RULES AND REGULATIONSRULES AND REGULATIONS
Title 10--BANKS AND BANKING
DEPARTMENT OF BANKING
[10 PA. CODE CHS. 61, 63, 65 AND 67]
Pawnbrokers License
[27 Pa.B. 6796] The Department of Banking (Department), under the act of December 28, 1994 (P. L. 1402, No. 163) (Act 163) which amends the Pawnbrokers License Act (act) (63 P. S. §§ 281-1--281-32) and the authority of the Department to promulgate regulations in section 8 of the act, will impose procedures for initial pawnbroker license application hearings, minimum capital requirements, restrictions on usage of the name ''pawn'' or ''pawnbroker'' in this Commonwealth, assessment by licensees of a $1 charge for governmental reporting costs and license changes of licensees' office location.
Purpose
The purpose of the amendments is to implement Act 163, which amended sections 2, 4, 4.1, 5.1, 6, 8 and 12 of the act (63 P. S. §§ 281-2, 281-4, 281-4.1, 281-5.1, 281-6, 281-8 and 281-12) the Secretary of the Department (Secretary) is authorized by section 8 of the act to issue regulations as may be necessary for the protection of the public and to insure the proper conduct of the pawnbroker business and enforcement of the act. The purposes of the rulemaking are consistent with the requirements of Act 163 and the authority of the Secretary to issue regulations.
Explanation of Regulatory Requirements
The amendments to the existing regulations provide procedures for initial pawnbroker license applications, including posting a notice of initial application and hearing at the proposed pawnbroker location, and publishing notice of the hearing in a newspaper of general circulation. The amendments also require a newspaper notice of renewal application to be published in a newspaper of general circulation by an applicant for renewal of a pawnbroker license. A change of place of business by a licensed pawnbroker could not be implemented until a notice of proposed relocation had been posted at the proposed new office location. Use of the formal name or fictitious name ''pawn'' or ''pawnbroker'' would not be permissible unless the entity using the formal name or fictitious name was a licensed pawnbroker under the act. Use of the terms ''pawn'' or ''pawnbroker'' would not be permissible in any advertisement unless the person or entity using the name was a licensed pawnbroker. A $1 charge per pledge could be assessed by a licensee to cover only governmental reporting costs pertaining to reports required to be issued by a licensee to the local or State Police pertaining to a particular pledge, or as otherwise permitted by the Secretary. The minimum start-up and ongoing capital requirement applicable to an initial applicant or renewal applicant for a pawnbroker license would be $10,000 per licensed pawnbroker office. The licensee would be required to report counterfeit pawn tickets to local police authorities. Interest and charges would be amended consistent with the statutory amendments to permit 3% per month aggregate interest and charges on the entire principal amount.
Entities Affected
The number of entities that will be affected by these amendments is as follows: an estimated five to ten initial applicants for pawnbroker licenses per annum regarding the hearing requirements applicable to initial applicants; all of the approximately 77 licensed pawnbrokers in this Commonwealth regarding the minimum capital requirements; all of the approximately 77 licensed pawnbrokers regarding the $1 charge per pledge that may be assessed by a licensee to cover governmental reporting costs; all of the approximately 77 licensed pawnbrokers regarding the newspaper notice of renewal application to be published in a newspaper of general circulation; an estimated one or two licensed pawnbrokers per annum who might seek to relocate their licensed offices would have to post at the proposed new office location a notice of proposed relocation; and an estimated two or three unlicensed entities per annum would be restricted from utilizing the word ''pawn'' or ''pawnbroker'' in any advertisement or in their name or fictitious name unless licensed as a pawnbroker under the act.
Cost and Paperwork Requirements
These amendments will impose paperwork requirements on the Department to process initial pawnbroker license application hearings, and the notices of license application applicable to initial applicants and renewal applicants respectively. The amendments will not impose any paperwork requirements on any political subdivision and will not affect the costs of any political subdivision of this Commonwealth. All costs of hearing shall be paid by the initial applicant, including all costs for stenographer services, transcript printing costs and Department expenses for providing a designee of the Secretary to preside at the public hearing.
Effectiveness/Sunset Date
A sunset date is inapplicable as the statute imposes an ongoing requirement for the licensing and regulation of pawnbrokers.
Summary of Comments and Responses on the Proposed Rulemaking
Notice of proposed rulemaking was published at 27 Pa.B. 1809 (April 12, 1997).
During the public comment period, the only written comments received by the Department were from the Pennsylvania Pawnbrokers Association, City of Philadelphia Police Department and the Independent Regulatory Review Commission (IRRC).
Comments received from the Pennsylvania Pawnbrokers Association and the City of Philadelphia Police Department regarding the Pawnbrokers Act were favorable.
The Department considered the written comments received in formulating the final-form regulations. The Department has completed a review of the comments and has prepared a Comment and Response Document that addresses each comment on the proposed amendments.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on January 31, 1997, the Department submitted a copy of the proposed rulemaking to IRRC, and the Chairperson of the Senate Committee on Banking and Insurance and the Chairperson of the House Committee on Business and Economic Development. In compliance with section 5(b.1) of the Regulatory Review Act, the Department also provided IRRC and the Committees with copies of the comments as well as other documentation.
In preparing these final-form regulations, the Department has considered the comments received from IRRC.
Findings
The Department finds that:
(1) Public notice of proposed rulemaking was given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and regulations promulgated thereunder at 1 Pa. Code §§ 7.1 and 7.2.
(2) A public comment period was provided as required by law, and all comments were considered.
(3) These amendments do not enlarge the purpose of the proposal published at 27 Pa.B. 1809.
Order
The Department, acting under the authorizing statutes, orders that:
(a) The regulations of the Department, 10 Pa. Code Chapters 61, 63, 65 and 67, are amended by amending §§ 61.5, 61.6, 63.1, 65.9 and 67.2 to read as set forth at 27 Pa.B. 1809 and by amending §§ 61.1--61.4 and by adding § 63.5 to read as set forth in Annex A.
(b) The Secretary of the Department shall submit this order, 27 Pa.B. 1809 and Annex A to the Office of General Counsel and the Office of the Attorney General for review and approval as to legality and form, as required by law.
(c) The Secretary of the Department shall submit this order, 27 Pa.B. 1809 and Annex A to IRRC and the Senate Committee on Banking and Insurance and House Committee on Business and Economic Development as required by the Regulatory Review Act.
(d) The Secretary of the Department of Banking shall certify this order, 27 Pa.B. 1809 and Annex A and deposit them with the Legislative Reference Bureau, as required by law.
(e) This order shall take effect upon publication in the Pennsylvania Bulletin.
RICHARD C. RISHEL,
Secretary(Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 27 Pa.B. 6385 (December 6, 1997).)
Fiscal Note: Fiscal Note 3-33 remains valid for the final adoption of the subject regulations.
Annex A
TITLE 10. BANKS AND BANKING
PART V. PAWNBROKERS
CHAPTER 61. GENERAL PROVISIONS § 61.1. Definitions.
The following words and terms, when used in this part, have the following meanings, unless the context clearly indicates otherwise:
Act--The Pawnbrokers License Act (63 P. S. § 281-1--281-32).
Capital--Tangible net worth which shall be maintained at all times by the licensee.
Charges--The aggregate total of interest, fees for storage, insurance, investigation and other services rendered by pawnbrokers licensed under the statutes of the Commonwealth.
Department--The Department of Banking of the Commonwealth.
Initial applicant--An individual, partnership, association, business corporation, nonprofit corporation, common law trust, joint-stock company or any group of individuals however organized applying for a license under the act or any person appearing as owner, partner, officer, director, trustee or other official of a partnership, association, business corporation, nonprofit corporation, common law trust, joint-stock company or any group of individuals however organized, on the application for license under the act. This applicant for license does not possess a license for the license term that expires immediately prior to the term being applied for regarding the proposed license location.
License--A license issued by the Secretary under the act that permits an initial applicant or renewal applicant to engage in the pawnbroker business at a particular business location to the extent provided in the license's terms.
Licensee--A pawnbroker licensed by the Department to do business under this part.
Month--The period elapsing between a certain date in 1 calendar month, to and including the same date in the next succeeding month.
Municipality--The term includes a city, town, borough or township.
Newspaper notice of renewal application--A written notice in a form prescribed by the Department. This notice shall be advertised in a newspaper of general circulation by a renewal applicant for a pawnbroker's renewal license. The advertisement shall be in a form prescribed by the Department.
Newspaper of general circulation--A newspaper issued daily, or not less than once per week, intended for general distribution and circulation, sold at fixed prices per day or week, published in the English language, which satisfies the requirements of 45 Pa.C.S. Part I (relating to preliminary provisions).
(i) The newspaper shall be:
(A) A newspaper which is one of general circulation in the county and is published in the city, borough or township in which the pawnbroker's office is to be located or already is located.
(B) If there is no newspaper as described in clause (A), a newspaper of general circulation in the county, published at the county seat.
(C) If there is no newspaper as described in clause (B), a newspaper of general circulation published in the county at the place nearest such city, borough or township.
(D) If there is no newspaper as described in clause (C), the newspaper of general circulation published at the place nearest the city, borough or township in an adjoining county.
(ii) The newspaper publications required by the act and this part shall be at the cost of the applicant for license.
Newspaper notice of hearing--The written notice in a form prescribed by the Department. The notice shall be published in a newspaper of general circulation by an initial applicant for a new pawnbroker's license.
Notice of initial application and hearing--The written notice in a form prescribed by the Department. The notice is shall be posted by an initial applicant for a new pawnbroker's license at the proposed pawnbroker's business location, as further specified in this part.
Renewal applicant--The definition of ''initial applicant'' shall be applied, except that this applicant for license does possess a license for the license term that expires immediately prior to the renewal term being applied for regarding the licensed location.
Resident--A person as defined in section 2 of the act (63 P. S. § 281-2) residing or operating at an address within 500 feet of an initial applicant's proposed new pawnbroker's business location.
Secretary--The Secretary of the Department or a person designated by the Secretary. This definition contemplates, among other things, that a designee of the Secretary may preside over a hearing required by the act.
§ 61.2. License applications, public notice, hearings and capital requirements.
(a) Blank forms of application and bond will be supplied by the Department upon request. Payment of a new license fee is required.
(b) Licenses shall be issued on the basis of information set forth in the application for license. Changes in title, place of business, office manager, owner, partner or corporate officials occurring during a license year shall require prior written approval of the Department.
(c) Every initial applicant for a license shall post a notice of initial application and hearing for at least 30 days beginning with the day the application is accepted as filed with the Secretary, in a conspicuous place at the proposed location for which the initial applicant has applied for a license, unless another location for posting the notice of initial application and hearing is approved by the Secretary. The notice of initial application and hearing shall be in the form prescribed by the Secretary. The conspicuous place of posting the notice of initial application and hearing shall face to the outside of the proposed location for which the initial applicant is applying, so that persons observing the normal main window or facade of the proposed location may readily see and read the notice of initial application and hearing, unless otherwise permitted by the Secretary due to the circumstances of the proposed pawnbroker location. At the end of at least 30 days continual posting of the notice of initial application and hearing, an initial applicant shall deliver to the Department an affidavit in a completed form as prescribed by the Department certifying that the notice of initial application and hearing has been properly posted for the required 30-day time period. A photocopy of the completed notice of the initial application and hearing also shall be provided by initial applicant to the Department as part of the initial application.
(d) A public hearing shall be held regarding any pawnbroker's license application submitted by an initial applicant. The public hearing is a fact-gathering mechanism to assist the Department in its review of the initial applicant's pawnbroker's license application while providing an opportunity for interested residents to testify regarding matters relevant to the Secretary's consideration of whether to approve the initial applicant's license application for the proposed location.
(1) General.
(i) A hearing regarding an initial applicant's license application may not be held by the Department until after the Department has accepted as complete a license application from the initial applicant. An initial applicant shall provide the affidavit required in subsection (e) certifying to the posting of the notice of initial application and hearing for the requisite 30-day time period, and a proof of publication of a newspaper notice of hearing.
(ii) The separate newspaper notice of hearing shall be published at least once in a newspaper of general circulation at least 10 days prior to the hearing date. An initial applicant shall cause proof of publication of the newspaper notice of hearing to be provided to the Department in a written form issued and executed by a representative of the newspaper.
(iii) The hearing shall occur at a date, time and place as deemed appropriate in the sole reasonable discretion of the Secretary.
(2) Hearing rules. The Secretary will preside over the hearing. The hearing rules in 1 Pa. Code Part II (relating to general rules of administrative practice and procedures) and Chapter 3 (relating to hearings and conferences) do not apply to hearings regarding an initial applicant, as described in this section, because of the fact-gathering nature of these hearings. Formal rules of evidence do not apply to these hearings. The Secretary has the authority to swear witnesses at a hearing. Procedural issues regarding any hearing will be determined by the Secretary.
(3) Witness testimony. Witness testimony may be limited as to time by the Secretary. The initial applicant may testify once after all witnesses, if any, have testified. Residents attending the hearing and seeking to testify will be permitted to testify. The number of witnesses including resident witnesses may be restricted in the sole discretion of the Secretary, including circumstances in which the Secretary determines that witnesses seek to offer similar testimony or to facilitate completion of the hearing within a reasonable time period. Witnesses other than residents may be permitted to testify at the hearing, in the sole discretion of the Secretary.
(4) Costs of the hearing. The costs of the hearing shall be paid by the initial applicant, including all costs for stenographer services, transcript printing costs and Department expenses for providing a designee of the Secretary to preside at the public hearing. Two copies of the hearing transcript shall be provided to the Department. If there is no testimony at the hearing, the transcript requirement will be waived by the Secretary.
(e) A license expires on October 1 of each year. An application for renewal shall be filed with the Department at least 30 days before the end of the license year. Applications for renewal shall be accompanied by a new bond and a check or money order payable to the Commonwealth of Pennsylvania. A renewal applicant shall have a newspaper notice of renewal application to be published once, in a form prescribed by the Department at least 30 days prior to license renewal. A renewal applicant shall have proof of publication provided to the Department in a written form issued and executed by a representative of the newspaper of general circulation. The Secretary will consider any written comments timely received after publication of the newspaper notice of renewal application.
(f) The minimum start-up capital requirement applicable to an initial applicant for a license is $10,000 per licensed pawnbroker office. The ongoing capital requirement applicable to a renewal applicant is $10,000 per licensed pawnbroker office. If multiple licensed offices are held by the same licensee, the maximum total capital requirement for the offices is $100,000. The minimum capitalization shall be maintained as permanent capital which may not be distributed to any stockholder or owner of licensee or be purchased by a licensee without the prior written approval of the Secretary. A licensee holding a valid license on December 27, 1997, shall meet the minimum capitalization requirements listed in this subsection by December 27, 1999.
(g) An applicant for a pawnbroker's license shall demonstrate that the proposed pawnbroker's location shall contain security measures and devices, such as a vault for the storage of pledge items, for the conduct of a pawnbroker's business under the circumstances of that location. An initial applicant shall demonstrate to the Department's satisfaction that the initial applicant has the requisite experience or knowledge, or both, to conduct the business of a pawnbroker under the act and this part. The knowledge or experience may include, but not necessarily be limited to, retaining an office manager with at least 1 year of knowledge and experience in the pawnbroker business or other business experience determined to be relevant in the Department's discretion. Renewal applicants shall demonstrate to the Department's satisfaction that the renewal applicant continues to have the requisite experience or knowledge to conduct the business of a pawnbroker under the act and this part.
(h) The license certificate shall be posted in a conspicuous place in the office of the pawnbroker so that it will be in full view of the public at all times.
§ 61.3. Change of place of business.
(a) If a licensed pawnbroker seeks to retain its current license upon the relocation of its business, the relocation shall be within the same municipality where its currently licensed office is located. Any change of place of business of a licensed pawnbroker within the same municipality requires prior approval of the Department, which will be granted upon the Department being satisfied that the requirements of this section have been met.
(b) The new place of business shall be in the same municipality for which the license was originally issued.
(c) A licensee who wishes to change the place of business to a municipality other than that indicated on the current license shall obtain a new license by filing a new application and bond and paying the license fee.
(d) Application for approval of a change of address shall be filed in writing with the Department at least 15 days prior to the intended date of change. Leases for new quarters may not be signed until the Department has approved the change of address. The Department will act on the application within 14 days. Failure of the Department to act on the application within 14 days constitutes approval, unless the Department requests additional information, which stops the 14-day review period from proceeding until the information requested by the Department is received from the licensee.
(e) The current license certificate should be forwarded to the Department with any request for approval of a proposed change in the place of business.
§ 61.4. Partnerships.
(a) A license issued to a partnership shall automatically expire when one of the partners dies or withdraws from the partnership. A new license shall be obtained immediately by the surviving partners desiring to continue the business which had been conducted under the expired license. A new license shall also be required when one or more new partners are admitted to a partnership.
(b) Any change in a partnership occurring during a license year and requiring a new license shall require the payment of a new license fee.
CHAPTER 63. CHARGES, PAYMENT AND RECORDS § 63.5. Charge for reports to police.
A $1 charge per pledge may be assessed and collected by a licensee to cover only those governmental reporting costs pertaining to reports required to be issued by a licensee to the local or State police pertaining to that pledge, or as otherwise permitted by the Secretary. The $1 fee may be collected at the time the loan is made, or may be financed as part of the loan, in which latter case interest and charges on the $1 may be made by the licensee consistent with the act.
[Pa.B. Doc. No. 97-2078. Filed for public inspection December 26, 1997, 9:00 a.m.]
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