To apply for a licence, find out the fees or find more information visit the website of the Licensing Authority of Secondhand Dealers and Pawnbrokers [Ministry of Justice website].
Some requirements need to be met by all secondhand dealers and pawnbrokers licence holders.
Below is extra information relating just to pawnbrokers.
"Every person who acts as a pawnbroker must hold a licence" (Secondhand Dealers and Pawnbrokers Act 2004). If you carry on business as a pawnbroker without a licence you could be prosecuted and fined up to $20,000.
A pawnbroker is, broadly, a person (including a company or partnership) who, in expectation of profit, gain, or reward, lends money on the security of goods by taking those goods into their (the pawnbroker’s) possession but without taking ownership of the goods.
The legal requirements surrounding pledges and pawnbroking contracts are complex. The information below is an overview relevant to pawnbroking activities under the Act. This should not be used as a substitute for legal advice specific to your own situation.
Restrictions on pawnbrokers' conduct
Licensed pawnbrokers may only:
- enter into a pawnbroking contract on the business premises identified in the pawnbroker's licence
- advance money, and no other thing, on a pledge
- charge interest and no other fee, however described.
A licensed pawnbroker:
- cannot accept a pledge from a person under the age of 18
- must not enter into buyback contracts.
A pawnbroker is prohibited from purchasing goods that are, or have been, subject to his or her pawnbroking contract unless:
- the pledger, after entering into the pawnbroking contract, wishes to sell the goods
- the purchase price paid by the pawnbroker is more than the redemption price of the goods
- the difference between the redemption price and the purchase price is paid in cash to the pledger at the time of the sale
- the pawnbroker records the sale and purchase price in his or her 'pawnbrokers record'.
Record keeping
All licensed pawnbrokers must keep a 'pawnbrokers record'. You can keep this in any form you wish, but the Secondhand Dealers and Pawnbrokers Act 2004 requires you to record certain information:
- the identity of the person who pledged the article to you (see below for further information)
- a description of the pawn goods, including its serial number or any other unique identifiers
- the unique number that you assign to the pledged goods
- the name and signature of any person who conducted the transaction on your behalf
- the redemption date
- the amount of money advanced on the goods
- the interest to be charged
- the total redemption price payable at the redemption date, and whether any lesser amount is payable if the goods are redeemed before that date.
In addition, your pawnbrokers record must show either:
- the date the goods are redeemed and the amount for which they are redeemed
- or the date on which the goods are sold, the sale price you received for the goods and the amount (if any) you returned to the pledger.
Details to establish identity of the pledger
Your pawnbrokers record must include the following details relating to a person’s identity:
- full name
- contact address and telephone number
- date of birth
- the fact that the pledger is over 18 years of age
- their signature
- the form of authorised identification that you used to verify the pledger's identity.
Verification of identity
You must verify the pledger's identity. You can only do this by:
- sighting the person's authorised identification
- or by your personal knowledge if the person is personally known to you.
If you choose to verify the pledger's identity by personal knowledge and incorrectly record any of their details in your pawnbrokers record you will be deemed to have made a false entry.
Offence in relation to details to be recorded
It is an offence which carries, on conviction, a fine of up to $10,000 if you do not, without reasonable excuse:
- keep a pawnbrokers record
- record any information required in relation to a pledge
- add the required information to your pawnbrokers record as soon as the information is available.
It is also an offence, carrying the same penalty, to make a false entry in your pawnbrokers record.
Storage of pawnbrokers record
It is an offence, carrying a penalty of up to $10,000 on conviction, if you do not, without reasonable excuse keep your pawnbrokers record:
- for three years from the date of the transaction to which the record relates
- at your principal place of business.
You must, when required to do so by a Police officer:
- show the officer your pawnbrokers record and any information contained in it
- or make a copy of all or part of your record and give that copy to the Police officer.
If you fail to do so without a reasonable excuse, you could be convicted of an offence and fined up to $10,000.
Possession of pawned goods
When you take possession of any pawned goods you must give the pledger a pledge ticket for the goods.
You must retain pawned goods until the redemption date has passed.
Labelling of pawned goods
You must attach a label to any pawned goods that you take possession of. This label must bear the number that you assigned to it in your pawnbrokers record. This label must remain attached to the goods until the goods have been redeemed or otherwise disposed of.
Rights of pledgers
A pledger has the right to redeem his or her pawned goods from you on payment of the redemption price. The pledger has the right, at any reasonable time, to inspect the pawned goods. The right of inspection allows the pledger to:
- view, but not handle, the goods
- have you demonstrate the operation of the goods.
Pawnbroker’s rights when pawned goods not redeemed
If a pledger has not redeemed his or her pawned goods on or before the redemption date, as a licensed pawnbroker you may sell the goods to recover the redemption price.
You must offer the unredeemed goods for sale by way of:
- public auction
- publicly accessible Internet auction website.
Public auction means an auction that complies with the Auctioneers Act 1928, the Auctioneers Regulations 1958 and regulation prescribed in the Secondhand Dealers and Pawnbrokers Regulations 2005.
A public auction used to sell unredeemed pawned goods must not be conducted by:
- the pawnbroker involved in the pledge contract
- the pawnbroker's spouse, de facto partner, parent, child, or sibling
- the pawnbroker's employee
- in the case of a pawnbroker that is a company, a person concerned in the management of the company.
If, at auction, the goods attract a bid that is equal to or exceeds the redemption price, the goods must be sold. If the goods do not sell at auction, the pawnbroker may sell the goods in any other way that is likely to yield a realistic price.
When unredeemed goods attract a price higher than redemption price
When any pawnbroker sells unredeemed goods that attract a sale price in excess of the redemption price, there is a strict process that must be followed for dealing with the excess received.
The excess must be divided:
- 10 percent for pawnbroker
- 90 percent for the pledger.
As a licensed pawnbroker you are entitled to keep your 10 percent share. You must hold the pledger's 90 percent for six months from the date of the sale. If the pledger does not claim his or her 90 percent within that time you may keep that portion of the excess as well.
If the amount of the excess is greater than $10 you must write to the pledger as soon as practicable and advise him or her of:
- the amount of excess to which he or she is entitled
- the date by which his or her portion of the excess must be claimed (six months from the date of sale).
Offences relating to pawnbroking
As a licensed pawnbroker you will be committing an offence that, on conviction, carries a fine of up to $10,000, if you:
- enter into a buyback contract as a buyer while apparently acting in the course of business as a pawnbroker
- enter into a pawnbroking contract at a place other than at the premises listed in your licence
- sell or otherwise dispose of pawned goods on or before the redemption date
- fail to issue a pledge ticket or issue a pledge ticket that does not contain all the required information
- fail to allow a pledger to redeem or inspect the goods that he or she has pledged
- sell pawned goods without first offering them for sale at public auction or publicly accessible Internet auction
- fail, when a pledger claims the excess between the sale price and the redemption price within the six month period, to return the pledger at least 90 percent of the excess
- accept a pledge from a pledger who is under 18 years of age
- fail to comply with the statutory obligations which permit you to purchase the pledge goods from the pledger.