A House committee on Friday endorsed legislation that would create the Pawnbroker Licensure Commission to regulate the pawn industry.
The House State Agencies and Governmental Affairs Committee recommended House approval of House Bill 2164 by Rep. Dwight Tosh, R-Jonesboro, that would create a five-member commission comprised of two pawnbrokers, two law enforcement officers and one at-large state resident. The governor would appoint each member of the commission, who would serve staggered terms of seven years, and a chairman from his appointees.
Tim Collier, president of the Arkansas Pawnbrokers Association, said the legislation would help preserve the industry, so consumers can understand and know how the industry works.
The commission would be required to issue rules governing eligibility and application requirements; licensing and continuing education requirements; procedures about the suspension, revocation and surrender of a license; prohibited acts; the right to redeem; a pawnbroker’s lien; and the procedure about hold orders.
The bill would require the commission to issue rules to ensure that the interest charged on a pawn transaction is designated as an annual percentage rate that “shall not exceed” the constitutional limit of 17 percent of the amount financed each year.
The bill also would require the commission to issue rules under which “a pawnbroker may charge a pawn service charge that is reasonably justifiable for the burden of all services related to maintenance of the security in the pawnbroker’s possession, including storing, insuring, and investigating the title of the security, but the total pawn service charge shall not exceed 25 percent … of the amount financed for each thirty-day period in a pawn transaction, except that the pawnbroker is entitled to receive a minimum pawn service charge of five dollars … for each fifteen-day period.”