How do I know that the merchandise I purchased at a pawn shop is not stolen?

Pawnshops are regulated at the state level in the US, and every state has different rules. Some of the details are absolutely fascinating! For example, let's take a look at a pawnshop in the state of New York.

Pawnshops are just like any other business. But unlike many other businesses, pawnshop has a separate set of laws that keep them on the narrow and straight. Pawnshops are specially licensed and have to cooperate with police daily to prevent the movement of stolen merchandise.

When you pawn an item, the pawnbroker asks your name and address, verifies it with your driving license and then inspects the item carefully. Most pawnshops have the ability to test gold and diamonds for authenticity.

If you are bringing in something like a VCR or TV, the pawnbroker tests it to make sure it is working. A serial number on the item is also recorded on the pawn ticket.

New York privacy law requires pawnshops to keep all non-public personal information private. They also give each customer a "Customer Privacy Notice" which means, if a thief sells your stolen TV to a pawnshop and you come in and validate it with the serial number the next day, the pawnbroker cannot tell you who brought it and when. He will direct you to the police, who will probe your claim.

A pawn shop must complete paper work for each item before they acquire it. There are three reasons for this level of inspection-

  • Every day, the pawnbroker has to submit a list of all merchandise received with serial numbers, to the police. The police compares the serial numbers against records of stolen items. Anything stolen is found this way and returned to the owner. Why do they do this? If a stolen item is found in a pawnshop and was not reported to the police when it came in, the pawnbroker is charged with receiving stolen merchandise.

  • A typical item pawned at a pawnshop has about a 60% chance of being reclaimed by the person who pawned it. This means there's about a 40% chance that the pawnbroker will have to sell the item to recover the loan, so the item must be in a good condition to be resold.

  • Unlike someone running a booth at a flea market or a garage sale, a pawnbroker is running a stable business and has to worry about her or his reputation. A pawnbroker cannot sell junk.

When you walk into a pawnshop, you are seeing only half of the area. The actual shop is twice as big as the front part. The unseen part is the storage area for all the pawned items. Let's say that you pawn your merchandise. For those minimum 90 days, your merchandise will sit in storage. This allows for any claims of stolen merchandise to be investigated by the police.

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