Dear Fellow Pawnbrokers:

This was one of the most difficult legislative sessions we’ve seen as an industry in a number of years, and many of you understand why.

If passed in their original forms, S.810 (prefiled in December of 2017) and its companion House bill H.4534 (filed in January 2018) would have destroyed the pawn industry in South Carolina.

Under the provisions of their original versions, they would have:

• Repealed Section 15 of Act 262, which states, “A county or municipality may enact ordinances that are in compliance with, but not more restrictive than the provisions of this act, except that local ordinances may not require the payment of a fee or tax related to a pawn transaction or purchase unless authorized pursuant to this chapter or restrict hours of operation other than between midnight and 6:00 a.m. An ordinance that conflicts with this act is void. This act does not affect the authority of a county or municipality to establish land use controls or require a pawnbroker to obtain a local occupational license.”
• Reversed Section 15 of Act 262 and allowed a county or municipality to enact ordinances that require the payment of a fee or tax related to a pawn transaction or purchase, eliminate restrictions of operating hours between midnight and 6:00 a.m., and allow local ordinances more restrictive than state law.
• Allowed for pawnbrokers to add their own fees, currently prohibited under 40-39-40(A).
• Allowed for local jurisdictions to create pawn taxes and fees specific to their county or municipality, currently prohibited under 40-39-40(A).
• Required pawnbrokers to perform digital scans of each pledgor’s thumbprint, identification, and photograph and maintain those records.
• Required pawnbrokers to hold an item for twenty-one (21) days without the possibility of early redemption of the pawn ticket.
• Allowed for municipalities and counties to enact local ordinances requiring pawn records and transactions to be submitted to a law enforcement database.
• Deleted current provisions in Section 40-39-145 that establish procedures for written hold orders from law enforcement on items believed to be misappropriated or stolen and how those items may be released to aid in a criminal investigation. The provisions of this section would be replaced with giving power to law enforcement to seize suspected items and given to the claimant without investigation or due process.
• Established additional penalties for pawnbrokers violating this chapter.
• Placed all new restrictions as being effective upon signature of the governor.

After extensive negotiations with legislators and law enforcement, the bill passed with the following effects:

• In addition to current requirements of “an account and description of the goods, articles, or things pawned, pledged, or purchased,” a digital photograph must also be obtained.
• Pawnshops shall provide records of pledged items by electronic data transfer to a database system accessible by law enforcement and approved by the South Carolina Department of Consumer Affairs. Essentially, this would require pawnbrokers to use a system like LeadsOnline to enter their items.
• If a law enforcement official believes an item is stolen or misappropriated, instead of the pawnbroker holding it for 90 days, law enforcement will hold it for 10 business days. If the pawnbroker does not file a claim and delivery action to contest an item’s ownership, the item will be transferred to the party claiming ownership.
• Prior to a law enforcement officer seizing any property for use in a criminal investigation, the law enforcement officer is required to provide the property’s relevant police report or case number to the pawnbroker. A pawnbroker who releases property to law enforcement must be listed as a statutory victim on all transmitted reports and case files. At the conclusion of the criminal investigation, if no additional identifiable owner is found, the property must be returned to the pawnbroker by the appropriate law enforcement agency.
• Releasing the property to the custody of a law enforcement official is not considered a waiver or release of the pawnbroker’s property rights or interest in the property. If property is identified as stolen, the court is required to order the conveying customer to pay restitution to the pawnbroker in the amount received by the conveying customer for the property.
• If a pawnbroker can be proven to “knowingly and intentionally” not transfer information about items to an approved database like LeadsOnline or a similar service approved by the Department of Consumer Affairs, that pawnbroker will be considered guilty of a misdemeanor and, upon conviction, must be fined not more than five hundred dollars or imprisoned not more than thirty days, or both.
• The provisions of this bill take effect 90 days after the governor’s signature to give pawnbrokers time to set up their internal systems.

After the House Labor, Commerce, and Industry Committee approved an amendment that removed more of the bill’s original language, and when the bill made it to the House floor on May 2, seventeen House members requested debate on the bill. That move essentially kept the bill from being debated because it moved the bill to the contested calendar.

On May 3, eleven House members removed their requests for debate. The bill stayed on the contested calendar because there were still 6 House members with requests.

On May 9, 3 more members removed their names. This moved the bill to the uncontested calendar because fewer than 5 members still requested debate.

Since it was moved to the uncontested calendar, the bill was taken up for 2nd Reading on May 9, and the House approved the committee amendment.

Representative Jonathan Hill from Anderson tried to amend the bill even more by tacking on the language from the bill that would pro rate interest charged on pawned items (H.4270). After lengthy debate, the House tabled his amendment.

The House approved the bill, as amended by the LCI committee, by a vote of 99-0.

The bill received 3rd Reading in the House on May 10 and was sent back to the Senate with the House amendment.

At 12:56 p.m. on May 10, by a vote of 41-0, the Senate voted to concur in the House amendment.

The legislature finished its regular session for the year at 5:00 that afternoon, and now the bill is awaiting ratification and signature by the governor.

A lot of hard work and effort kept this bill from being a piece of legislation that would have destroyed our industry. It allows for due process, and it also keeps the rights of the pawnbrokers intact.

We will continue advocating for the pawn industry and small business in South Carolina and hope we can count on pawnbrokers like you in that effort.

Sincerely,
Jay Friedman
President; South Carolina Pawnbrokers’ Association

UPDATE: The bill was ratified by the House and Senate on May 14, and it was signed in to law by Governor McMaster on May 17.