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Regulating Pawnbrokers <br />Government has long recognized the unique opportunity that pawnbrokers and <br />secondhand goods dealers provide the criminally inclined to dispose of stolen <br />merchandise. Because of this, governments have invoked strong regulatory <br />requirements wherever these businesses are licensed. With the advent of casino and <br />charitable gambling in Minnesota, the Minneapolis /St. Paul metropolitan area has <br />seen significant growth in both the pawn and secondhand goods industry. In <br />Minneapolis alone there has been a 95% increase in reported pawn/secondhand <br />transactions from 1990 to 1995. In 1995, Minneapolis had eight licensed pawn <br />shops and 117 secondhand goods shops. In St. Paul there were 11 pawn and 124 <br />secondhand goods shops. Due to this growth, and due to the growing cost of <br />regulating this growth under their then current ordinances, a moratorium was placed <br />on the issuance of additional pawn shop licenses in both Minneapolis and St. Paul. <br />While this moratorium was in effect, Minneapolis crafted a new pawn ordinance and <br />is now revising secondhand goods and precious metal dealers as well. With higher <br />annual license fees and new billable transaction fees implemented by the ordinance, <br />the full cost of regulating these businesses will be recovered for the first time <br />The Pawn Detail <br />Minneapolis has used a manual, paper based system to record and investigate pawn <br />and secondhand transactions. Adequate in years gone by, this system is now too <br />expensive to maintain and fails to effectively identify stolen property, or the <br />criminals that may be responsible. In 1994, the cost of regulating Minneapolis pawn <br />shops and secondhand dealers exceeded the license fees they paid by more than <br />$90,000.00. Of the 45,000 items that were reported processed, only 160 were <br />identified as stolen - 3/10 of 1 %. <br />Faced with spiraling costs, poor results, and a steadily increasing workload, the <br />need for a better way to regulate was obvious. Like most businesses, pawn shops <br />and secondhand dealers are regulated to insure the health, safety, and well being of <br />the public. More specifically, regulation serves to: <br />• Identify and minimize illegal activity; <br />• Verify compliance with applicable laws; and <br />• Insure customers a wholesome, legitimate business environment. <br />Automated Pawl Syste:UTM and APSTM are Trade Marks o <br />Page 24 <br />JSA <br />3 <br />