HB2211.DOC

SECTION 1. The legislature finds that stolen property is being sold by pawnbrokers and secondhand dealers. The legislature also finds that it is difficult to identify stolen property that is sold by pawnbrokers or secondhand dealers.

The purpose of this Act is to create a requirement for pawnbrokers and secondhand dealers to report articles received and retain a record of those articles received. This requirement will attempt to eliminate the sale of stolen property. A reporting and retention system for pawnbrokers and secondhand dealers will be cost efficient. Moreover, confidential information required by this Act will be protected and secured if electronic transmission is chosen as the preferred method of reporting. Lastly, requiring pawnbrokers and secondhand dealers to report and retain articles received will not "criminalize" customers that transact business with pawnbrokers and secondhand dealers.

SECTION 2. Chapter 486M, Hawaii Revised Statutes, is amended by adding eight new sections to be appropriately designated and to read as follows:

"§486M- Retention of records. Dealers shall complete a transaction form at the time of the actual transaction. Dealers shall maintain a copy of a completed transaction form on the registered premises for at least two years following the date of the transaction, or one year if the transaction was conducted electronically.

§486M- Submission of records. (a) If the chief of police authorizes the use of appropriate software by secondhand dealers or pawnbrokers, transaction forms shall be electronically transmitted to the department. The dealer, at the end of each business day, shall ensure that all records of transactions have been entered into the appropriate software and transmitted so that the information is available to the department.

(b) Transaction forms for non-electronically recorded transactions shall be transmitted to the department at the end of each business day, by a method designated by the chief of police.

(c) For the purposes of a criminal investigation, the appropriate law enforcement agency may request that the dealer produce an original of a transaction form that was electronically transmitted. The dealer shall deliver this form to the law enforcement agency within twenty-four hours following the request.

(d) When an electronic image is part of a transaction, the secondhand dealer or pawnbroker shall maintain the electronic image in order to meet the recordkeeping requirements applicable to the original transaction form.

(e) The dealer, upon request by the department, shall provide a clear and legible copy of all images related to the requested transaction.

§486M- Prohibited acts. A dealer, or any employee or agent of a dealer, shall not:

(1) Falsify or intentionally fail to complete a transaction form;

(2) Refuse to allow the department to inspect completed transaction forms or pawned or purchased goods;

(3) Obliterate, discard, or destroy a completed transaction form sooner than any required retention period;

(4) Make any agreement requiring or allowing the personal liability of a seller or the waiver of any of the provisions of this section, part V of chapter 445, or chapter 486M;

(5) Knowingly enter into a pawn or purchase transaction with any person who is under the influence of alcohol or controlled substances when the condition is apparent;

(6) Knowingly enter into a pawn or purchase transaction with any person who is under the age of eighteen years;

(7) Conduct any transaction with any person using the name of another or the registered name of another's business;

(8) Conduct any transaction at any location other than the specific address listed on the secondhand dealer or pawnbroker license;

(9) Lease goods to the seller or any other party;

(10) Operate a secondhand shop or pawnshop between the hours of 11:00 p.m. and 7:00 a.m.; or

(11) Make purchases or sales through any business associate not registered in compliance with this chapter.

§486M- Applicability. Any dealer who is otherwise licensed shall comply with this chapter as a condition of the dealer's license except as to those statutory conditions of the license that are more restrictive. This chapter shall not apply to the following:

(1) Any secondhand transaction involving an organization or entity registered with the State as a nonprofit, religious, or charitable organization or any school-sponsored association or organization;

(2) A law enforcement officer acting in an official capacity;

(3) A trustee in bankruptcy, executor, administrator, or receiver;

(4) Any public official acting under judicial process or authority;

(5) A sale upon the execution or, by virtue of, any process issued by a court;

(6) Any garage or yard sale operator who holds sales less than twenty weekends per year;

(7) Any person who, pursuant to a written agreement, sells household personal property as an agent for the property owner or the property owner's representative at that person's residence;

(8) The purchase, consignment, or trade of goods from one dealer to another dealer when the selling dealer has complied with the requirements of this chapter;

(9) Any person accepting a good, other than a precious or semiprecious metal or gem, in trade for a similar item of greater value;

(10) Any person purchasing, consigning, or trading goods, other than precious or semiprecious metals, gems, or golf clubs, at a flea market, trade show, farmer's market, or any other conglomeration of sellers, regardless of whether the event is held at a temporary or permanent business location;

(11) Any auction business regulated under part II of chapter 445;

(12) Any consignment shop;

(13) Any person offering one's own personal property for sale, purchase, consignment, or trade via an Internet web site, or a person or entity offering the personal property of others for sale, purchase, consignment, or trade via an Internet web site, when that person does not benefit from the sale of the item;

(14) A business whose primary business is the sale, rental, or trade of motion picture video in digital format or video games, if the business:

(A) Requires the sellers of goods to have a current account with the business;

(B) Has on file in a readily accessible format the name, current residential address, home and work telephone numbers, government-issued identification number, place of employment, date of birth, gender, and thumbprint of each seller of goods;

(C) Purchases goods from the property owner or the property owner's representative at the place of business pursuant to an agreement in writing and signed by the property owner that describes the property purchased, states the date and time of the purchase, and states that the seller is the lawful owner of the property;

(D) Retains purchase agreements for not less than one year; and

(E) Pays for the purchased property in the form of a store credit that is issued to the seller and is redeemable solely by the seller or another authorized user of the seller's account with that business;

(15) Secondhand dealers or pawnbrokers, to the extent that transactions involve secondhand sports equipment; provided that the secondhand sports equipment is not either:

(A) Permanently labeled with a serial number; or

(B) Golf equipment;

(16) A motor vehicle dealer regulated under chapter 437; or

(17) Scrap dealers regulated under part X of chapter 445.

§486M- License required. (a) It shall be unlawful for any person to engage in business as a secondhand dealer or pawnbroker without obtaining a license as required under chapter 445.

(b) A separate license shall be required for each secondhand shop or pawnshop location, and each licensed shop shall be operated out of an established storefront. Any license not operated out of an established storefront shall expire five calendar days after its date of issuance.

(c) A licensee who seeks to move a secondhand shop or pawnshop to another location, not less than thirty days before the move, shall provide written notice to the treasurer by certified or registered mail, return receipt requested, and the treasurer shall then amend the license to indicate the new location. The licensee shall also give a copy of the written notice to the department.

(d) The secondhand dealer's or pawnbroker's license shall be conspicuously displayed at the licensed location.

(e) The treasurer may deny, suspend, or revoke a license for any violation of this chapter or chapter 445.

§486M- Suspension or revocation. (a) The treasurer shall suspend or revoke any license upon a finding that:

(1) The licensee has violated this chapter or chapter 445 or has aided or conspired with another person to violate this chapter or chapter 445; provided that:

(A) For a second violation of this chapter or chapter 445, the license shall be suspended for one calendar day;

(B) For a third violation of this chapter or chapter 445 that occurs within twelve months of the second violation of this chapter or chapter 445, the license shall be suspended for seven calendar days; and

(C) For a fourth or subsequent violation of this chapter or chapter 445 that occurs within twelve months of the immediately prior violation, the license shall be suspended for fourteen calendar days; or

(2) A condition exists that, if it existed when the license was issued, would have justified the treasurer's refusal to issue a license.

(b) The suspension or revocation notice shall be sent by the treasurer via registered mail to the address listed on the secondhand dealer's or pawnbroker's license. Return of the registered mail receipt shall fulfill the requirements of service.

(c) The revocation or suspension of a license shall not impair or affect the obligation of any pre-existing lawful contract between the licensee and any seller. Any pawn transaction made by a person without a license shall be voidable, and the person shall forfeit the right to collect any money, including the principal and any charges, from the seller in connection with the transaction and shall be obligated to return to the seller the goods in connection with the transaction.

(d) Upon the request of a law enforcement official, the treasurer shall release to the official the name, address, and business history of any licensed secondhand dealer or pawnbroker.

(e) For the purposes of this section, deferral and no contest pleas shall constitute a finding of a violation.

§486M- Penalties. Any dealer, or any agent, employee, or representative of a dealer who knowingly violates this chapter shall be guilty of a misdemeanor.

§486M- Pawn transactions. In addition part V of chapter 445, a pawnbroker shall comply with this chapter when conducting a pawn transaction."

SECTION 3. Section 486M-1, Hawaii Revised Statutes, is amended as follows:

1. By adding sixteen new definitions to read:

""Acquire" means to obtain by purchase, consignment, or trade.

"Chief of police" means the chief of police or the chief of police's designee for each respective county.

"Consignment shop" means a shop, with an established storefront, engaging in the business of accepting for sale, on consignment, any goods other than precious or semiprecious metals, gems, or golf clubs.

"Department" means a county police department.

"Goods" means personal property previously owned or used, and that is purchased, consigned, pawned, or traded as used property.

"Goods" shall not include:

(1) Titles or any other form of written security;

(2) Intangible property in lieu of actual physical possession, including securities;

(3) Printed evidence of indebtedness;

(4) Certificates of title and other instruments evidencing title that separates items of property, including motor vehicles; or

(5) Household or office furniture, pianos, books, clothing, organs, motor vehicles, costume jewelry, cardio and strength training or conditioning equipment designed primarily for indoor use, or secondhand sports equipment that are not permanently labeled with a serial number. For purposes of this paragraph, "secondhand sports equipment" does not include golf clubs.

"Identification" means a valid government-issued photographic identification.

"Pawn transaction" means the act of lending money on the security of goods or the act of purchasing tangible personal property on condition that it may be redeemed or repurchased by the seller for a fixed price within a fixed period of time.

"Pawnshop" means the place or premises at which a pawnbroker is licensed to conduct business as a pawnbroker.

"Person" means an individual, partnership, corporation, joint venture, trust, association, or other legal entity.

"Purchase" means the transfer and delivery of goods, by a person other than a commercial vendor, to a secondhand dealer or pawnbroker by acquisition for value, consignment, or trade for other goods.

"Scrap" means a piece of precious or semiprecious metal that cannot be readily identified as any piece of describable jewelry.

"Secondhand store" means the place or premises at which a secondhand dealer is licensed to conduct business as a secondhand dealer.

"Seller" means an individual who delivers goods into the possession of a secondhand dealer or pawnbroker in connection with a transaction.

"Transaction form" means the instrument on which a secondhand dealer or pawnbroker records pawns and purchases.

"Transaction" means any pawn, purchase, consignment, or trade of goods by a secondhand dealer or pawnbroker.

"Treasurer" shall have the same meaning ascribed to the term under section 445-1; provided that for the city and county of Honolulu, "treasurer" shall mean the director of customer services of the city and county of Honolulu."

2. By amending the definitions of "dealer", "government issued identification", "pawnbroker", "secondhand dealer" to read:

""Dealer" means any person, firm, partnership, corporation, or other entity who engages in a business which includes the buying of previously owned [~~articles,~~] goods, and includes any pawnbroker or secondhand dealer.

"Government issued identification" means:

(1) A valid passport issued by the United States of America;

(2) A valid [[]driver's[]] license issued pursuant to any state or District of Columbia law;

(3) [An] A valid identification card issued by any state or local government or the Bureau of Indian Affairs; or

(4) [An] A valid identification card issued by any branch of the Armed Forces of the United States of America.

"Pawnbroker" means any person, firm, partnership, corporation, or other entity who advances for interest or for [~~or in~~] an expectation of profit, gain, or reward any sum of money upon security of any goods or chattels taken by [~~such~~] the person by way of pawn or pledge, and includes any person subject to part V of chapter 445.

"Secondhand dealer" means any person [~~who trades in secondhand or previously owned articles,~~], corporation, or other business organization or entity that is not a scrap dealer, as defined in section 445-231, that is engaged in the business of purchasing, consigning, or trading goods, and includes any person subject to part VII of chapter 445."

3. By repealing the definition of "article":

["~~"Article" means any previously owned good or chattel, including, but not limited to, precious or semiprecious metals or precious or semiprecious gems.~~"]

SECTION 4. Section 486M-2, Hawaii Revised Statutes, is amended to read as follows:

"§486M-2 Record of transactions. Every dealer, or the agent, employee, or representative of the dealer [~~shall, immediately upon receipt of any article, record the following information, on a form authorized by the chief of police in each county:~~

~~(1)~~ ~~The name and address of the dealer;~~

~~(2)~~ ~~The name, residence address, date of birth, and the age of the person from whom the article was received;~~

~~(3)~~ ~~The date and time the article was received by the dealer;~~

~~(4)~~ ~~The signature of the person from whom the article was received;~~

~~(5)~~ The Hawaii [driver's] license number, or if the person does not possess a Hawaii [driver's] license, the number of and description of any government issued identification which bears a photograph of the person from whom the article was received;

~~(6)~~ ~~A complete and accurate description of the article received, including all markings, names, initials, and inscriptions;~~

~~(7)~~ ~~A reasonable estimate of the fineness and weights of the precious and semiprecious metals and precious and semiprecious gems received; and~~

~~(8)~~ ~~The price paid by the dealer for each article.~~

Upon request and at the discretion of the chief of police of each county, copies of all completed forms required by this section shall be surrendered, mailed, or electronically inputted and transmitted via modem or by facsimile transmittal to the chief of police or to the chief of police's authorized representative. The method of submittal to the chief of police shall be at the option of the dealer.] at the time of entering into any pawn or purchase transaction, shall complete a transaction form for the transaction, including an indication of whether the transaction is a pawn or a purchase, and the seller shall sign the completed transaction form. The design and format of the transaction form shall be as designated by the chief of police.

(b) Upon completing the transaction form, the dealer shall record or attach the following information or documents, and the information shall be either typed or legibly printed in ink in English:

(1) The name and address of the dealer;

(2) A sequential transaction number;

(3) The time and date of the transaction;

(4) A photograph and a complete and accurate description of the goods offered for purchase or pawn, including the following information, if applicable:

(A) Brand name;

(B) Model number;

(D) Size;

(E) Color, as apparent to the untrained eye;

(F) Precious metal type, weight, and fineness, if known;

(G) Gemstone description, including the number of stones; and

(H) Any other unique identifying marks, numbers, names, or letters;

(5) Scrap items, which shall be described as "unidentifiable remnant", shall include the precious metal type, weight, and fineness, if known;

(6) The full name and current residence address of the person from whom the goods were acquired;

(7) The height, weight, date of birth, age, gender, and any other visible identifying marks of the person from whom the goods were acquired;

(8) A thumbprint, free of smudges and smears, of the person from whom the goods were acquired; and

(9) The type of identification exhibited, the issuing agency, and the number thereon, of the person from whom the goods were acquired;

(10) The amount of money paid or loaned for each item or the monetary value assigned to each item in connection with the transaction; and

(11) Any other information required by the forms approved by the chief of police."

SECTION 5. Section 486M-5, Hawaii Revised Statutes, is amended to read as follows:

"§486M-5 Inspections. The chief of police of each county or the chief of police's authorized representative may immediately inspect[, during normal business hours or whenever the dealer or the dealer's agents or employees are otherwise present, any records required by this chapter and any articles described in such records that the police reasonably believe are stolen goods.] the entire licensed premises. The records required by this chapter are subject to inspection by the department during business hours. If the goods are being stored in a secure location off premises, the goods shall be made available for inspection within twenty-four hours of the initial request, or by the next business day if the request is made on a weekend or state holiday."

SECTION 6. Section 486M-3, Hawaii Revised Statutes, is repealed.

["~~§486M-3 Transactions by minors prohibited.~~ ~~A dealer shall not receive or purchase any article from any person under the age of eighteen.~~"]

SECTION 7. Section 486M-4, Hawaii Revised Statutes, is repealed.

["~~§486M-4 Minimum retention of items.~~ (a) No dealer, the dealer's agents, employees, or representatives shall alter, melt, deface, break apart, dispose of, or change the character or integrity of the precious or semiprecious metals or precious or semiprecious gems received or purchased for a period of fifteen calendar days in counties with a population of less than 300,000, and thirty calendar days in counties with a population of 300,000 or more after the purchase or possession by the dealer, whichever comes later. Every article received by the dealer, the dealer's agents, employees, or representatives shall be retained by the dealer in the county where received or purchased for a period of fifteen calendar days in counties with a population of less than 300,000, and thirty calendar days in counties with a population of 300,000 or more after the purchase or possession by the dealer, whichever comes later.

(b) At the discretion of the chief of police of each county, the holding period may be reduced to fifteen calendar days; provided that the dealer has computerized record-keeping and transmittal capabilities acceptable to the chief of police or the chief of police's authorized representative."]

SECTION 8. Section 486M-7, Hawaii Revised Statutes, is repealed.

["~~§486M-7 Penalties.~~ Any dealer, or any agent, employee, or representative of a dealer who knowingly violates any of the provisions of sections 486M-2, 486M-3, 486M-4, or who refuses to allow the inspection provided for in section 486M-5, and any person who offers or records information which is required under section 486M-2 that the person knows or has reason to know is false, shall be guilty of a misdemeanor. Any dealer, or any agent, employee or representative of a dealer who is convicted for a second violation of any provision of this chapter shall, in addition to the foregoing penalty, be permanently prohibited from engaging in the business of buying or selling of precious or semiprecious metals or precious or semiprecious gems or any article."]

SECTION 9. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2014-2015 for the increase in duties imposed upon the counties with regard to the licensing of pawnbrokers and secondhand dealers.

The sum appropriated shall be expended by the counties for the purposes of this Act in the following amounts:

(1) City and county of Honolulu $

(2) County of Hawaii $

(3) County of Kauai $

(4) County of Maui $ .

SECTION 10. The legislature declares that the appropriations to the counties made under section 10 of this Act is done in satisfaction of the requirements under article VIII, section 5, of the Hawaii State Constitution, on the State's share of the cost in increasing, pursuant to this Act, the level of service under the licensing programs for pawnbrokers and secondhand dealers.

SECTION 11. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 12. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 13. This Act shall take effect on July 1, 2014.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2211
TWENTY-SEVENTH LEGISLATURE, 2014
STATE OF HAWAII