Who Regulates Pawn Shops?

February 22, 2020 - Pawn Resources

Before I started PawnGuru, I knew I had to understand what regulations pawn shops had to follow.

Pawn shops, like any other finance-oriented business, have regulations in place that protect the consumer. I was surprised to find how strict they were.

The Process:

Most pawn shops work relatively the same way. Let’s say you decide to buy or sell an item at a pawn shop – often a laptop, an iPhone, or an instrument.

1. An employee or pawnbroker provides an estimate, guessing how much your item is worth.

2. He/She may offer to buy your item outright. You can haggle over price, but don’t expect a big change from his original offer, or:

3. You can take a loan from the broker and leave your item there as collateral

Simple as it is for you, there are a lot of rules governing the process. In particular, these are federal and state laws that pawn shops have to abide that protect consumers.

The Rules:

Federal Laws:

  • Truth in Lending Act (TILA). Disclosure of credit terms in consumer credit transactions- meaning the pawnbroker has to explain to you clearly and in writing all of the terms of your loan, such as interest rate, fees, etc.
  • Federal Trade Commission (FTC) Safeguard and Privacy Rules to protect your personal information including your name, address, phone number, and bank and credit card account numbers, etc.
  • Federal firearm laws, including record-keeping and background check requirements for buyers/sellers
  • Internal Revenue Service rules on reporting cash transactions over $9,000

State Laws:

  • Licensing and registration. In most states, pawnbrokers must apply for a license or register with a state agency – like the state consumer protection agency or state tax department.
  • Interest rates and fees on loans are capped or limited in practically every state.
  • Records. Usually, pawn shops have to keep detailed records of everything they buy or take as collateral – serial and model numbers, brand name; precious metal type, gemstone description, etc.
  • Reporting. In some states, pawn shops have to give reports of their purchases to local police to help identify stolen goods. In other states, a shop has to honor your request to check their inventory for stolen goods if you give it a police report on your stolen property

When you decided to buy or sell at a pawn shop, always check to make sure that it has a license to act as a broker. If you have any doubts you’re getting a fair deal (or dealing with an unauthorized shop),  please don’t hesitate to reach out. You can reach me and my team for help at help@pawnguru.com. We work hard to make sure all of our shops play by the rules, and we care deeply about your experience. We also invite you to read more about who regulates pawn shops with Brian the Pawn Nerd: Pawn Shops, Regulated.

Jordan Birnholtz
Jordan Birnholtz

Jordan Birnholtz is the cofounder of PawnGuru. An alumnus of the University of Michigan, Jordan started PawnGuru in 2015 with Jon Polter, David Stiebel, and Jessica Zahnd. When he's not working at PawnGuru, Jordan volunteers his time to support undergraduates in building socially-responsible businesses and organizations through Optimize, a program at the University of Michigan.

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Avatar for James R.Meadows

James R.Meadows

May 2, 2017, 8:37 AM

I really would like to know this, say I pawn some things, now where I pawn it they charge me 540.00dollars a month to hold it, and in order to hold it I must pay 540.00 a month, now say on the first of the month I pay 540.00 and on the 7th of that same month I go to pick it up. Can they still charge me the 540.00, or can they gust charge me for the lone amount, because I already paid to renew for the month. And while I am taking it out early they still make money by me paying the 540.00 early, and then taking what I borrowed early.

Avatar for James R.Meadows

James R.Meadows

May 2, 2017, 8:56 AM

I really would like to know this, say I pawn some things, now where I pawn it they charge me 540.00dollars a month to hold it, and in order to hold it I must pay 540.00 a month, now say on the first of the month I pay 540.00 and on the 7th of that same month I go to pick it up. Can they still charge me the 540.00, or can they gust charge me for the lone amount, because I already paid to renew for the month. And while I am taking it out early they still make money by me paying the 540.00 early, and then taking what I borrowed early.and I live in West Virginia.

Avatar for raju


May 12, 2017, 9:57 AM

What are the rights of pawn broker in legal issues of robbery of the pledged articles . the deception made by the customer

Avatar for Janae Hiner

Janae Hiner

May 16, 2017, 4:42 PM

If you buy something from a pawn shop and it doesn’t work like they say it does eh have to give you back the money right?
My fiancé bought a recording set for music and it didn’t work after they said it did and he tried to take it back and they said they can’t give money back.

Avatar for Stephen


June 15, 2017, 9:15 PM

I own a shop in Arkansas and i am curious how long do we have to store our tickets and where do i go to read about that.

Avatar for Dawn Marie Young

Dawn Marie Young

July 27, 2017, 2:34 AM

What is the law in Indiana as far as interest on a pawn loan?i thought by law you get 90 days 20%interest due every 30days after 90days if you don’t pay at least one month of that interest then the pawn shop can sell your stuff.i had one refuse to take nothing less than all 3months interest.60dollars.so which is it by law all interest paid or 1 month?

Avatar for Klara Huckabay

Klara Huckabay

September 23, 2017, 3:34 PM

Thanks for giving your ideas on this blog. Furthermore, a delusion regarding the banking institutions intentions whenever talking about property foreclosure is that the loan company will not have my repayments. There is a degree of time that the bank will take payments in some places. If you are as well deep inside hole, they will commonly call that you pay the actual payment completely. However, i am not saying that they will not take any sort of repayments at all. In the event you and the financial institution can manage to work something out, this foreclosure course of action may cease. However, if you ever continue to miss payments underneath the new system, the property foreclosures process can pick up from where it was left off.

Avatar for Melody Boatner

Melody Boatner

November 10, 2017, 10:37 PM

I went to a newly opened pawn shop a couple weeks ago just browsing, I seem my fishing tackle box on display for sale. So I took it up to the counter and asked the owner who brought this item in? He looks it over and mumbles somthing about no number on the item identifying the person who brought it in. Before he could answer, the of the building owner walks in the door, he takes over the conversation and the owner of the business exits the conversation and slips away. I advised the building owner that the tackle box belongs to me adding that I can identify it by a rag in it I carried in an baggie to wipe my hands off. The building owner states that he believes if just a rag. I explained that the rag was in fact a partial leg of some old pj’s I had. He continues to defend that I am lying and its just an old rag. I took the fabric out of the baggie and laid it flat on the counter it was clearly what I described it to be. I advised him that I would pay him what he paid for it and he continues to insinuate that I am lying and states that I will pay full price. He thought it came from one of his storage lockers. The item was only marked at $6. He added that I could go to the police station and file a complaint blablabla and waste my time doing all that. So I did purchase my own property back from this building owner. When I got in my truck I went from calm to angry in an slit second. I have a personal problem with my character being defamed as being a liar. Had I of been thing about what this guy was actually saying I would have bitch slapped him. I did proceed to the Police Dept. And explained what had taken place. The officer advised me he would look into it and call me back. He never called so I contacted him. He called me two days ago and told me there is not law in which pawn shop owners have to have a record of who brings in property for sale. I do not believe that. I have found no supporting information to his claim. I want my $6 bucks back simply to prove I am not a liar. I have scraps of the same fabric on my rag bag as we speak. I find no laws that suggest that actual owner of the property chalks if off as a loss. None at all. I am located in Keokuk, Lee County, Iowa. Does the pawn shop owner have to have the identity of who ever brings an item in for sale?

Avatar for Gillian Babcock

Gillian Babcock

March 11, 2019, 7:27 AM

My sister is planning to pawn some of her jewelry because she needs extra cash to have her car repaired. It was explained here that she should check the license of the pawnshop before having a transaction. Furthermore, it’s recommended to go to trusted pawnbrokers for quality services.

Avatar for Jake


February 2, 2020, 11:02 PM

Question for you: I bought a Diamond ring from. Local Oceanside, CA pawnshop. They told me (and I have the receipt as proof) that the diamond ring I was purchasing was a .80ct VS1 I near colorless center stone with a tcw of 1.46. I go to school at the GIA and brought the ring in while we were doing mounted stone estimates. The ring was woefully under…no where near what the pawn shop said it was. What myself and other classmates along with the instructor Got as it’s best estimate was center stone as .66ct with a 1.06Tcw. ceNter stoNe was also VS2 and we got an H color off of it with GIA masterstones.

Far cry from .80ct, and I realize that mounted stones are estimated but it seems to me that .66-.80 is a little absurd. When I tried to take the ring back to notify the pawn shop that they were very much off on their weight estimation, I was told that since I purchased the ring during the holiday season where everyone received a holiday discount, that should Be good enough for me and to leave the shop. First, they gaVe me a discount everyone got, 2nd the discount was based off an .80ct diamond, and thirdly, this just doesn’t seem ethical in any expanse of the imagination. Are pawn shops allowed to fabricate specs, charge for the fabricated specs, then tell customers to F-off when they realize what The pawn shop has done???

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