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Proposed “Pawnbrokers and Other Dealers” Ordinance

2011/10/17

My comments in blue.

I should add that the comments among the text were written before the meeting.  While Chief Bridges claims that only four or five businesses in the city would be affected by the proposed ordinance, I can think of at least six off the top of my head, even if some of the exceptions are applied very loosely.  He has also recommended removing metal recyclers from the list due to their existing state reporting requirements.

South Loop Pawn Shop, Richard’s Jewelery and Erath Iron all had people present to discuss this proposal.  In spite of the chief’s claim that only “four or five” businesses would be affected, he did admit that even those few businesses had not been contacted for input regarding the ordinance.  I hope that we will be able to get all of the businesses that will potentially be affected by this ordinance to come to the next few meetings and participate in the discussion. 

As I said in my other post, I don’t object to the recordkeeping system itself, but I believe that it should be a purely voluntary system in which business owners would be allowed to opt into only those parts which will not cause too much of a labor or cost burden to them, and I feel that some of the restrictions on what may be purchased are somewhat shortsighted.

ORDINANCE NO.2011—_

AN ORDINANCE REGULATING PAWNBROKERS AND OTHER DEALERS; PROVIDING FOR RECORDKEEPING REQUIREMENTS AS WELL AS REQUIREMENTS FOR PURCHASING, RECEIVING, AND ACCEPTING PROPERTY HEREIN DESCRIBED; AND PROVIDING A PENALTY FOR VIOLATION HEREOF.

Because, as we all know, the best way out of a recession is to pile a lot more unpaid work and some extra expenses on the small businesses.

BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF STEPHENVILLE, TEXAS:

CHAPTER 118. PAWNBROKERS AND OTHER DEALERS

118.01. Definitions.
The following words or phrases, whenever used in this article, shall be construed as defined in this section:

Chief of Police. The Chief of Police of the City of Stephenville, Texas, or his designated representative.

Crafted precious metal dealer. Any person who engages in the business of purchasing and selling crafted precious metal as defined in V.A.T.C. Occupations Code 1956.051, excluding those exceptions found in 1956.052 et seq., of such Code, as amended.

Metal recycling entity. Anyone, who from a fixed location engages in the business of utilizing machinery or equipment for the processing of or manufacturing of iron, steel, or nonferrous metallic scrap and whose principal product is scrap iron, scrap steel or nonferrous metallic scrap for smelting purposes.

Pawnbroker. Any person as defined in the Texas Pawnshop Act, V.A.T.C. Finance Code 371.001 et seq., as amended.

Person. An individual, corporation, partnership, or other legal entity, or any of their employees
or agents.

Secondhand dealer. Any person engaged in the business of buying and selling used or secondhand personal property, or lending money on the security of personal property deposited with the person.

Secondhand metal dealer. A person who operates or maintains a scrap metal yard or other place in which used or previously purchased metal items or scrap metal is collected or kept for shipment, sale, or transfer.

118.02 Recordkeeping requirements.

A. Except as otherwise herein provided, every person licensed or transacting any business as a crafted precious metal dealer, metal recycling entity, pawnbroker, secondhand dealer or second hand metal dealer within the city limits shall, beginning sixty (60) days following the effective date of this ordinance, maintain an electronic inventory-tracking system and transmit all information required by this article via computer to the entity designated by the chief of police.

Most of the small shops don’t maintain any sort of electronic inventory, and even those who do don’t have the ability to enter all the extra information this ordinance would require. 

B. The information required to be transmitted by this section for crafted precious metals dealers, pawnbrokers, and secondhand dealers must include:

1. The date and time of each transaction in which personal property is purchased, pledged, or received for the sum of $25 or more (Or other consideration equivalent to that amount).

2. An accurate and detailed description of any and all property purchased or acquired during the regular course of business for the sum of $25 or more (or other consideration equivalent to that amount), including any and all trademarks, identification numbers, serial numbers, model numbers, brand names, and other identifying marks.

3.  The actual price paid or the amount of money involved in each such transaction.

4. The full name, address, telephone number, date of birth, driver’s license number or state-issued identification card, and physical description of the person with whom each such purchase or transaction is consummated.

The pawnshops I’ve dealt with already provide the information in items 1-4 to police weekly.  Many other secondhand dealers often buy bulk lots of miscellaneous items for which this type of recordkeeping would be an unbearable burden.  If you buy a truckload of assorted stuff for $100, taking the chance that you’ll even get your money back off of it, do you really need the extra hassle of having to go through all of it within 48 hours to create a complete and accurate electronic inventory for the police?

5. A digital photograph of any item not bearing a unique serial number purchased or acquired for a sum of money more than $50.

This is too vague, even if it could be implemented reasonably.  Can I just take a picture of the whole shop every other day and let them pick out what they’re interested in?

6.  Such other information as the chief of police may reasonably deem necessary to ensure compliance with the laws of the State of Texas and ordinances of the City of Stephenville.

Of course, they can’t even be troubled to come up with everything they want in time to publish an ordinance, so there’s a built-in opportunity for abuse.

C.  The information required to be transmitted by sub-section (b) of this Section shall be transmitted within forty-eight (48) hours of the date and time a purchase or transaction is consummated.

D.  The information required to be transmitted for metal recycling entities and secondhand metal dealers shall be the information that is required of such businesses by Chapter 1956 of V.A.T.C. Occupations Code, as amended.

E.  The information required to be transmitted by subsection (d) of this Section shall be transmitted by the date and time prescribed by Chapter 1956 of such Code.

118.03. Defenses.
This article shall not be applicable to:

A. Automobile dealerships.

B. The sale of aluminum cans.

C. Charitable or eleemosynary organizations.

If it’s not a serious financial burden on the other businesses in spite of the current economic situation, then why do the charities need an exemption?

D. Used or secondhand clothing businesses.

E. Used or secondhand furniture businesses.

F. Antique dealers.

Why isn’t “antique dealer” defined?  What is an antique for the purpose of this ordinance?  Looking around, I see several common definitions for antiques, but few useful legal ones, and for that matter, the legal definition of an “antique firearm” in 18 USC specifically includes replicas.  What happens if an antique dealer buys an item that isn’t an antique, or that the chief doesn’t think of as an antique?

118.04. Government or utility property.

A. It shall be unlawful for any person licensed or transacting any business as a crafted precious metal dealer, pawnbroker, or secondhand dealer within the city limits to purchase or receive any item of property on which words or markings appear indicating ownership of such item by the United States, the State of Texas, or any of its political subdivisions or agencies, or any public utility company, except where the person offering such item for sale or transfer provides: written authorization from the governmental entity, agency, or utility to convey the item on behalf of the entity, agency, or utility; or, (2) a valid receipt from the governmental entity, agency, or utility evidencing such entity, agency, or utility has conveyed or relinquished ownership of the item.

Lots of military surplus collectibles have “U.S. Government Property” or similar wording, but relatively few have any documentation available.  For that matter, having such a record often doubles or triples the value of a collectible item, specifically because it is so uncommon.

B. It shall not be a defense to prosecution under sub-section of this section that an item of property contains no words or markings indicating ownership if the person who purchased or received the item knows or should reasonably be expected to know such item is owned by the United States, the State of Texas, or any of its political subdivisions or agencies, or any public utility company.

118.05. Acceptance of property sealed or unopened in its original packaging.

It shall be unlawful for any person licensed or transacting any business as a crafted precious metal dealer, pawnbroker, or secondhand dealer within the city limits to purchase or receive an item of property sealed or unopened in its original packaging unless the person conveying such item presents a receipt or proof of purchase for the item.

Again we get into the problem of the secondhand dealer buying bulk lots; often a bulk lot from an estate sale or auction will include some stock from a store, or just some items the prior owner had bought in bulk.  These are typically only indicated on the receipt as “miscellaneous items” so the buyer has no real proof of what the lot was.

118.06. Acceptance of property inscribed with a company name.

It shall be unlawful for any person licensed or transacting any business as a crafted precious metal dealer, pawnbroker, or secondhand dealer within the city limits to purchase or receive an item of property bearing the name, initials, or logo of a business entity unless the person conveying such item provides at the time of conveyance a valid receipt indicating lawful ownership, a signed statement attesting to lawful ownership, or written authorization from the owner to convey the item on such owner’s behalf.

Anyone who has bought old tools knows how common it is for these items to bear the logo of a company that no longer exists.  Just how does one go about obtaining written authorization from a long-deceased sole proprietor of some repair company or a dissolved corporation?

118.07. Penalty

A violation of this ordinance shall constitute a misdemeanor and, upon conviction thereof, shall be punishable by a fine as provided in state statute.

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