops in court against a federal agency would do anything but damage our image further? Being right doesn't mean you're going to win. If you win, you must determine what you won. You didn't win any friends. It is rare that someone gets beat and doesn't want retribution. Many Brady proponents serve on other committees that could create serious grief for the industry.
Bill White, The Brady Report—A Wake-up Call, NAT'L PAWNBROKER, Summer 1994, at 52, 53. Return to text.

[74] "Customers do repeatedly mention convenience, not cost, in conversations about the pros and cons of check cashers." Tim Gray, Cashing In on Checks, ST. PETE. TIMES, Nov. 26, 1995, at H6. Conveniences such as free money orders, longer office hours than banks (including all day Saturday and part of Sunday), and cashing the checks of almost any customer are mentioned as drawing cards. Id.

At least one check casher has a mobile check-cashing unit. "In addition to serving employees near the job site, the armored car [mobile check-cashing unit] also goes into three public housing neighborhoods at the first of the month to cash checks for residents . . . [who] feel belittled if they go to a bank because they don't have much money." Rolling Bank in Macon Cashes Checks on the Go, ATLANTA CONST., Aug. 23, 1993, at State News.

By virtue of legislation effective July 1, 1994, Florida check cashers are to register with the Florida Department of Banking and Finance. FLA. STAT. §§ 560.302-.310 (1995). As of October 30, 1995, only 284 applications had been received. It is perceived that there are "a lot" of unregistered businesses still operating in Florida. Telephone Interview with Marilyn Meyers, Florida Department of Banking and Finance (Nov. 15, 1995) (informal interview conducted by Florida State University Law School student Josette Chack-On, notes on file with author). Return to text.

[75] It was estimated that there would be 25 million electronic filers in 1995. "What drives most electronic filing is the next-day 'refund' that people get. That refund actually is a loan that some banks make against the IRS's promise that a refund is due. When taxpayers qualify for earned income credit, that refund can total $1,000, $1,200, or more." R.G. Edmonson, Pawnbrokers May Find the Future Is Spelled "ETF," TODAY'S PAWNBROKER, Fall 1994, at 14, 14. If the pawnbroker has the ability to cash the refund check, the customer may spend a portion of it for merchandise in the pawnshop. Id.

A Lightning Tax Service representative opines that

Every pawnbroker should be in the tax business. . . . It's easy to get started. "Our company and software cover all the bases to get a pawnbroker going in the fast refund business. We have excellent customer service, so when someone has questions, he or she can easily get them answered. Our software does the tax preparation by basically walking the operator through the return, then prints the federal and state returns, electronically files the tax report and provides a Refund Anticipation Loan. Almost all of our checks are back in one day. The client of a pawnbroker wants his refund fast, just like everybody else. A pawnbroker has an advantage, because he has a built-in customer base that he deals with year-round, whereas a tax service is closed most of the year."
Tracet Raule, Vendors in Pawn, NAT'L PAWNBROKER, Winter 1995, at 62, 62. Return to text.

[76] In Florida, check cashers may charge the greater of five dollars or three percent of the face amount of public assistance checks (four percent without identification); the greater of five dollars or five percent of the face amount of other payment instruments (six percent without identification); and the greater of five dollars or ten percent of the face amount of personal checks or money orders. FLA. STAT. § 560.309 (1995). Return to text.

[77] In his recent book, Professor Caskey notes that in total dollars, pawnbrokers provide less than one percent of consumer credit in the United States. However, since the median loans are quite small (about $60), pawnshops serve millions of customers each year. Caskey estimates this to be "perhaps as much as 10 percent of the adult population." CASKEY, supra note 4, at 49. Return to text.

[78] Id.; Pawns in the Game of Recession, JEWELERS' CIRCULAR- KEYSTONE, May 1991, at 28. Return to text.

[79] Nick Ravo, Upscale Down-and-Outers Try Pawning, N.Y. TIMES, Sept. 11, 1991, at C1. Return to text.

[80] Patrice Apodaca, Recession Leaves Mark in Over-the-Counter Lending, L.A. TIMES, Dec. 22, 1991, at D3. Return to text.

[81] CASH AMERICA INTERNATIONAL, INC., 1994 ANNUAL REPORT 4 (1995). Return to text.

[82] Averil Guiste, Pawns in the Game of Commerce, TALL. DEM., Jan. 2, 1994, at C2. Return to text.

[83] Christie Brown, Pawnbrokers to the Stars, FORBES, July 8, 1991, at 104. Return to text.

[84] Wealthy Flock To Hock in Posh Pawnshop, HOUSTON BUS. J., Aug. 10, 1987, at 1. Return to text.

[85] Brayton, Upscale Clientele Targeted by Pawn Shop, NASHVILLE BUS. J., Sept. 26, 1988, at 16. Return to text.

[86] Dan Herbeck, 2 O.J. Trophies, Seized by Police; Focus of Dispute Pawnshop Wants Them Back, BUFFALO NEWS, Feb. 2, 1995, at B1.

Two trophies won by O.J. Simpson during his early career with the Buffalo Bills may remain in the possession of a Buffalo pawnshop that bought them last year, the Buffalo News reported. A supreme court judge persuaded Buffalo police to return the trophies to [the shop]. . . . However, [the judge] also barred the store from selling the trophies for 60 days, giving Simpson's attorney time to file suit to reclaim them . . . .
Pawnshop Wins O.J. Trophies, TODAY'S PAWNBROKER, Fall 1995, at 42, 42. Return to text.

[87] Richard Weatherington, Pawnshop Keeps Oriental Carpets After Owner Loses Rights, TODAY'S PAWNBROKER, Winter 1994, at 14. Return to text.

[88] A custom-made gold bracelet had been given to Mrs. Bridges by her pawnbroker husband. The bracelet was stolen from a motel room in which she was staying. Later, when the thief tried to pawn the bracelet, he had the misfortune to choose Mr. Bridges as his pawnbroker. When questioned, the thief fled with Mr. Bridges in hot pursuit. After a considerable run about town, the thief cleared a fence into a parking lot where "Bridges saw his friend Crider and [shouted for his help]. Crider joined the chase and shortly caught the man . . . . The thief may not have had a chance. Crider is a former marathon runner." Crime News, TODAY'S PAWNBROKER, Winter 1994, at 43, 60. Return to text.

[89] The pawnbroker at Jack's Gun & Pawn Shop was curious about what a fellow in the parking lot was doing to his own car. In a few minutes, the object of the curiosity came into the shop to pawn the lid off the trunk of the very car he had driven to the shop. Media Watch, TODAY'S PAWNBROKER, Summer 1994, at 36, 36. Return to text.

[90] "A Virginia Country Cured Ham was pawned [and] at the end of 60 days it was not picked up so my employees and I enjoyed a very good lunch." Under the Internal Revenue Code, is this imputed income? Pawn Humor, FLA. PAWNBROKER, Summer 1995, at 33, 33. Return to text.

[91] CASKEY, supra note 4, at 41. Return to text.

[92] As of January 16, 1996, the State of Florida had 828 pawnshop dealers actively registered with the Department of Revenue. This number does not account for the total number of pawnshops operating in Florida; it includes only the pawnshop dealers registered with the Department of Revenue. See STATE OF FLORIDA, DEPARTMENT OF REVENUE SALES TAX REGISTRATION DATA (Jan. 16, 1996) (department computer printout on file with author) (listing the active pawn shop dealers registered in Florida). Return to text.

[93] The Department of Revenue collects only sales figures because, in their role as collector of the state sales tax, loans are of little or no interest.

The following table lists the gross sales by fiscal year and is based on yearly statistics for Florida Department of Revenue (DOR) sales tax return data on DOR-administered taxes/DOR accounts.

TABLE I

Gross Sales for State of Florida Pawnshops

Fiscal Year   Gross Sales

1995            $113,528,275 [through Oct. 9, 1995]
1994              107,669,725
1993               90,634,773
1992               75,900,229
1991               66,596,080
1990               66,004,549
1989               65,112,456
1988               56,781,116
1987               43,752,702
1986               35,083,086
1985               29,235,105

Return to text.

[94] State of Florida, DOR-validated tax receipts data on DOR-administered taxes/DOR accounts. Id. Return to text.

[95] Id. The complete data for 1995 was available only for sales through October 9, 1995. As of October 9, total 1995 sales and use tax collections already exceeded the entire twelve months of 1994. Id. Return to text.

[96] Steiner & Strischek, supra note 2, at 45; see Oeltjen, Parade, supra note 9, at 761-67; Jarret C. Oeltjen, Usury: Utilitarian or Useless?, 3 FLA. ST. U. L. REV. 167, 214 (1975) (discussing the question "Who is protected by the rate ceilings?") [hereinafter Oeltjen, Usury]. Return to text.

[97] And, if Professor Caskey's regression analysis is correct, to the relative poverty and lack of education of my fellow Floridians. CASKEY, supra note 4, at 50. Return to text.

[98] See Oeltjen, Parade, supra note 9, at 759. Return to text.

[99] See infra notes 141-60. Return to text.

[100] See infra notes 108-10. Return to text.

[101] See infra notes 108-10. Return to text.

[102] See infra notes 119-26. Return to text.

[103] E.g., District of Columbia (minimum capital, "convenience and advantage"), Pennsylvania ("convenience and advantage," both state and local licenses), Vermont ("convenience and advantage"). Jarret C. Oeltjen, Pawnbroking: Coming to America, Observations of Statutory Non-Uniformity and a Call for Uniform Legislation, 38 BUFF. L. REV. 223, 233-87 (1990) [hereinafter Oeltjen, America]. Return to text.

[104] Section 538.17, Florida Statutes, expressly authorizes local regulation that does include licensing. FLA. STAT. § 538.17 (1995). Return to text.

[105] Florida has not required a state pawnbroker's occupational license since 1971. See id. § 205.434; 1972, Fla. Laws ch. 72-306, § 1, at 1142 (repealing FLA. STAT. § 205.434 (1971)). Return to text.

[106] Pawnbrokers are sure to identify with the memorable words of comedian Rodney Dangerfield, "I don't get no re spect." Return to text.

[107] Ch. 24, Laws of Eng. (1757). Return to text.

[108] FLA. S. COMM. ON COM., 1984-85 INTERIM REPORT: REVIEW OF PAWNBROKING IN FLORIDA TO DETERMINE IF THE TRANSACTION SHOULD BE REGULATED AS AN "INTEREST" OR "BUY- BACK" TRANSACTION 11 (1985) (on file with comm.). Return to text.

[109] 1903, Fla. Laws ch. 5106, § 34, at 13. Return to text.

[110] Id. Return to text.

[111] Id. Return to text.

[112] 1913, Fla. Laws ch. 6424, § 42, at 40. Return to text.

[113] FLA. STAT. § 205.51 (1941). Return to text.

[114] FLA. STAT. § 715.04 (1957) (repealed 1989). In a number of jurisdictions (e.g., Indiana, Maine, Massachusetts, and Michigan), the pawnbroker is required to sell the pawn and apply the proceeds to the loan and service charges. Any surplus must be returned to the debtor. See Oeltjen, America, supra note 103, at 233-87. Return to text.

[115] FLA. STAT. § 715.04 (1957) (repealed 1989). Return to text.

[116] FLA. STAT. § 205.511 (1959). Section 205.51, Florida Statutes, required the pawnbroker to "keep a complete and true record of all transactions, showing from whom each article of stock was purchased, the date of purchase, and the date and to whom each article was sold." In 1967, sections 205.51 and 205.511 were repealed and recodified with minor changes as sections 205.434 and 205.442, Florida Statutes. Return to text.

[117] FLA. STAT. § 205.434 (1967). Return to text.

[118] FLA. STAT. § 811.165 (1971). In Newman v. Carlson, 280 So. 2d 426 (Fla. 1973), these record-keeping requirements survived a constitutional challenge. The court held that it was not a violation of the equal protection clause to require persons or firms regularly buying and selling junk or secondhand goods to keep records. It was a valid exercise of the state's police power. "The act before us which indeed frustrates the sale of stolen merchandise and greatly enhances the possibility of return of these items to their rightful owners is in the interest of public welfare and strikes at the basic evil of disposal by sale of illegally obtained merchandise." Id. at 428-29.

This statute was substantially rewritten in 1975 and all references to pawnbrokers were deleted. 1975, Fla. Laws ch. 75-118 (codified at FLA. STAT. §§ 812.049, .051 (1975)). Return to text.

[119] Local Occupational License Tax Act, ch. 72-306, § 1, at 1142, Laws of Fla. (codified at FLA. STAT. §§ 205.013-.062 (1972)). Return to text.

[120] As discussed infra in part IX, this grant of authority to local regulators is, at best, problematic. Return to text.

[121] 1975, Fla. Laws ch. 75-298, § 28, at 1092 (codified at FLA. STAT. § 812.051 (1975)). Return to text.

[122] FLA. STAT. § 715.04 (1975). Return to text.

[123] FLA. STAT. § 715.041 (1979). This statute required pawnbrokers to demand identification from the pledgor, record the identity of the pledgor, record the transaction date, and have the pledgor sign the record. Id. Return to text.

[124] Note that under the laws repealed in 1972, the pawnbroker had the duty not only to keep records but to also to make periodic reports to the sheriff. FLA. STAT. §§ 205.434-.442 (1971) (repealed by 1972, Fla. Laws ch. 72-306, § 1, at 1142). Return to text.

[125] For a discussion of problems created by such police procedures, see discussion infra part XI. Return to text.

[126] FLA. STAT. § 715.041(2) (1979). For a discussion of recovery of "stolen" property from pawnbrokers and their customers, see text infra part XI. Return to text.

[127] Fla. H.R. Comm. on Crim. Just., SB 16-B (1989) Staff Analysis 6 (final June 22, 1989) (on file with Comm.).

Not surprisingly, the information customers provide pawnbrokers is being used by authorities who have access to it for law enforcement purposes other than the recovery of stolen property (such as collecting unpaid parking or traffic tickets). Some pawnbrokers express fear that such practices may make some people reluctant to patronize pawnbrokers. On Top of Many Issues, TODAY'S PAWNBROKER, Spring 1994, at 48, 48. Return to text.

[128] 1989, Fla. Laws ch. 533 (codified at FLA. STAT. §§ 538.03-.26 (1989)). Return to text.

[129] FLA. STAT. § 538.03(1)(h) (1995). Return to text.

[130] Id. § 538.03(1)(a) (emphasis added). The italicized language was added to the statute during the 1995 legislative session. 1995, Fla. Laws ch. 95-287, § 1, at 2697 (codified at FLA. STAT. §§ 538.03, .06, .15, .16 (1995)). Return to text.

[131] Among the exclusions: "an organization or entity registered with the state as a non-profit, religious, or charitable organization or any school-sponsored association or organization," "a law enforcement officer acting in an official capacity," "any garage sale operator who holds garage sales less than ten weekends per year," "any person at antique, coin, or collectible shows or sales," "any person purchasing, consigning, or pawning secondhand goods at a flea market regardless of whether at a temporary or permanent business location at the flea market," "any auction business . . . unless the business deals in secondhand goods," "any person purchasing, consigning, or pawning secondhand goods ordered by mail, computer-assisted shopping, media-assisted, media-facilitated, or media-solicited shopping or shopping by other means of media communication, including, but not limited to, direct mail advertising, unsolicited distribution of catalogues, television, radio, or other electronic media, telephone, magazine, or newspaper advertising, so long as such person is in this state at the time of the order," "a motor vehicle dealer." FLA. STAT. § 538.03(2) (1995). Return to text.

[132] State v. Hodges, 614 So. 2d 653 (Fla. 5th DCA 1993). The court held both that the term "flea market" did not render the statute unconstitutionally vague and that the exclusion of flea markets from record-keeping requirements imposed upon other dealers in secondhand goods did not violate equal protection. "[I]t would be more difficult to conduct illicit activities [at a flea market than at a] sole proprietorship or business with only one vendor . . . ." Id. at 655. Return to text.

[133] FLA. STAT. § 538.03(1)(c) (1995). Return to text.

[134] Id. § 538.03(1)(d)1. Return to text.

[135] Id. § 538.03(1)(d)2. For a discussion of this distinction, see infra part VII. Return to text.

[136] FLA. STAT. § 538.03(1)(d) (1995). Return to text.

[137] Section 687.02, Florida Statutes, defines "usurious contracts" as "[a]ll contracts for the payment of interest upon any loan, advance of money, line of credit, or forbearance to enforce the collection of any debt, or upon any obligation whatever, at a higher rate of interest than the equivalent of 18 percent per annum simple interest . . . ." Id. § 687.02; see also PRACTICE UNDER FLORIDA USURY LAW § 1.11 (2d ed. 1993) [hereinafter FLORIDA USURY LAW]. Return to text.

[138] 1989, Fla. Laws ch. 89-533, § 6, at 2739 (codified at FLA. STAT. §§ 538.03-.26 (1989)). Return to text.

[139] See chs. 90-192, 90-318, 91-429, 92-79, 92-303, 93-37, 93-97, 94-353, 95-287, Laws of Fla. Return to text.

[140] For example, "pawnbroker" was redefined from "a secondhand dealer who is regularly engaged in the business of making pawns . . . [,]" FLA. STAT. § 538.03(1)(c) (1989), to "any person, corporation, or other business organization or entity which is regularly engaged in the business of making pawns . . . ." FLA. STAT. § 538.03(1)(c) (1995). The definition was altered even though a "secondhand dealer" was already defined as "any person, corporation, or other business organization or entity . . . ." FLA. STAT. § 538.03(1)(a) (1989).

The supplemental changes have maintained the same holding periods and inspection of records and premises procedures. The amendments to these sections clarified which items were subject to the holding periods and the jurisdiction of the inspecting law enforcement office. Compare FLA. STAT. § 538.05, .06 (1995) with id. § 538.05, .06. Return to text.

[141] FLA. STAT. § 538.06 (1993). This amendment was designed to eliminate the practice of pawning automobile titles for cash, a practice by which the possession of the auto remained in the seller/debtor, as contrasted with the procedures of the conventional pawn in which part of the essence of the transaction was to surrender possession of the subject tangible property to the pawnbroker. See supra notes 52-72, infra notes 201-08 and accompanying text for additional information on the title loan industry. Return to text.

[142] Earlier legislative attempts to authorize title loans were unsuccessful. In 1993, instead of authorizing title loans as lobbied, language was added to chapter 538 to prohibit title loans. 1993, Fla. Laws ch. 93-97, § 3, at 514 (codified at FLA. STAT. § 538.06 (1993)); see Ericks, 1994 Legislative Update, FLA. PAWNBROKER, Summer 1994, at 9. In 1994, a title loan authorization bill passed both the Florida Senate and Florida House of Representatives without opposition, only to be vetoed by the Governor. Veto of Fla. SB 2208 (1994) (letter from Gov. Chiles to Sec'y of State Jim Smith, May 26, 1994) (on file with Sec'y of State, The Capitol, Tallahassee, Fla.). Return to text.

[143] 1995, Fla. Laws ch. 95-287, § 3, at 2698 (codified at FLA. STAT. § 538.15 (1995) (title lenders may not use pawn terminology)). Return to text.

[144] FLA. STAT. § 538.08 (1995). As a prerequisite to this right of replevin, the statute requires that the person alleging ownership file a timely report of the theft of the goods to the proper authorities. Id. The following is part of the suggested form complaint included in the statute: "3. Plaintiff is entitled to the possession of the property under a security agreement dated _____, 19____, a copy of which is attached." Id. The use of this provision suggests that the statute was enacted to protect lending institutions when debtors pawn goods covered by a security agreement and not necessarily when the original owner of the goods was relieved of possession by a thief. Return to text.

[145] See the survey of pawnbroker laws in Oeltjen, America, supra note 103, at 233-87. Return to text.

[146] 1990, Fla. Laws ch. 90-192, § 4, at 865 (codified at FLA. STAT. § 215.475 (1990) (amended by 1991, Fla. Laws ch. 91-429, § 4(2)(a), at 93-97). Return to text.

[147] FLA. STAT. § 538.16 (1995). Return to text.

[148] Id. Return to text.

[149] Id. Return to text.

[150] Id. This section also requires that every pawn ticket and receipt for a pawn have printed on it notice of these provisions. The ticket and receipt must also include notice of sale or disposal, notice of intention to sell or dispose without further notice, and consent to sale or disposal. All liability of the pawnbroker terminates with such sale or disposal and vests in the purchaser the right, title, and interest of the seller or borrower and the pawnbroker. Id. Return to text.

[151] Id. § 538.09. Interestingly, registration is not with a department that regulates banking, finance, or secured transactions but rather is with the Florida Department of Revenue. For registration purposes, a secondhand dealer must now pay the Department of Revenue a nominal fee per location and an annual renewal fee, in addition to the initial application fee. Id.

In contrast, section 5-19A-11(a) of the Alabama Pawnshop Act requires that pawnbrokers obtain initial licenses at a cost of $100 for each location and then pay additional annual renewal fees of $100 per license. 1995 Ala. Acts ch. 19A, § 5-19A-11(a). Furthermore, pawnbrokers must pay a license tax of $250 for each place of business and an additional tax if they sell pistols, sawed-off shotguns, or revolvers. 1995 Ala. Acts ch. 12, art. 2, § 40-12-138; see also Oeltjen, America, supra note 103, at 238-87 (comparing licensing (registration) fees charged in the various jurisdictions).

In order to register, a "secondhand dealer" must 1) be a natural person who has reached the age of 18 years; 2) submit a fee; and 3) furnish a certified, complete set of fingerprints and a "recent fullface photographic identification card of himself." FLA. STAT. § 538.09(1), (2) (1995). Registration may be de nied (or revoked, suspended, or restricted) if the registrant has 1) violated chapter 538 or any rule or order thereunder; 2) made a material false statement in the registration application; 3) been guilty of a fraudulent act relating to any purchase or sale; 4) made a misrepresentation or false statement to, or concealed any material fact from, any purchaser or seller; 5) made purchases or sales through any nonregistered associate; 6) within the preceding five years been convicted of, or entered a nolo plea regarding, statutorily enumerated property offenses, felony drug offenses, or any fraudulent or dishonest dealing; 7) had a final judgment rendered against him or her in a civil action upon grounds of fraud, embezzlement, misrepresentation, or deceit; or 8) has failed to pay any owed Florida sales tax. Id. § 538.09(5). Return to text.

[152] Id. § 538.04. This section requires pawnbrokers to maintain records of all transactions on the premises and deliver the records of any acquisition of secondhand goods to local law enforcement within 24 hours of acquisition. The record is to contain (a) the time, date, and place of the transaction; (b) a complete and accurate description of the goods acquired; (c) a description of the person from whom the goods were acquired (including full name, address, workplace, home and work phone numbers, height, weight, date of birth, race, gender, hair color, eye color, and any other identifying marks), and (d) any other information required by the form ap proved by the Department of Law Enforcement. The "transaction records" must be maintained for five years. Id. § 538.06(4). Return to text.

[153] Id. § 538.04(1). Return to text.

[154] Id. § 538.06. The statutory holding period to be observed by "secondhand dealers" is 15 days unless the goods are being pawned. Id. § 538.06(1). This holding period may be "extended to 60 days by a law enforcement officer upon probable cause that the goods are stolen and that further holding is necessary . . . . A court of competent jurisdiction may extend the holding period even further." Id. § 538.06(3). Return to text.

[155] Id. § 538.05 ("The premises and required records . . . are subject to inspection during regular business hours . . . by any state law enforcement officer who [has] jurisdiction over the dealer."). Return to text.

[156] Id. § 538.15 (listing forbidden acts including failure to pay sales tax or have a sales tax registration number; knowingly transacting business with a minor, someone under the influence of alcohol or other drugs, or someone using an alias; or transacting business between 10 p.m. and 8 am. or at a "drive-through window"). Return to text.

[157] Id. §§ 538.08, .07(2). Return to text.

[158] "[A] person who knowingly violates any provision of this chapter commits a misdemeanor of the first degree, punishable [by imprisonment not exceeding one year] and by a fine not to exceed $10,000." Id. § 538.07(1).

For each violation of the registration requirements, the Department of Revenue may impose a civil fine up to $10,000. If the fine is not paid within 60 days, the Department may bring a civil action under section 120.69, Florida Statutes, to recover the fine. Id. § 538.09(4). Return to text.

[159] Id. § 538.17. As will be discussed infra, multilevel regulation schemes are, at best, problematic. See also Association in Membership Push, TODAY'S PAWNBROKER, Spring 1994, at 48, 48 (The Maryland Pawnbrokers "[A]ssociation is considering backing new state legislation to standardize the situation and eliminate the necessity of dealing with myriad laws from different strata of government."). Return to text.

[160] See infra notes 171-200 and accompanying text (discussing recent Florida case law addressing this issue). Return to text.

[161] See, e.g., Ron Stempkowski, Old Law Is New to Many Pawnbrokers, TODAY'S PAWNBROKER, Summer 1995, at 9, 9 (discussing Truth-in-Lending and its applicability to pawnbrokers); Richard Weatherington, New Money Laundering Law Affects Some Pawnbrokers, TODAY'S PAWNBROKER, Summer 1995, at 16, 16 (stating that check-cashing and money transmission services may well bring pawnbrokers within the scope of the Money Laundering Suppression Act of 1994); Richard Weatherington, Broker Loses Truck for Violating Pawnbrokers Act, UCC, TODAY'S PAWNBROKER, Summer 1995, at 22, 45 ("While most brokers generally understand their state's pawn laws, other laws like the UCC, truth-in-lending and bankruptcy can get very complicated."); Beware the Dangers of Truth in Lending, NAT'L PAWNBROKER, Summer 1995, at 32, 32 ("[T]he courts have consistently ruled that Truth in Lending applies to pawn shops and failure to comply with its requirements could cost you your business."). Return to text.

[162] A statute that requires certain people or firms to keep records regularly, when they buy and sell junk or secondhand goods, was found not to be vague and ambiguous. See Newman v. Carson, 280 So. 2d 426, 426 (1973). The term "flea market," as an exception to statutory reporting requirements, was held not to render the statute unconstitutionally vague. See State v. Hodges, 614 So. 2d 653, 653 (1993). Return to text.

[163] Record-keeping requirements statutorily imposed on those who regularly buy and sell junk and secondhand goods but not on other retail merchants was found not to violate equal protection requirements in Newman. 280 So. 2d at 426. Nor does excluding "flea markets" from such requirements violate equal protection requirements. Hodges, 614 So. 2d at 653. Return to text.

[164] Newman, 280 So. 2d at 429. Return to text.

[165] 334 So. 2d 47, 47 (Fla. 3d DCA 1976). Return to text.

[166] Id. at 48. Return to text.

[167] Id. at 47. Return to text.

[168] The City argued that because pawnshops were not specifically mentioned in the ordinance, it had discretion as to where to put them. Id. at 48. This contention suspiciously smacks of a perpetuation of the stigma discussed within part III of this Article. Return to text.

[169] City of Miami Beach, 334 So. 2d at 48. Return to text.

[170] Id. Return to text.

[171] See Isaac v. Brave, 600 So. 2d 1258, 1259 (Fla. 2d DCA 1992). Return to text.

[172] FLA. STAT. § 538.16(1) (1991). Return to text.

[173] Issac, 600 So. 2d at 1259-60. Much of the confusion in interpreting this provision was eliminated by the 1993 legislative amendments, which added clarifying language to section 538.16, Florida Statutes. See FLA. STAT. § 538.16 (1995). Return to text.

[174] Issac, 600 So. 2d at 1259. Return to text.

[175] See FLA. STAT. § 687.02 (1991). Return to text.

[176] See infra notes 177-200 and accompanying text. Return to text.

[177] 605 So. 2d 898, 901 (Fla. 2d DCA 1992). Return to text.

[178] Id. (citing FLA. STAT. § 501.201 (1995)). Subsection 570.544 (11), Florida Statutes, created by chapter 90-323, Laws of Florida, states the following:

If the division by its own inquiry, or as a result of complaints, has reason to believe that a violation of the laws of the state relating to consumer protection has occurred or is occurring, that the interests of the consumers of this state have been damaged or are being damaged, or that the public health, safety, or welfare is endangered or is likely to be endangered by any consumer product or service, the division may commence legal proceedings in circuit court to enjoin the act or practices or the sale of the product or service and may seek appropriate relief on behalf of the consumers. Upon application by the division, a hearing shall be held within 3 days after the commencement of the proceedings.
FLA. STAT. § 570.544 (11) (1990) (emphasis added). Return to text.

[179] Quick Cash of Clearwater, Inc., 605 So. 2d at 901. Return to text.

[180] Id. Return to text.

[181] Id. Return to text.

[182] Id. at 900. Return to text.

[183] Id. at 902 (citing FLA. STAT. § 538.03(1)(d)1 (1991)). Return to text.

[184] Id. Return to text.

[185] Id. Return to text.

[186] Id. Return to text.

[187] For example, the court noted that chapter 516, Florida Statutes, regulates consumer finance, yet it does not apply to "any bona fide pawnbroking business transacted under a pawnbroker's license." Id. (quoting FLA. STAT. § 516.02(4) (1991)). The court went on to question what the Legislature meant by this phrase since chapter 538 is only a registration statute, and the State of Florida does not otherwise provide for issuance of pawnbrokers' licenses. Id. at 902 n.4.

The court's confusion was compounded because the case involved the attempted pawn and leaseback of an automobile. Id. at 901-02. Automobiles were not included within the extensive listing of types of property subject to chapter 538 regulation. Id. at 902; see also FLA. STAT. § 538.03(1)(g) (1991). Return to text.

[188] Quick Cash of Clearwater, Inc., 605 So. 2d at 902-03. Return to text.

[189] Id. at 902. As yet, the Department of Agriculture has not proceeded in any further litigation under either of these theories. Return to text.

[190] Id. Return to text.

[191] 609 So. 2d 735 (Fla. 1st DCA 1992). Return to text.

[192] Id. at 735. Return to text.

[193] Id. at 738. Return to text.

[194] Id. at 740. Return to text.

[195] Id. at 736, 740. Return to text.

[196] Id. at 738. Return to text.

[197] Id. (construing FLA. STAT. § 570.544(11) (1991)). Return to text.

[198] Id. at 735, 740. Return to text.

[199] Id. at 739. The Second District Court had predicted that "there [would] be chronic problems determining the authority of the Division and that of other departments of the executive branch unless section 570.544, Florida Statutes (1991), is clarified." Quick Cash of Clearwater, Inc. v. Department of Agric. & Consumer Servs., 605 So. 2d 898, 903 (Fla. 2d DCA 1992). Return to text.

[200] Quick Cash of Tallahassee, Inc., 609 So. 2d at 739. Return to text.

[201] 1993, Fla. Laws ch. 93-97, § 3, at 514 (codified at FLA. STAT. § 538.06 (2), (3) (1993)); see also supra note 134. Return to text.

[202] Veto of Fla. SB 2208 (1994) (letter from Gov. Chiles to Sec'y of State Jim Smith, May 26, 1994) (on file with Sec'y of State, The Capitol, Tallahassee, Fla.); see also supra note 135. Return to text.

[203] 1995, Fla. Laws ch. 95-287, § 1, at 2697 (codified at FLA. STAT. § 538.03(1)(a), (h), (i) (1995)). Return to text.

[204] FLA. STAT. § 538.15(4), (5) (1995). Return to text.

[205] "No charges other than those charges permitted in paragraph (e) [the 22% per month] shall be allowed . . . ." Id. § 538.06(5)(e), (f). Return to text.

[206] Id. § 538.06(5)(b), (e). Return to text.

[207] Id. § 538.06(5)(f). Return to text.

[208] See Gray, supra note 49, at H2. Return to text.

[209] FLA. STAT. § 538.03(1)(d) (1995). Return to text.

[210] One is hard-pressed even to think of a reasonable exception to the "general rule." Return to text.

[211] "'Security interest' means an interest in personal property . . . which secures payment . . . of an obligation." FLA. STAT. § 671.201(37) (1995). Chapter 679 "applies . . . [t]o any transaction (regardless of its form) which is intended to create a security interest in personal property . . . including goods." Id. § 679.102(1)(a). Return to text.

[212] E.g., compare In re Lopez, 163 B.R. 189 (Bankr. D. Colo. 1994) (stating that a pawn transaction that is a secured transaction can be modified by a chapter 13 debtor's plan) with In re Jackson, 133 B.R. 541 (Bankr. W.D. Okla. 1991) (stating that when a period for redemption has expired, neither the debt nor the property pawned can be a part of the debtor's chapter 13 plan). Return to text.

[213] FLA. STAT. § 687.03(1) (1995). The usury limit applies to "any loan, advance of money, line of credit, forbearance to enforce the collection of any sum of money, or other obligation." Id. Generally, a buy-sell agreement would not be regarded as a loan. See Oeltjen, Usury, supra note 96, at 187-88; FLORIDA USURY LAW, supra note 137, §§ 1.14, 1.15; Quick Cash of Clearwater, Inc. v. Department of Agric. & Consumer Servs., 605 So. 2d 898, 902 (Fla. 2d DCA 1992). Contra Mears v. Mayblum, 96 So. 2d 223, 226 (Fla. 1957) (stating that a sale of property for cash plus a right to repurchase for some higher amount may be held to be a loan). Return to text.

[214] See Oeltjen, Parade, supra note 9, at 767-69; see also Burnett v. Ala Mona Pawn Shop, 3 F.3d 1261 (9th Cir. 1993) (finding pawn transactions subject to the Truth-in-Lending Act); Chapes, Ltd. v. Anderson, 825 F.2d 357 (11th Cir. 1987) (discussing applicability of the Truth-in-Lending Act to pawns). Return to text.

[215] Informal surveys have revealed rates of 25% for a 30-day transaction to be common in Tallahassee and West Palm Beach. Return to text.

[216] FLA. STAT. § 687.02(1) (1995). Return to text.

[217] See supra notes 177-208 (discussing the Quick Cash cases); see also In re Held, 34 B.R. 151 (Bankr. M.D. Fla. 1983), aff'd, 734 F.2d 628 (11th Cir. 1984). Return to text.

[218] This is the difference between the price received by the pawner/borrower and the amount required to redeem the pawn. Return to text.

[219] FLA. STAT. § 538.03(1)(d) (1995). Return to text.

[220] Id. § 679.102. Return to text.

[221] Id. § 671.201(37) (defining "security interest" as "an interest in personal property . . . which secures payment or performance of an obligation"). Even though it may be argued that the pawner/debtor has no obligation because only the pledged good is at stake, there being no personal liability, such argument should be rejected. The pawner/debtor has an equity of redemption that is being held by the pawnbroker, return being conditioned upon payment of an agreed upon sum (loan plus service charges); to recover in equity, the debtor must first settle this "obligation." Furthermore, by reading the entire definition of "security interest," it becomes obvious that "obligation" is used in a very broad sense (e.g., to include seller's title retention in a sales setting and the buyer's interest in a purchase of accounts or chattel paper). See id. Return to text.

[222] Id. § 679.504(2). Return to text.

[223] Id. § 679.501(3)(a), (b). Return to text.

[224] Id. § 679.504(3). Return to text.

[225] Id. § 679.504(2). Return to text.

[226] Id. § 671.304(2)(i). Return to text.

[227] Id. § 538.16. Return to text.

[228] Id. §§ 679.504, .505, .506. Return to text.

[229] Id. Return to text.

[230] See generally FLORIDA USURY LAW, supra note 137, § 3.18-3.21. Return to text.

[231] See generally FLA. STAT. §§ 538.03-.17 (1995). Return to text.

[232] Id. § 538.17. Return to text.

[233] But cf. State Association News, NAT'L PAWNBROKER, Summer 1994, at 60, 62 (stating that Ohio's new Pawnbrokers Act includes "pre-emption from local licensure and regulation. The state will now have sole authority over pawnshops"). Return to text.

[234] Cash Inn of Dade, Inc., v. Metropolitan Dade County, 706 F. Supp. 844, 847 (S.D. Fla. 1989). Could that same logic be applied to the pawnshop "Blue Law" (no pawnshop business on Sunday)? It was not until May 1994 that the Jacksonville, Florida, City Council approved an ordinance to repeal its remaining "Blue Law" aimed at Jacksonville pawnbrokers. Bob Meadows, District News, FLA. PAWNBROKER, Spring 1994, at 33, 33. Return to text.

[235] Cash Inn of Dade, Inc. v. Metropolitan Dade County, 938 F.2d 1239, 1241 (11th Cir. 1991) (emphasis added). Return to text.

[236] Id. at 1242. Is this "logical" in light of the following observations?

When a pawnbroker takes in a stolen item, he loses on three levels. First, he could lose his license. Second, chances are good that the police will confiscate the item and the broker ends up with neither the item nor the money he paid out on it. And third, it undermines the relationship the shop has with the local law enforcement agency.
George White, Corporate Security: Eliminating Loss from the Industry, NAT'L PAWNBROKER, Summer 1994, at 22, 24.

A recent academic study would confirm these observations and go one step further. It is not in the interest of pawnbrokers

to make loans on stolen goods because the police can seize the goods, and the broker would lose the collateral and the money loaned. Given the police report requirement, . . . it would not be in the interest of a thief to pawn stolen goods, and many charge[] that stolen goods are far more commonly channelled through unregulated flea markets.
CASKEY, supra note 4, at 38. Return to text.

[237] Cash Inn of Dade, 938 F.2d at 1242. The question really becomes, logical to whom and based on what information? Return to text.

[238] Id. at 1244. Return to text.

[239] Id. The court also pointed out that "[d]uring the hearing before the commission, one of the pawnshop owners estimated that up to five percent of all items purchased by pawnshops are stolen. In a multimillion dollar industry that figure is not insubstantial." Id. Such assertions are not substantiated by fact. Return to text.

[240] Id. Return to text.

[242] President's Corner, FLA. PAWNBROKER, Fall 1994, at 4, 4. Return to text.

[243] See News Notes, TODAY'S PAWNBROKER, Fall 1994, at 36, 36. Baltimore's pawn ordinance was spurred by the growth of the number of pawnshops in the city; their numbers tripled in five years. News Notes, TODAY'S PAWNBROKER, Summer 1994, at 37, 40. Return to text.

[244] See News Notes, TODAY'S PAWNBROKER, Summer 1995, at 38, 40-41; see also News Notes, TODAY'S PAWNBROKER, Fall 1994, at 36, 36. Return to text.

[245] The burden placed on police department resources was cited as the reason. News Notes, TODAY'S PAWNBROKER, Fall 1994, at 36, 36. Return to text.

[246] News Notes, TODAY'S PAWNBROKER, Summer 1995, at 38, 41. Return to text.

[247] News Notes, TODAY'S PAWNBROKER, Fall 1995, at 36, 40. Both communities are St. Louis, Missouri, suburbs. Return to text.

[248] Id. at 42. Return to text.

[249] News Notes, TODAY'S PAWNBROKER, Summer 1994, at 37, 46. Return to text.

[250] "Supporters say they want to avoid a 'pawnshop row.'" "[S]ome city pawnbrokers support the ordinance because it would limit competition." News Notes, TODAY'S PAWNBROKER, Fall 1994, at 36, 36. Return to text.

[251] Id. Return to text.

[252] District News, FLA. PAWNBROKER, Spring 1994, at 33, 33. Return to text.

[253] News Notes, TODAY'S PAWNBROKER, Summer 1994, at 46, 48. The city's original proposal of an annual $10,000 license fee was reduced to $5000 and the one dollar per transaction fee was reduced to 60 cents per transaction. Id. Return to text.

[254] Id. Return to text.

[255] Id. at 40. Return to text.

[256] Implicit interest rate ceilings range from 1.5% per month to 25% per month. See Oeltjen, America, supra note 103, at 233-87.Return to text.

[257] See Oeltjen, Usury, supra note 96, at 171-80. A recent article, Steven W. Bender, Rate Regulation at the Crossroads of Usury and Unconscionability: The Case for Regulating Abusive Commercial and Consumer Interest Under the Unconscionability Standard, 31 HOUS. L. REV. 721 (1994), "builds on the argument that the usury solution is flawed and urges a compromise between usury and market control that employs the variable fairness standard of unconscionability to police unfair interest pricing." Id. at 725. Return to text.

[258] Bender, supra note 257, at 724-25. Return to text.

[259] This framing of the issue as a question of morals was presented by Senator Paul H. Douglas in testimony before the Massachusetts Legislature in 1969. See Oeltjen, Usury, supra note 96, at 207 n.283. Return to text.

[260] See Oeltjen, Parade, supra note 9, at 771. Influenced by English law, many of the colonies in the eighteenth century established a lawful rate of six percent. Thus arose a prevailing view that six percent was a proper rate. See Oeltjen, Usury, supra note 96, at 174. "A '6% myth' is found by many investigators to be the basis of consumers' expectations about the normal charge for credit. . . . [T]he type of state legislator who is always ready to defend motherhood and the American flag has a field day with any effort to breach visibly the 6% ceiling." Homer Kripke, Consumer Credit Regulation: A Creditor-Oriented Viewpoint, 68 COLUM. L. REV. 445, 447 (1968). Return to text.

[261] Allen McReynolds, Legislative Remedies Possible Under the Missouri Constitution of 1945, 16 MO. L. REV. 292, 295 (1951). The Russell Sage Foundation was incorporated in New York in 1907 for the purpose of improving social conditions. Id. at 294. Return to text.

[262] Oeltjen, Usury, supra note 96, at 208 (quoting The Honorable George Brun, a Berkeley, California municipal court judge). Return to text.

[263] Hudson, Should Regulators Check Up on Check Cashers?, BUS. & SOC'Y REV., 1993, at 47. Return to text.

[264] 15 U.S.C. §§ 1601-1693(r) (1994). Return to text.

[265] See Oeltjen, Parade, supra note 9, at 771-72, and authorities cited therein. Return to text.

[266] CASKEY, supra note 4, at 71. Return to text.

[267] Many of the attempts to regulate pawnbroking, and especially those at the local government level, end up creating a situation in which the existing pawnshops can exert monopoly power. See Oeltjen, America, supra note 103, at 233-87. Return to text.

[268] "Because . . . transactions are quite small, customers tend to patronize the most conveniently located shops even if more distant shops charge slightly less for their services." CASKEY, supra note 4, at 114; see also Oeltjen, Parade, supra note 9, at 772. Return to text.

[269] For examples of such cost-raising regulations, see Oeltjen, America, supra note 103, at 233-87. Return to text.

[270] CASKEY, supra note 4, at 121-22:

Economically sophisticated pawnbrokers are well aware that the way to raise their long-run profitability is to create barriers to entry into the business. In several states, pawnshop organizations have been lobbying to add clauses to state regulations that would prohibit new shops from opening within a certain distance of existing shops or that would require potential new owners to prove that they possess significant capital. . . . [Also there are regulations under which] the owner must show a public need for and probable profitability of an additional pawnshop. Such barriers to entry are in the interests of pawnbrokers—but not in the public interest.
Return to text.

[271] Banks, credit unions, and consumer finance companies may well be unavailable or the application process may take too long.

A related problem that defies workable regulation is one of oversupply or overextension of credit. When borrowers have more obligations than they can afford, their sources for additional credit are quite limited. Return to text.

[272] "[P]awnbroking is characte rized by high customer transportation costs relative to the size of the transaction . . . . [T]ransportation costs per dollar of credit are sig nificant, and customers generally p atronize the closest shop.T CASKEY, supra note 4, at 49-50. Return to text.

[273] See Oeltjen, Usury, supra note 96, at 217-21 (discussing loansharking) (note authorities cited therein). Return to text.

[274] A side effect of the reduction of pawn value is that as the loan amount, pawn value ratio decreases, the consumer must pawn an increasingly larger proportion of his or her goods for a given amount of credit. Return to text.

[275] Except in those situations where the pawnbroker is regulated like a utility. For a discussion of this possibility, see Oeltjen, Parade, supra note 9, at 780-83; Oeltjen, Usury, supra note 96, at 221-22. Return to text.

[276] Some states, such as Iowa, North Dakota and West Virginia, appear to have no state statutory regulation of pawnbrokers. Many other states have enacted "comprehensive" regulatory schemes. See Oeltjen, America, supra note 103, at 233-87 (note survey). Return to text.

[277] Approximately 15 states have no state statutes regulating pawnbroker interest rates; another 12 states have statutory rates that are comparatively high. Id. In many states it may be possible that there are local interest regulations (e.g., Massachusetts). Id. at 258. In one state, Utah, local governmental units are statutorily prohibited from engaging in rate setting. Id. at 282. Return to text.

[278] Pawnbrokers are at least the last "legal" alternative, and it is highly unlikely that loansharks would resort to price competition with legitimate lenders. Return to text.

[279] In most cases, this amount would necessarily generate an extremely high Annual Percentage Rate (APR) because, as has been pointed out, the transaction is generally quite small and the period of the credit is quite short so the dollar amount that is being assessed does not seem particularly burdensome, e.g., a $20 service charge for a $50 loan for one month would generate an APR of approximately 480%. Return to text.

[280] Indeed, such a jurisdiction would be where an aspiring pawnbroker would need to show "convenience and advantage" to be licensed and the regulatory body determined that additional pawnbroking outlets were not needed. Another example would be where there was a city ordinance establishing a moratorium on new licenses. Return to text.

[281] In those jurisdictions in which extremely low rate ceilings already challenge even the spirit of any pawnbroker, excessively restrictive nonrate regulations would extinguish it. Return to text.

[282] During the drafting of the Uniform Consumer Credit Code, the determination of proper criteria for governing licensees proved to be such a headache that

[a]t one point in the deliberations on the Code the Committee actually voted to junk the licensing concept as a useless and expensive anachronism. Though this action was taken in the heady atmosphere of the concluding minutes of an exhausting three-day meeting and was notably short-lived (its reversal was the first order of business at the next meeting), it is of interest that, in the recollection of the authors, both industry and consumer representatives supported the decision.
Robert L. Jordan & William D. Warran, The Uniform Consumer Credit Code, 68 COLUM. L. REV. 387, 430 (1968). Return to text.

[283] Connecticut (local), Delaware (only in New Castle County), District of Columbia (state), Hawaii (state), Idaho (state), Indiana (state), Kansas (local), Louisiana (state), Maryland (state), Michigan (local), Mississippi (local), Montana (local), Nebraska (state), New Jersey (state), New Mexico (local), New York (local), North Carolina (local), Ohio (state), Oklahoma (state), Oregon (state), Pennsylvania (state), Rhode Island (local), South Carolina (state), South Dakota (local), Tennessee (state), Texas (local), and Vermont (local) all have mandatory licensing. See Oeltjen, America, supra note 103, at 233-87. Return to text.

[284] This category includes Colorado, Georgia, Illinois, Maine, Massachusetts, New Hampshire, Pennsylvania, Utah, Virginia, and Washington. Id. Return to text.

[285] FLA. STAT. § 538.09 (state registration), § 538.17 (local prerogative) (1995). Return to text.

[286] A "notification" type of license application would need to ask little information beyond (a) the name of the owner; (b) the name of the business; (c) the address of the office if different from the place of business; (d) the addresses of all locations at which such business is conducted; and probably (e) the name and address of the designated agent for service of process. Changes in information could be reported at the next annual renewal. Return to text.

[287] See FLA. STAT. § 538.09(5) (1995), summarized supra note 143. Return to text.

[288] The "convenience and advantage" criteria originated in the fifth draft of the Uniform Small Loan Law in 1932. F.B. Hubachek, Progress and Problems in Regulation of Consumer Credit, 19 LAW & CONTEMP. PROB. 4, 17 (1954). The provision was an attempt to curtail excesses resulting from a very competitive market. James M. Sullivan, Administration of a Regulatory Small Loan Law, 8 LAW & CONTEMP. PROB. 146, 148 (1941). It was feared that free entry would cause a great influx of lenders into the market, drive lenders to illegal means to make profits, and stabilize rates at the maximum allowable, factors which would actually defeat competition. Return to text.

[289] As stated in the Uniform Consumer Credit Code § 3-503, Comments 1 & 2:

The purpose [of keeping licensing requirements at a minimum] is to facilitate entry into the cash loan field so that the resultant rate competition fostered by disclosure will generally force rates [down].
. . . A secondary purpose is to reduce the likelihood of establishing localized monopolies in the granting of cash credit. Such monopolies tend to push rates charged to the maximum permitted levels and to establish conditions under which some share of the anticipated monopoly profits are devoted to direct or indirect pressures to obtain the license.
U.C.C.C. § 3-503 cmt. 1 & 2 (1985). In conjunction with recommendations for increased maximum rate allowances, the National Co mmission on Consumer Finance recommended "that the only criterion for entry (license) in the finance company segment of the consumer credit market be good character and that the right to market entry not be based on any minimum capital requirements or convenience and advantage regulations." NATIONAL COMMISSION ON CONSUMER FINANCE, CONSUMER CREDIT IN THE UNITED STATES 138 (1972).

Though directed toward consumer finance company regulation, the above recommendation would seem even more pertinent to pawnbroker regulation. Return to text.

[290] OR. REV. STAT. § 726.070 (1995). Return to text.

[291] N.Y. GEN. BUS. LAW § 41 (McKinney Supp. 1996). Return to text.

[292] MASS. GEN. LAWS. ANN. ch. 140, § 79 (West 1996). Return to text.

[293] Oeltjen, America, supra note 103, at 233-87. Return to text.

[294] Id. Return to text.

[295] There would seem to be little difference in theory between the situation under discussion and the automobile problem. Automobile drivers are capable of causing significant damage. Is proof of capital or net worth a prerequisite to automobile registration? In the automobile case, insurance is the answer. Return to text.

[296] CASKEY, supra note 4, at 122. Return to text.

[297] In some jurisdictions, the bonds are not for the protection of the pawner or customer but are to insure the pawnbrokers' faithful performance of the statutory requirements. See Oeltjen, America, supra note 103, at 233-87. Return to text.

[298] See, e.g., FLA. STAT. § 538.16(1) (1995). Return to text.

[299] This fact makes valuing the potential pawn one of the keys to profitability. Too low a valuation and the potential pawner walks away; an excessive valuation and the pawnbroker has the potential to lose capital. Neither alternative fosters employment longevity for the employee making the valuation.

The Mexican National Pawnshop may have the answer. It pays highly trained and skilled pawn appraisers a salary plus a commission on loans they extend. But any tendency to extend large loans to increase the commission from the transaction is negated. "If the appraiser makes a mistake and overvalues the pawn, or is duped, or is so touched by a sad story that he extends too high a loan, he is charged for any difference between the amount of the loan extended and the sale price of the pawn." Oeltjen, supra note 15, at 66. Return to text.

[300] "At least fifteen states require the surplus to be made available to the borrower, but there is no corresponding requirement that the borrower be responsible for deficiencies." Oeltjen, Parade, supra note 9, at 787. Return to text.

[301] Id. at 788. Return to text.

[302] See Lewis A. Engman, How Government Regulation Has Become the Curse of Consumerism, BARRISTER, Winter 1975, at 58. See generally S. Hugh High, Consumer Credit Regulation in Texas—A Rejoinder by an Economist, 50 TEX. L. REV. 463 (1972); Allison Dunham, Research for Uniform Consumer Credit Legislation, 20 BUS. LAW. 997 (1965). Return to text.

[303] Oeltjen, America, supra note 103, at 231. Return to text.

[304] Id. Return to text.

[305] Id. Arkansas, Connecticut, Delaware, Florida, Georgia, Louisiana, Michigan, Nevada, Ohio, Oregon, Pennsylvania, Rhode Island, and Utah. Id.; see, e.g., FLA. STAT. § 538.04(1)(c) (1995). Return to text.

[306] Oeltjen, America, supra note 103, at 238-87. E.g., in Florida, "[t]he premises and required records of each secondhand dealer are subject to inspection during regular business hours by the police department . . . by the sheriff's department . . . and by any state law enforcement officer who has jurisdiction over the dealer." FLA. STAT. § 538.05(1) (1995). Return to text.

[307] Oeltjen, America, supra note 103, at 238-87. E.g., Florida has the following provision: "Within 24 hours of the acquisition of any secondhand goods by purchase or pledge as security for a loan, a secondhand dealer shall deliver to the police department . . . or . . . the sheriff's department . . . a record of the transaction . . . ." FLA. STAT. § 538.04(1) (1995). Return to text.

[308] Programs with names such as PAWN POWER, CompuPawn and CompuPawn-LITE, PawnMaster®, Pawn Manager©, MR. PAWN, PAWN PRO II®, LOANArranger™, PAWNDEX®, Auto Pro and PawnMax®, The Pawnshop, QuickPawn, and MUNZ Pawn System have been advertised in the various issues of Today's Pawnbroker, The Florida Pawnbroker, and National Pawnbroker. Return to text.

[309] "The guys in Organized Crime frequently use their terminal to run names of suspected felons. When things are slow, they query the pawnshop records database for criminal profiles." Ric Blum, George Orwell Was 10 Years Early, NAT'L PAWNBRO KER, Spring 1994, at 50, 52. Also, traffic violation authorities research data banks to update addresses in the Bureau of Motor Vehicles records. Id. Return to text.

[310] "There was a case where a pawnbroker went down to the local law enforcement agency and asked to view the pawn records for the entire city. . . . What were they (sic) up to? . . . They were recording the names and addresses of those who made high-dollar loans. Then, they would write the pledgers a letter to try to persuade them to do business with their pawnshop." Id. at 53. Return to text.

[311] See generally FLA. CONST. art. I, § 23. Return to text.

[312] Steve H. Nickels & Edward S. Adams, Pawnbrokers, Police, and Property Rights—A Proposed Constitutional Balance, 47 ARK. L. REV. 793 (1994). Return to text.

[313] 699 F. Supp. 888 (S.D. Fla. 1988). Return to text.

[314] Id. at 890 (holding unconstitutional FLA. STAT. § 715.041(2) (1987) (repealed by 1989, Fla. Laws ch. 89-533)). The statute read as follows:

(2) The lawful owner of any stolen property in the possession of a pawnbroker may recover such property by informing any law enforcement agency of the location of such property and providing the agency with proof of ownership of the property, provided a timely report of the theft of the property was made to the proper authorities. Upon the receipt of such proof, any law enforcement officer authorized by the police chief or sheriff, or the delegate thereof, in the jurisdiction where the property is found, may recover the property from the pawnbroker, without expense to the lawful owner thereof, unless the pawnbroker presents evidence of having received proof of ownership of such property by the person who sold it to the pawnbroker or pledged the property as security for a loan. Any property recovered from a pawnbroker pursuant to this section shall be returned to the lawful owner subject to its use as evidence in any criminal proceeding.
FLA. STAT. § 715.041(2) (1987) (repealed by 1989, Fla. Laws ch. 89-533) (emphasis added). Return to text.

[315] Florida Pawnbrokers, 669 F. Supp. at 889. Return to text.

[316] Id. at 890 ("It is clear that Florida caselaw [sic] recognizes the bailee's interest as a form of property."). Return to text.

[317] Id. at 889. Return to text.

[318] Id. at 890-91 ("[E]ven a temporary loss of possessory rights in chattels is a significant abridgement of Fourteenth Amendment rights. . . . The Supreme Court has recognized that mere possessory rights are protected property."). Return to text.

[319] Id. at 891-92. "While the defendant may contend that the pawnbroker's opportunity of a 'hearing' before the police officer satisfies due process, few would hold that a police official seizing pawned property is an impartial decisionmaker possessed of the legal training sufficient to resolve conflicting claims to property." Id. at 892. Return to text.

[320] 42 U.S.C. § 1983 (1994). Return to text.

[321] Florida Pawnbrokers, 699 F. Supp. at 893. Return to text.

[322] 1989, Fla. Laws ch. 89-533. The provision was cleaned up again the next year. 1990, Fla. Laws ch. 90-97. Return to text.

[323] FLA. STAT. § 538.08 (1995). Return to text.

[324] Id. Return to text.

[325] See Nickles & Adams, supra note 312. As recently as October 1, 1993, a new Montana statute was enacted (the law having been passed by the Legislature with no opposition) to allow law enforcement officials to go into any Montana pawnshop, without a search warrant, and seize anything suspected of being stolen. MONT. CODE ANN. § 46-5-212 (1993).

In the summer of 1994, it was reported that the California pawnbrokers' association encouraged the filing of two lawsuits challenging unconstitutional search and seizures and that it has two additional actions on hold. State Association News, NAT'L PAWNBROKER, Summer 1994, at 60, 60. On February 2, 1995, the headlines in Buffalo, N.Y., read: "2 O.J. Trophies, Seized by Police, Focus of Dispute, Pawnshop Wants Them Back." 2 O.J. Trophies, Seized by Police, Focus of Dispute, Pawnshop Wants Them Back, BUFFALO NEWS, Feb. 2, 1995, at B1. In that summer, a pawnshop bought the Simpson trophies for $300. In January 1995, police seized the trophies, claimed they were stolen, and were going to return them to Simpson. News Notes, TODAY'S PAWNBROKER, Summer 1995, at 43, 43. Return to text.

[326] The Caskey, Nickels and Adams, and Oeltjen works, cited and quoted supra, are the only major pawnbroking studies of the last several decades. See notes 4, 9, 15, 96, 103, and 312, supra, for the titles and cites to these studies. Return to text.

[327] See, e.g., Oeltjen, America, supra note 103, at 233-87 for a collection of state pawnbroker laws. Return to text.

[328] As discussed earlier, economically restrictive pawnbroker regulations result in the rationing or unavailability of pawnbroker services. This unavailability can, in turn, drive borrowers to less desirable sources, e.g., patronizing illegal lenders or writing checks on insufficient funds, the costs for either of which can be significant. Return to text.