Part 5. OFFICE OF CONSUMER CREDIT COMMISSIONER

Chapter 85. RULES OF OPERATION FOR PAWNSHOPS

Subchapter D. OPERATION OF PAWNSHOPS

7 TAC §85.420

The Office of Consumer Credit Commissioner (the agency) adopts new §85.420 concerning provisions of the rules to purchase transactions entered into by pawnshops and how they affect enforcement of the Texas Pawnshop Act, Chapter 371, Texas Finance Code without changes to the proposed text as published in the September 22, 2000, issue of the Texas Register (25 TexReg 9304).

The agency received two comments from members of the pawn industry (Handy Super Pawn and Wright Pawn & Jewelry); one comment did not relate to the proposed section.

Section 85.420 applies various provisions of the rules to purchase transactions entered into by pawnshops in the same manner that similar rules applying to pawn transactions would apply. Several comments were received during the initial proposal that suggested that the agency does not have the authority to adopt subsection (a). The agency believes that the agency not only has the authority, but the responsibility to ensure that purchase transactions are adequately documented. The purpose clause of the Texas Pawnshop Act provides that one of the purposes of the Act is to exercise the state's police power to ensure a sound system of making pawn loans and transfers of personal property by and through pawnshops [and to] prevent transactions in stolen property and other unlawful property transaction by licensing and regulating pawnbrokers and pawnshop employees ... (emphasis added). The Legislature in enacting the Pawnshop Act clearly intended to regulate transfers of personal property. It would completely thwart the purposes of the Act to suggest that pawn transactions must be monitored and documented, but that purchase transactions are not required to be monitored or documented. Furthermore §371.177 requires that records be established regarding purchase of personal property. The rule requires that documentation be legible, include proper identification (also pursuant to §371.174(a)(2)), include a proper description of the item purchased, and include title information if the goods are titled goods. The rule provides that the pawnbroker shall monitor goods purchased in order to identify and prohibit transactions involving stolen goods as provided in §371.181 and that information pertaining to purchase transactions be made available to law enforcement as provided by §371.204. The section also designates a hold period of 20 days as authorized in §371.182 of the Texas Pawnshop Act. The hold period is necessary to allow law enforcement agencies adequate opportunity to discover and identify stolen property. The rule also permits a reduced hold period if the pawnbroker provides data electronically to the law enforcement agency or if a local ordinance with jurisdiction over the pawnshop specifies a reduced period. A commenter discussed the costs associated with holding merchandise during a hold period. The commenter disagrees that there should be a 20 day hold period. The agency disagrees with the proposition that a 20 day hold is inappropriate. In fact the agency chose 20 days as a hold period, since that period seemed to be preferred by a majority of the law enforcement jurisdictions who have informally expressed a preference on the length of a hold period. In an attempt to make the rule more flexible, however, the agency provided for a reduced hold period in the proposed rule if the pawnshop electronically submits transaction data to law enforcement and the chief local law enforcement officer supports a reduction in the hold period. The agency believes the proposed rule accomplishes the objective of providing a mechanism to allow law enforcement to monitor stolen property, yet retains the greatest flexibility for pawnshops and local jurisdictions. The agency retains the rule as proposed.

The new rule is adopted under §371.006 of the Texas Pawnshop Act, which authorizes the Consumer Credit Commissioner to adopt rules to enforce the Act.

This rule affects the Texas Pawnshop Act, Chapter 371 of the Texas Finance Code.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on March 16, 2001.

TRD-200101547

Leslie L. Pettijohn

Commissioner

Office of Consumer Credit Commissioner

Effective date: April 5, 2001

Proposal publication date: September 22, 2000

For further information, please call: (512) 936-7640

7 TAC §85.702

The Office of Consumer Credit Commissioner (the agency) adopts new §85.702 concerning the enforcement procedures that will be applied for accepting prohibited merchandise as they affect enforcement of the Texas Pawnshop Act, Chapter 371, Texas Finance Code without changes to the proposed text as published in the September 22, 2000, issue of the Texas Register (25 TexReg 9305).

The agency received no comments on the proposed section.

Section 85.702 details the enforcement procedures that will be applied for accepting prohibited merchandise. Section 371.181 requires that a pawnbroker must monitor goods purchased, accepted in pawn, or otherwise acquired in order to identify and prohibit transactions involving stolen goods. Furthermore, it is one of the stated purposes of the Pawnshop Act to prevent transactions in stolen property and other unlawful property transactions. The commissioner finds that this is an area of substantial concern for non-compliance. In order to discourage noncompliance with the requirement as well as to consistently and uniformly enforce the provisions, the rule provides standard penalties for noncompliance with the requirement.

This new rule is adopted under §371.006 of the Texas Pawnshop Act, which authorizes the Consumer Credit Commissioner to adopt rules to enforce the Act.

This rule affects the Texas Pawnshop Act, Chapter 371 of the Texas Finance Code.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on March 16, 2001.

TRD-200101546

Leslie L. Pettijohn

Commissioner

Office of Consumer Credit Commissioner

Effective date: April 5, 2001

Proposal publication date: September 22, 2000

For further information, please call: (512) 936-7640