BANKING

DEPARTMENT OF BANKING AND INSURANCE

DIVISION OF BANKING

Pawnbrokering Law Regulations

Proposed Readoption with Amendments: N.J.A.C 3:16

Authorized By: Karen L. Suter, Commissioner, Department of Banking and Insurance

Authority: N.J.S.A. 17:1-15(e) and 45:22-11 et seq.

Proposal Number: PRN 2001-

Submit comments by April 18, 2001 to:

Karen Garfing, Assistant Commissioner

Regulatory Affairs

New Jersey Department of Banking and Insurance

P.O. Box 325

Trenton, NJ 08625-0325

Fax: (609) 292-0896

Email: Legsregs@dobi.state.nj.us

The agency proposal follows:

Summary

The Department of Banking and Insurance ("Department") proposes to readopt N.J.A.C. 3:16, which is scheduled to expire on June 3, 2001 pursuant to Executive Order No. 66 (1978). N.J.A.C. 3:16-1 requires the licensing of pawnbrokers in New Jersey. N.J.A.C. 3:16-2 sets forth the rules regarding recordkeeping and the conduct of a pawnbroker business. The rules proposed for readoption also require licensees to notify the Commissioner of legal actions involving a licensee's pawnbroker business. Finally, the rules proposed for readoption provide the procedures for notice and hearing regarding possible violations of the rules and provide for penalties for violations of N.J.S.A. 45:22-1 et seq. and the subchapter. The Department has reviewed these rules and determined them to be necessary, reasonable and proper for the purpose for which they were originally promulgated.

The Department also is proposing several technical amendments to the rules. The amendments to the definitions of "Commissioner" and "Department" would recognize the merger of the Department of Banking and the Department of Insurance into the Department of Banking and Insurance. The other amendments at N.J.A.C. 3:16-1.2(d)2 specifies the existing license fee that is charged and at N.J.A.C. 3:16-1.2(d)7, reflects that certificates of incorporation are now issued by the Department of Treasury, Division of Revenue.

The Department is also reviewing certain substantive changes to the rules and may propose them as amendments in the future.

Social Impact

The rules proposed for readoption with amendments apply to all persons or entities in the pawnbrokering business in New Jersey. They will continue to implement N.J.S.A. 45:22-1 et seq. by requiring pawnbrokers to be licensed and to keep records of their transactions. They also require pawnbrokers to post their fees in the place of business of the pawnbroker. The rules provide to the general public and to those who use the services and purchase the merchandise offered for sale by pawnbrokers a basic level of protection when dealing with pawnbrokers. They also make it clear to pawnbrokers what records they must maintain and the minimum business procedures with which they must comply. Thus, the rules proposed for readoption with amendments will continue to have a beneficial social impact on the general public, consumers of pawnbroker services and pawnbrokers.

Economic Impact

It is not expected that the rules proposed for readoption with amendments will have a significant negative economic impact on New Jersey pawnbrokers. The requirement that pawnbrokers be licensed, keep proper records and maintain insurance to cover the pledgor’s property is mandated by N.J.S.A. 45:22-1 et seq., and in any case, is a reasonable and anticipated commercial requirement. The annual cost of the license is $400.00, the cost of the required surety bond of $1,000 is set by the insurance company who issues the bond, and the annual report charge is $100.00. These costs and fees are unchanged from the current rules. Moreover, full and truthful disclosure about the fees charged, the proper posting of those fees in the place of business of the pawnbroker and the unchanged limit of the service charge on loans secured by the pledge of 8% but not to exceed $4.00, which is required by the rules proposed for readoption with amendments, will continue to provide a substantial measure of protection to the consumer of pawnbroker services and thereby avert potential negative economic consequences to such a consumer. The amendments will not have any economic impact because they are technical in nature and will impose no new requirements.

Federal Standards Statement

A Federal standards analysis is not required because the rules proposed for readoption with amendments are not subject to any Federal requirements or standards.

Jobs Impact

The Department does not anticipate any jobs will be generated or lost as a result of the rules proposed for readoption with amendments. Pawnbrokers will use existing staff for continued compliance with the existing rules. Pawnbrokers should not have to employ professional services to meet the recordkeeping, reporting and other compliance requirements. The amendments will not require additional staff because they are technical in nature and will impose no new requirements.

The Department invites commenters to submit any data or studies concerning the jobs impact of the proposed readoption with amendments together with their written comments on other aspects of this proposal.

Agriculture Industry Impact

The Department does not expect any agriculture industry impact from the rules proposed for readoption with amendments.

Regulatory Flexibility Analysis

Many New Jersey pawnbrokers are small businesses as defined in the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. The rules proposed for readoption with amendments will continue to impose compliance requirements on these entities. The rules proposed for readoption with amendments will continue to require licensing of pawnbrokers and require them to maintain records concerning their business. The costs for compliance are set out in the Economic Impact Statement. Pawnbrokers must also report legal actions to the Commissioner.

The Department believes that these requirements are generally mandated pursuant to N.J.S.A. 45:22-1 et seq. Moreover, the Department does not believe that these requirements are unduly burdensome and should not impose the need for professional services to comply. The purpose of N.J.S.A. 45:22-1 et seq. and these rules is to protect all consumers who use pawnbrokers. Thus, the purpose of these requirements does not vary based upon business size. Accordingly, no differentiation based on business size is provided.

Full text of the rules proposed for readoption may be found in the New Jersey Administrative Code at N.J.A.C. 3:16.

Full text of the proposed amendments follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

3:16-1.1 Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

"Commissioner" means the Commissioner of the New Jersey Department of Banking and Insurance.

"Department" means the New Jersey Department of Banking and Insurance.

3:16-1.2 Licensing

(a) - (c) (No change.)

(d) An applicant for a license shall apply on a form supplied by the Commissioner, which shall require the following information:

    1. - 2. (No change.)

    1. The license fee of $400.00;

4.-6. (No change.)

7. For corporate applicants, a copy of the certificate of incorporation showing the filing or recording stamp of the New Jersey [Secretary of State] Department of the Treasury, Division of Revenue, and identifying the registered agent for service of process; and

    1. (No change.)