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Texas Pawnshop Act Effective September 1, 2005

Office of Consumer Credit Commissioner 2601 North Lamar Boulevard

Austin, Texas 78705-4207 (512) 936-7600 • www.occc.state.tx.us

TABLE OF CONTENTS

Page Texas Finance Code Title 4 -- Regulation of Interest, Loans, and Finance Transactions Chapter 371 -- Pawnshops Subchapter A -- General Provisions………………………………………………1 §371.001 §371.002 §371.003 §371.004 §371.005 §371.006 §371.007 Subchapter B -- Pawnshop License……………………………………………….2 §371.051 §371.052 §371.053 §371.054 §371.055 §371.056 §371.057 §371.058 §371.059 §371.060 §371.061 §371.062 §371.063 §371.064 §371.065 §371.066 §371.067 §371.068 §371.069 §371.070 §371.071 §371.072 §371.073 Subchapter C -- Pawnshop Employee License……………………………………6 §371.101 §371.102 §371.103 §371.104 §371.105 §371.106

Subchapter D -- Operation of Pawnshops………………………………...………7 §371.151 §371.152 §371.153 §371.154 §371.155 §371.156 §371.157 §371.158 §371.159 §371.160 §371.161 §371.162 §371.163 §371.164 §371.165 §371.166 §371.167 §371.168 §371.169 §371.170 §371.171 §371.172 §371.173 §371.174 §371.175 §371.176 §371.177 §371.178 §371.179 §371.180 §371.181 §371.182 §371.183 §371.184 §371.185 Subchapter E -- Inspections and Examinations……………………………….…11 §371.201 §371.202 §371.203 §371.204 §371.205 §371.206 §371.207 §371.208

Subchapter F -- License Revocation, Suspension, and Surrender……………….12 §371.251 §371.252 §371.253 §371.254 §371.255 §371.256 §371.257 §371.258 §371.259 Subchapter G -- Enforcement; Penalties…………………………………………13 §371.301 §371.302 §371.303 §371.304 §371.305 §371.306 Rules, Texas Administrative Code Title 7 – Banking and Securities Part 5 – Consumer Credit Regulation Chapter 85 – Rules of Operation for Pawnshops Subchapter A – General Provisions……………………………….………………1 §85.101 §85.102 §85.103 §85.104 Subchapter B – Pawnshop License……………………………….……………….2 §85.201 §85.202 §85.203 §85.204 §85.205 §85.206 §85.207 §85.208 §85.209 §85.210 §85.211 §85.212 Subchapter C – Pawnshop Employee License………………….…………………9 §85.301 §85.302 §85.303 §85.304 §85.305 §85.306 §85.307

§85.308 Subchapter D – Operation of Pawnshops……………….………………….……11 §85.401 §85.402 §85.403 §85.404 §85.405 §85.406 §85.407 §85.408 §85.410 §85.411 §85.412 §85.413 §85.414 §85.415 §85.416 §85.417 §85.418 §85.419 §85.420 §85.421 §85.422 §85.423 Subchapter E – Inspections and Examinations……….………………………….23 §85.501 §85.502 §85.503 Subchapter F – License Revocation, Suspension, and Surrender…………….….24 §85.601 §85.602 §85.603 §85.604 §85.605 §85.606 §85.607 §85.608 Subchapter G – Enforcement; Penalties…………………………………………26 §85.701 §85.702 §85.703

Appendices Appendix 1 – §85.405(a)(1)(A).………………….………….……..………..31 Appendix 2 – §85.405(a)(1)(A).………………………….….……..………..31 Appendix 3 – §85.405(a)(1)(B).………………………….….……..………..32 Appendix 4 – §85.407(a)……...…………………………….…...…………..33 Appendix 5 – §85.413(e)(6)…………………………………..……..….……34 Appendix 6 – §85.413(h)……………………………….…….………….…..35 Appendix 7 – §85.418(a)(2)…..………………………………...………..…..36

TEXAS PAWNSHOP ACT

TEXAS PAWNSHOP ACT 1

CHAPTER 371. PAWNSHOPS SUBCHAPTER A. GENERAL PROVISIONS

§371.001. SHORT TITLE. This chapter shall be known and may be cited as the "Texas Pawnshop Act." §371.002. PURPOSES. The purposes of this chapter are to: (1) prevent fraud, unfair practices, discrimination, imposition, and abuse of state residents; (2) exercise the state's police power to ensure a sound system of making pawn loans and transfers of personal property by and through pawnshops; (3) prevent transactions in stolen property and other unlawful property transactions by licensing and regulating pawnbrokers and pawnshop employees; (4) provide for licensing and investigation fees; (5) provide minimum capital requirements for pawnbrokers; (6) ensure financial responsibility to the state and its residents and compliance with federal, state, and local law, including rules and ordinances; and (7) assist local governments in the exercise of their police power. §371.003. DEFINITIONS. In this chapter: (1) "Applicable liabilities" include trade or other accounts payable; accrued sales, income, or other taxes; accrued expenses; and notes or other payables that are unsecured or secured in whole or part by current assets. The term does not include a liability secured by assets other than current assets. (2) "Commissioner" means the consumer credit commissioner. (3) "Current assets" include an investment made in cash, bank deposits, merchandise inventory, and loans due from customers, excluding the pawn service charge. The term does not include an investment made in: (A) fixed assets of real estate, furniture, fixtures, or equipment; (B) stocks, bonds, or other securities; or (C) prepaid expenses or other general intangibles. (4) "Goods" means tangible personal property. (5) "Net assets" means the book value of current assets less applicable liabilities. (6) "Pawnbroker" means a person engaged in the business of: (A) lending money on the security of pledged goods; or (B) purchasing goods on condition that the goods may be redeemed or repurchased by the seller for a fixed price within a fixed period. (7) "Pawnshop" means a location at which or premises in which a pawnbroker regularly conducts business. (8) "Pawn transaction" means the pledging with a pawnbroker of a single item of goods as security for a loan of money. (9) "Pledged goods" means goods deposited with or otherwise delivered into the possession of a pawnbroker in connection with a pawn transaction. §371.004. COMPUTATION OF MONTH. (a) For the computation of time in this chapter, a month is the period from a date in a month to the corresponding date in the succeeding month. If the succeeding month does not have a corresponding date, the period ends on the last day of the succeeding month. (b) For the computation of a fraction of a month, a day is equal to one-thirtieth of a month. §371.005. REGULATORY AUTHORITY. The legislature has exclusive authority regarding the operation of pawnshops, except for a matter delegated by this chapter to the commissioner. The commissioner has the authority to regulate only a business practice that requires a pawnshop license. §371.006. RULEMAKING. (a) The Finance Commission of Texas may adopt rules to enforce this chapter. (b) A rule shall be entered in a permanent record book. The book is a public record and shall be kept in the office of the commissioner. (c) A copy of a rule shall be mailed to each license holder, and the rule may not take effect before the 21st day after the earliest date on which all of the copies have been mailed. (d) On application by any person and on payment of any associated cost, the commissioner shall furnish the person a certified copy of a rule adopted by the Finance Commission of Texas.

2 TEXAS PAWNSHOP ACT

§371.007. STAGGERED RENEWAL OF LICENSES. (a) The Finance Commission of Texas by rule may adopt a system under which licenses issued under this chapter expire on various dates during the year. (b) For a year in which an expiration date is changed, a license fee payable on the date of issuance shall be prorated according to the number of months during which the license is valid. (c) On renewal of a license on the new expiration date, the total license fee is payable.

(Sections 371.008-371.050 reserved for expansion)

SUBCHAPTER B. PAWNSHOP LICENSE §371.051. PAWNSHOP LICENSE REQUIRED. A person may not engage in business as a pawnbroker unless the person holds a pawnshop license. §371.052. ELIGIBILITY. (a) To be eligible for a pawnshop license, an applicant must: (1) be of good moral character; (2) meet the net assets requirement of Section 371.072; and (3) show that: (A) the pawnshop will be operated lawfully and fairly under this chapter; and (B) the applicant or the applicant's owners and managers have the financial responsibility, experience, character, and general fitness to command the confidence of the public in the pawnshop's operations. (b) Subsection (a)(1) applies to each: (1) operator and legal or beneficial owner if the applicant is a business entity; and (2) officer, owner of at least five percent of the shares outstanding, and director if the applicant is a corporation. (c) For purposes of a disqualification under Chapter 53, Occupations Code, the commissioner is a licensing authority. §371.053. VERIFICATION OF APPLICANT'S NET ASSETS. If the commissioner cannot verify that an applicant meets the net assets requirement of Section 371.072, the commissioner may require a finding, including a current balance sheet, by an independent certified public accountant that: (1) the accountant has reviewed the applicant's books and records; and (2) the applicant meets the net assets requirement. §371.054. LICENSE APPLICATION. (a) This section applies to an application for: (1) an original pawnshop license; (2) relocation of a pawnshop; or (3) transfer of a pawnshop license and approval of a change in the ownership of a pawnshop. (b) An application must be made to the commissioner and must: (1) be under oath; (2) state: (A) the full name and place of residence of the applicant; (B) the full name and address of each member if the applicant is a partnership; (C) except as provided by Subsection (c), the full name and address of each officer, shareholder, and director if the applicant is a corporation; (D) the location where the business is to be conducted; and (E) other relevant information required by the commissioner; and (3) be accompanied by the fees and proof of insurance required by Section 371.055. (c) The full name and address of each shareholder is not required if the applicant is owned directly or beneficially by a person who: (1) is an issuer of securities who: (A) has a class of securities registered under Section 12 of the Securities Exchange Act of 1934 (15 U.S.C. Section 78l); or (B) is required to file reports with the Securities and Exchange Commission by Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78o(d)); and (2) has filed with the commissioner the information, documents, and reports required by the Securities Exchange Act of 1934 (15 U.S.C. Section 77b et seq.) to be filed by the issuer with the Securities and Exchange Commission.


§371.055. FEES; PROOF OF INSURANCE. An applicant must submit with the application: (1) an investigation fee of: (A) $500 if the applicant does not hold a license; or (B) $250 if the application: (i) is for an additional license for a separate location; or (ii) involves substantially identical principals and owners of a licensed pawnshop at a separate location; (2) an annual fee in an amount determined as provided by Section 14.107; and (3) proof of general liability and fire insurance in a reasonable amount and form required by the commissioner. §371.056. BOND. (a) The commissioner may require that an applicant file a bond with the application. The bond must be: (1) satisfactory to the commissioner; (2) in the amount set by the commissioner not to exceed $5,000 for each license; and (3) issued by a surety qualified to do business in this state. (b) The aggregate liability of the surety may not exceed the amount of the bond. (c) The bond must be in favor of this state for the use of this state and the use of a person who has a cause of action under this chapter against the pawnbroker. (d) The bond must be conditioned on: (1) the pawnbroker's compliance with this chapter and rules adopted under this chapter; and (2) the payment of all amounts that become due to this state or to another person under this chapter. §371.057. INVESTIGATION; NOTICE OF APPLICATION. (a) On receipt of an application and the required fees, the commissioner shall: (1) conduct an investigation to determine whether to issue the license; and (2) give notice of the application to: (A) the department of public safety of the State of Texas; (B) each local law enforcement agency in the county in which the business is to be conducted; and (C) each pawnbroker in the county in which the applicant pawnshop is to be located. (b) The notice to the Department of Public Safety and local law enforcement agencies must state the name and address of each person required by Section 371.054 to be listed on the license application. (c) The commissioner shall give the department and local law enforcement agencies a reasonable time to respond with information concerning the listed persons or with any other relevant information. §371.058. PUBLIC HEARING. (a) On request, the commissioner shall conduct a public hearing before issuing a pawnshop license. (b) The commissioner shall give a pawnbroker that would be affected by the granting of an application for a pawnshop license an opportunity to appear, present evidence, and be heard for or against the application. §371.059. APPROVAL; ISSUANCE OF LICENSE. (a) Subject to Subsection (b), the commissioner shall approve the application and issue a license if the commissioner finds that the applicant is eligible for the license. (b) In a county with a population of 250,000 or more, the commissioner shall approve an application for: (1) an original license to operate a pawnshop at a facility that is not an existing licensed pawnshop at the time the application is filed if the proposed facility is not located within two miles of a licensed pawnshop; (2) the relocation of a licensed pawnshop to a facility that is not an existing licensed pawnshop at the time the application is filed if the facility where the pawnshop is to be relocated is not located within one mile of a licensed pawnshop; and (3) the relocation of a licensed pawnshop if at the time the application is filed the pawnshop has been in operation at its current location for at least three years, and the facility where the pawnshop is to be relocated is either within one mile of its existing location or, if in excess of one mile from its existing location, not within one mile of another existing operating pawnshop. (c) Notwithstanding Subsection (b)(3), the commissioner may approve an application for the relocation of a licensed pawnshop that needs to relocate marginally further than one mile from its existing location or that at the time the application is made has not been in operation in its current location for at least three years if the necessity for relocation was caused by circumstances beyond the applicant's control. (d) A determination of distance for purposes of this section is based on a measurement taken from the front door of a facility to the front door of the other facility. For a facility not in existence at the time the application is filed, the location of


the front door of the proposed facility must be indicated on architectural drawings or comparable professionally prepared drawings depicting the facility and the entire boundary of the lot or parcel of land to which the facility is to be attached. §371.060. NOTICE OF DENIAL; HEARING. (a) If the commissioner does not make a finding described by Section 371.059, the commissioner shall notify the applicant. (b) An applicant who requests a hearing on the application not later than the 30th day after the date of notification under Subsection (a) is entitled to a hearing within 60 days after the date of the request. §371.061. PERIOD FOR FINAL DECISION TO APPROVE OR DENY. Unless the applicant and the commissioner agree in writing to a later date, the commissioner shall approve or deny the application before the 61st day after the later of the date on which: (1) the application is filed and the required fees are paid; or (2) a hearing on the application is completed. §371.062. DISPOSITION OF FEES ON DENIAL OF APPLICATION. If the commissioner denies the application, the commissioner shall retain the investigation fee and shall return to the applicant the annual license fee submitted with the application. §371.063. LICENSE ISSUED BEFORE OCTOBER 1, 1981. A license issued to a pawnshop before October 1, 1981, remains valid as long as the pawnbroker complies with this chapter. §371.064. ANNUAL LICENSE FEE; EXPIRATION. (a) Not later than December 1, a pawnbroker shall pay to the commissioner for each license held an annual fee in an amount determined as provided by Section 14.107 for the year beginning the next January 1. (b) If the annual fee for a license is not paid before the 16th day after the date on which written notice of delinquency of payment has been given to the pawnbroker by the commissioner, the license expires on the later of: (1) that day; or (2) December 31 of the last year for which an annual fee was paid. §371.065. REDUCTION IN ANNUAL LICENSE FEE. Repealed September 1, 2001. §371.066. TEMPORARY LICENSE. (a) The commissioner may issue a temporary pawnshop license on receipt of an application: (1) to transfer a license from one person to another; or (2) for a license involving principals and owners that are substantially identical to those of a pawnshop in operation at the time of receipt of the application. (b) A temporary license is effective until a permanent license is issued or denied. §371.067. CONTENTS AND DISPLAY OF LICENSE. (a) A license must state: (1) the name of the pawnbroker; and (2) the address at which the business is to be conducted. (b) A pawnbroker shall display a license at the place of business provided on the license. §371.068. MULTIPLE PLACES OF BUSINESS. (a) A separate pawnshop license is required for each place of business operated under this chapter. (b) The commissioner may issue more than one license to a person if the person complies with this chapter for each license. §371.069. CHANGE OF OWNERSHIP. (a) An application for an original pawnshop license or the transfer of a pawnshop license is required if a change in direct or beneficial ownership of a licensed pawnshop occurs. (b) This section does not apply to a change in direct or beneficial ownership of a licensed pawnshop if the pawnshop is owned directly or beneficially by a person who: (1) is an issuer of securities who is described by Section 371.054(c)(1); (2) is described by Section 371.054(c)(2) and has submitted to the commissioner each filing required by Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78o(d)) and paid a filing fee of $100 with each; and


(3) has filed information on officers and directors of the issuer or any licensed or intermediate subsidiary as required by Section 371.054 for officers and directors of a corporation. §371.070. TRANSFER OR ASSIGNMENT OF LICENSE. A pawnshop license may be transferred or assigned only with the approval of the commissioner. §371.071. APPLICATION FOR RELOCATION. A pawnbroker who wishes to move a pawnshop from the location provided on the license must make application to the commissioner before the 30th day preceding the date the pawnbroker moves. §371.072. NET ASSETS REQUIREMENT. (a) Except as provided by Subsection (b), a pawnbroker shall maintain net assets of at least $150,000 that are used or readily available for use in the business of each pawnshop. *(b) A pawnbroker who held a license under this chapter before September 1, 1999, shall maintain net assets that are used or readily available for use in the business for that existing license of at least the amount required on August 31, 1999. The net assets requirement of this subsection remains in effect without regard to a change in ownership or relocation of the license. *(c) Subject to subsection (b), net assets must be represented by a capital investment unencumbered by a lien or other encumbrance and subject to a claim by a general creditor. (d) In this section, "capital investment" means: (1) common or preferred shares and capital or earned surplus as those terms are defined by the Texas Business Corporation Act if the pawnbroker is a corporation; or (2) a substantial equivalent of items described by Subdivision (1), as determined by generally accepted accounting principles, if the pawnbroker is not a corporation. (e) Subsection (b) applies to a change in ownership that is: (1) a transaction involving a different owner who had a significant family or business relationship with a prior owner before the transaction; (2) a transaction in which: (A) only the number or proportionate ownership of owners of a business changes; and (B) an individual who was not an owner before the transaction is not an owner after the transaction; or (3) a change in ownership that occurs by testate or intestate disposition. * HB 1511 and HB 1878 [Acts of the 76th Legislature] both amended the existing law of §371.072. The Code Construction Act requires that conflicting amendments shall be harmonized, if possible. Subsection (b) is printed as it passed in HB 1878. The amended language of HB 1511 reads as follows:

“(d) Subject to Subsection (b), a pawnbroker shall maintain for each pawnshop net assets, as that term was defined at the time the license was issued, that are used or readily available for use in the business of the pawnshop of at least the amount required on: (1) August 31, 1981, if the pawnbroker held a license on that date; or (2) June 20, 1987, if the pawnbroker held a license on that date but did not hold a license on August 31, 1981.”

Note: subsection (b) was eliminated in HB 1878 and the section was renumbered accordingly. §371.073. APPOINTMENT OF AGENT. (a) A pawnbroker shall maintain on file with the commissioner a written appointment of a resident of this state as the pawnbroker's agent for service of all judicial or other process or legal notice unless the pawnbroker has appointed an agent under another statute of this state. (b) If a pawnbroker does not comply with this section, service of all judicial or other process or legal notice may be made on the commissioner.



SUBCHAPTER C. PAWNSHOP EMPLOYEE LICENSE §371.101. PAWNSHOP EMPLOYEE LICENSE REQUIRED. (a) An individual who begins employment at a pawnshop must apply to the commissioner for a pawnshop employee license not later than the 75th day after the date employment begins. (b) The individual may continue employment until the license is issued or denied. (c) A pawnbroker may not employ an individual to write a pawn transaction, buy or sell merchandise, or supervise another employee who writes pawn transactions or buys or sells merchandise unless the individual: (1) has complied with Subsection (a) but has not been issued or denied a license; or (2) holds a pawnshop employee license. (d) Subsection (c) does not apply to an individual who: (1) has an ownership interest in the pawnshop license; and (2) is named on the application. §371.102. ELIGIBILITY. (a) To be eligible for a pawnshop employee license, an individual must: (1) be of good moral character and good business repute; and (2) possess the character and general fitness necessary to warrant belief that the individual will operate the business lawfully and fairly under this chapter. (b) For purposes of a disqualification under Chapter 53, Occupations Code, the commissioner is a licensing authority. §371.103. LICENSE APPLICATION; FEES. (a) An application for a pawnshop employee license must state: (1) the applicant's name and address; (2) the name of the pawnshop at which the applicant is employed; (3) whether the applicant has: (A) been convicted of or is under indictment for a crime; (B) had a license to engage in an occupation, business, or profession revoked or suspended; or (C) been denied an occupational, business, or professional license, including a pawnshop employee license, in this or another state; (4) if the applicant has had a license described by Subdivision (3)(B) revoked or suspended, the reason for the action; (5) each business or occupation in which the applicant engaged for the five years preceding the date of application; and (6) other relevant information the commissioner requires. (b) The application must be accompanied by an investigation and annual fee of $25. §371.104. APPROVAL OR DENIAL OF APPLICATION. (a) Not later than the 60th day after the date an application is filed, the commissioner shall determine whether the applicant qualifies for a pawnshop employee license. (b) The commissioner shall approve the application and issue a license if the commissioner finds that the applicant qualifies for a license. (c) If the commissioner does not make the finding required by Subsection (b), the commissioner in writing shall notify the applicant and the employing pawnbroker that the application will be denied unless the applicant, in writing and not later than the 30th day after the date of the notice, requests a hearing on the application. (d) An application is denied on the 31st day after the date of the notice if the applicant does not request a hearing in the time allowed. (e) If an applicant requests a hearing in the time allowed, the commissioner shall conduct a hearing on the application. On the conclusion of the hearing, the commissioner shall approve or deny the application. §371.105. LICENSE TERM. A pawnshop employee license is effective until the license expires or is surrendered, suspended, or revoked. §371.106. ANNUAL LICENSE FEE; EXPIRATION. (a) Not later than December 1, a pawnshop employee license holder shall pay to the commissioner an annual fee of $15 for the year beginning the next January 1. (b) The commissioner shall send written notice of delinquency to a license holder who does not pay the fee on or before December 1. (c) If the annual fee for a license is not paid before the 16th day after the date of the delinquency notice, the license expires on the later of:


(1) that day; or (2) January 1 of the first year for which the annual fee was not paid.


SUBCHAPTER D. OPERATION OF PAWNSHOPS §371.151. HOURS OF OPERATION. (a) A pawnbroker shall maintain normal business hours of at least four hours a day for five days a week. (b) A pawnbroker may not do business before 7 a.m. or after 9 p.m. §371.152. RECORDKEEPING. (a) A pawnbroker, consistent with accepted accounting practices, shall keep adequate books and records relating to the pawnbroker's pawn transactions and any other business regulated by this chapter. (b) Books and records shall be preserved at least until the second anniversary of the date of the last transaction recorded. §371.153. NOTICE OF OPERATION OF OTHER BUSINESS. (a) A pawnbroker shall notify the commissioner before the pawnbroker allows another person to conduct at the pawnshop a business other than the business of a pawnbroker or the business of buying and selling goods. (b) The commissioner may refuse to permit a person other than the pawnbroker to operate the other business on the pawnshop premises if the commissioner finds that the operation is inconsistent with this chapter. (c) A pawnbroker shall notify the commissioner of any location at which the pawnbroker or an applicant for a pawnshop license operates a buy shop, secondhand merchandise store, retail outlet, or similar business or any business to which the pawnbroker regularly transfers goods from the pawnshop. §371.154. INSURANCE AND BOND. (a) A pawnbroker shall maintain general liability and fire insurance: (1) in a reasonable amount and form required by the commissioner; and (2) sufficient to protect pledged goods, including jewelry, at the pawnshop. (b) A pawnbroker shall secure a bond: (1) in the amount, not to exceed $5,000, required by the commissioner; (2) in the form required by the commissioner; and (3) conditioned on compliance with this chapter and rules adopted under this chapter. §371.155. PAWNSHOP SECURITY. A pawnshop shall have: (1) one or more alarm systems sufficient to detect and signal unauthorized entry or the presence of an unauthorized person to provide for the security of pledged goods; and (2) a safe to provide for the security of pledged jewelry. §371.156. PAWN TRANSACTION. (a) Items that are usually sold as a set are considered a single item and must be included in the same pawn transaction. (b) A pledged item together with items that are accessories to the pledged item are considered a single item and must be included in the same pawn transaction. (c) A separate pawn transaction retains its separate character when it is renewed, unless the parties agree otherwise. (d) A pawnbroker may not divide a pawn transaction into more than one transaction to obtain, or with the effect of obtaining, a total pawn service charge that exceeds the charge authorized for an amount financed that is equal to the total of the amounts financed in the resulting transactions. §371.157. PAWN TICKET. A pawnbroker, at the time a pawn transaction is entered, shall deliver to the pledgor a pawn ticket or other memorandum that clearly shows: (1) the name and address of the pawnshop; (2) the pledgor's name, address, and physical description and a driver's license number, military identification number, identification certificate number, or other official number that can identify the pledgor; (3) the date of the transaction; (4) an identification and description of the pledged goods, including serial numbers if reasonably available; (5) the amount of cash advanced or credit extended to the pledgor, designated as "Amount Financed"; (6) the amount of the pawn service charge, designated as "Finance Charge";


(7) the total amount, consisting of the amount financed plus the finance charge, that must be paid to redeem the pledged goods on the maturity date, designated as "Total of Payments"; (8) the "Annual Percentage Rate," computed according to regulations issued by the Federal Reserve Board under the Truth in Lending Act (15 U.S.C. Section 1601 et seq.), as amended; (9) the maturity date of the pawn transaction; and (10) a statement that: (A) the pledgor is not obligated to redeem the pledged goods; and (B) the pledged goods may be forfeited to the pawnbroker on the 31st day after the maturity date. §371.158. AMOUNT FINANCED. The amount financed by a pawn transaction may not exceed the amount computed under Subchapter C, Chapter 341, using the reference amount of $2,500. §371.159. PAWN SERVICE CHARGE. (a) A pawnbroker may not contract for, charge, or receive an amount, other than a pawn service charge, as a charge for credit in connection with a pawn transaction. (b) A pawn service charge may not exceed the charge disclosed in the pawn ticket or other memorandum delivered to the pledgor. (c) A pawn service charge may not exceed an amount equal to: (1) 20 percent of the total amount financed for one month if that amount is less than or equal to the amount computed under Subchapter C, Chapter 341, using the reference amount of $30; (2) 15 percent of the total amount financed for one month if that amount is more than the amount computed for Subdivision (1) but less than or equal to the amount computed under Subchapter C, Chapter 341, using the reference amount of $200; (3) 2-1/2 percent of the total amount financed for one month if that amount is more than the amount computed for Subdivision (2) but less than or equal to the amount computed under Subchapter C, Chapter 341, using the reference amount of $300; or (4) 1 percent of the total amount financed for one month if that amount is more than the amount computed for Subdivision (3). (d) A rate set by Subsection (c) shall be proportionately adjusted for a finance period of less than one month. §371.160. MATURITY DATE; MEMORANDUM OF EXTENSION. (a) A pawnbroker may not enter a pawn transaction that has a maturity date later than one month after the date of the transaction. (b) The pledgor and the pawnbroker by written agreement may change the maturity date of a pawn transaction to a subsequent date. (c) The written agreement must clearly set out: (1) the new redemption date; and (2) the amount of any additional pawn service charge. (d) The pawnbroker must provide a copy of the written agreement to the pledgor. §371.161. EARLY REDEMPTION: REDUCTION OF PAWN SERVICE CHARGE. If a pledgor redeems the pledged goods before the maturity date of the pawn transaction, any part of the pawn service charge that exceeds $15 shall be reduced by an amount equal to one-thirtieth of the total pawn service charge for each day between the date on which redemption occurs and the original maturity date. §371.162. PRESENTATION OF TICKET; PRESUMPTION. Except as provided by Section 371.163(a), a person who presents proper identification and a pawn ticket to the pawnbroker is presumed to be entitled to redeem the pledged goods described by the pawn ticket. §371.163. LOST OR DESTROYED TICKET. (a) If a pawn ticket is lost, destroyed, or stolen, the pledgor may notify the pawnbroker of that fact in writing. Receipt of this notice invalidates the pawn ticket if the pledged goods have not been redeemed. (b) The pawnbroker shall require the pledgor to make a written statement of the loss, destruction, or theft before the pawnbroker delivers the pledged goods or issues a new pawn ticket. (c) The pawnbroker shall record on the written statement: (1) the date the statement is made; and (2) the number of the pawn ticket lost, destroyed, or stolen.


(d) The statement must be signed by the pawnbroker or the pawnshop employee who accepts the statement from the pledgor. (e) A pawnbroker is entitled to a fee of not more than $1 in connection with the accepting of a written statement under this section. §371.164. DUTY OF REASONABLE CARE. A pawnbroker shall exercise reasonable care to protect pledged goods from loss or damage. §371.165. RETURN OF PLEDGED GOODS. A pawnbroker shall return pledged goods to the pledgor on payment of the total amount due the pawnbroker in connection with the pawn transaction. §371.166. REDEMPTION BY MAIL. A pawnbroker shall permit a pledgor to redeem pledged goods by mail. §371.167. LOST OR DAMAGED GOODS. (a) A pawnbroker shall replace pledged goods that are lost or damaged while in the pawnbroker's possession with like kind merchandise. The replacement is subject to approval by the commissioner and the pledgor must exhaust this administrative remedy with respect to the lost or damaged pledged goods before seeking a remedy in court. If the commissioner does not approve a replacement before the 91st day after the date on which the commissioner receives a complaint from the pledgor concerning the lost or damaged goods, or if the pledgor does not accept the commissioner's determination, the pledgor may seek a remedy in court. (b) For purposes of this section, goods are considered lost if the goods are destroyed or have disappeared and are unavailable for return to the pledgor. §371.168. EXEMPTION FROM CRIMINAL LIABILITY. A pawnbroker is not criminally liable for damages or loss due to an act of God or circumstances beyond the pawnbroker's control. §371.169. UNREDEEMED PLEDGED GOODS; FORFEITURE. (a) A pawnbroker shall hold pledged goods not redeemed by the pledgor on or before the maturity date stated in the pawn ticket issued in connection with a pawn transaction for at least 30 days after that date. (b) On or before the 30th day after the original maturity date, the pledgor may redeem the pledged goods by paying: (1) the originally agreed redemption price; and (2) an additional pawn service charge equal to one-thirtieth of the original monthly pawn service charge for each day after the original maturity date, including the day on which the pledged goods are finally redeemed. (c) Pledged goods not redeemed on or before the 30th day after the original maturity date may, at the option of the pawnbroker, be forfeited to the pawnbroker. §371.170. REDEMPTION OR PAYMENT BY PLEDGOR NOT REQUIRED. A pledgor is not obligated to redeem pledged goods or to make a payment on a pawn transaction. §371.171. AGREEMENT REQUIRING PLEDGOR'S PERSONAL LIABILITY PROHIBITED. A pawnbroker may not enter an agreement requiring the personal liability of the pledgor in connection with a pawn transaction. §371.172. WAIVER OF PLEDGOR'S RIGHTS PROHIBITED. A pawnbroker may not accept a waiver of a right or protection of a pledgor under this chapter. §371.173. INSURANCE CHARGE LIMITED. A pawnbroker may not impose a charge for insurance in connection with a pawn transaction, except that a pawnbroker may impose a charge in the amount of the actual cost to insure pledged goods being shipped to a pledgor who redeemed the goods by mail. §371.174. IDENTIFICATION OF PLEDGOR OR SELLER REQUIRED. (a) A pawnbroker shall require identification of: (1) the pledgor if a transaction is a pawn transaction; or (2) the seller if a transaction is a purchase of goods by the pawnbroker. (b) Identification is acceptable only if it contains a photograph of the pledgor or seller and is: (1) a state driver's license; (2) a state identification card; (3) a passport;


(4) a military identification; (5) a certificate of identification from the Mexican Consulate, certificado de matricula consular; or (6) identification issued by the agency of the United States responsible for citizenship and immigration. (c) A pawnbroker shall make the pawnbroker's best effort to determine whether the identification: (1) is apparently genuine and unaltered; and (2) properly identifies the pledgor or seller. §371.175. PROPERTY IDENTIFICATION TAGS REQUIRED. (a) A pawnshop shall identify by a tag or similar means each item of goods located in the pawnshop that: (1) has a retail or sale value of more than $25 and (2) can be tagged or similarly identified. (b) This section does not apply to: (1) the personal effects of a person in the pawnshop; or (2) furniture, fixtures, or equipment of the pawnshop. §371.176. TRANSACTIONS WITH MINORS OR PERSONS UNDER THE INFLUENCE OF ALCOHOL OR DRUGS PROHIBITED. A pawnbroker may not: (1) accept a pledge or purchase property from a person under 18 years of age; or (2) transact business with a person believed to be under the influence of alcohol or drugs. §371.177. PURCHASE OF USED PERSONAL PROPERTY. A pawnbroker may not purchase used personal property from a person other than another pawnbroker unless a record is established that contains: (1) the seller's name, address, and physical description and a driver's license number, military identification number, identification certificate number, or other official number that can identify the seller; (2) a complete description of the property, including the serial number, if reasonably available, or other identifying characteristics; and (3) the seller's signed statement that the seller has the right to sell the property. §371.178. ACCEPTANCE OF BUILDING CONSTRUCTION MATERIALS. (a) A pawnbroker may not accept the pledge of building construction materials unless a record is established that contains the information required by Section 371.177. (b) In this section, "building construction materials" includes: (1) copper pipe, tubing, or wiring; (2) aluminum wire; (3) plumbing supplies; (4) electrical supplies; (5) window glass; (6) lumber; and (7) other similar materials. §371.179. DISPLAYS OF CERTAIN WEAPONS PROHIBITED. A pawnbroker may not display for sale in a storefront window or sidewalk display case or depict on a sign or advertisement in such a way that the item, sign, or advertisement may be viewed from a street: (1) a pistol; (2) a dirk; (3) a dagger; (4) a blackjack; (5) a hand chain; (6) a sword cane; (7) knuckles made of metal or any other hard substance; or (8) a switchblade, springblade, or throwblade knife. §371.180. ADVERTISEMENTS. (a) A person who does not hold a pawnshop license may not: (1) advertise or cause to be advertised the making, arranging, or negotiating of a loan subject to this chapter; or (2) use in an advertisement a word, symbol, or statement that states or suggests that the person is a pawnbroker.


(b) In each advertisement that purports to offer credit subject to this chapter, the advertiser shall disclose the legal or registered name of the advertiser and the physical address of the advertiser's place of business. This subsection does not apply to an advertisement located on the premises of the advertiser's place of business. §371.181. STOLEN GOODS. (a) A pawnbroker shall monitor goods purchased, accepted in pawn, or otherwise acquired by the pawnbroker in order to identify and prohibit transactions involving stolen goods. (b) The Finance Commission of Texas shall adopt rules that allow: (1) a consumer who has filed an offense report with a local law enforcement agency to request that a pawnbroker search the records of the pawnshop; and (2) the pawnbroker to assist the consumer and the local law enforcement agency in locating and recovering stolen property. §371.182. HOLD PERIOD. The commissioner may designate a reasonable hold period during which a pawnbroker may not sell or otherwise dispose of an item of goods acquired and offered for sale or other disposition by the pawnbroker. §371.183. CONSUMER INFORMATION. The Finance Commission of Texas by rule may require a pawnshop to display, in an area in the pawnshop accessible to a consumer, materials provided by the commissioner that are designed to: (1) inform a consumer of the duties, rights, and responsibilities of parties to a transaction regulated by the commissioner; and (2) inform and assist a robbery, burglary, or theft victim. §371.184. DISPLAYS AND SIGNS. Repealed September 1, 1999. §371.185. MAINTENANCE OF PREMISES. Repealed September 1, 1999.


SUBCHAPTER E. INSPECTIONS AND EXAMINATIONS §371.201. EXAMINATION BY COMMISSIONER. At any time the commissioner considers necessary, the commissioner or the commissioner's representative may: (1) examine a pawnbroker's place of business; (2) inquire into and examine a pawnbroker's transactions, books, accounts, papers, correspondence, or other records that relate to the business of the pawnbroker; and (3) examine or inspect pledged goods and goods required to be identified by Section 371.177. §371.202. ACCESS TO RECORDS; COPIES. (a) During an examination the pawnbroker shall give the commissioner or the commissioner's representative free access to the pawnbroker's office, place of business, files, safe, or vault. (b) The commissioner or the representative is entitled to copy any book, account, paper, correspondence, or other record that relates to the business of the pawnbroker. §371.203. OATHS. During an examination the commissioner or the commissioner's representative may administer an oath and examine a person under oath on a subject relating to a matter regarding which the commissioner is authorized or required by this chapter to consider, investigate, or secure information. §371.204. INSPECTION BY PEACE OFFICER. A pawnbroker shall allow a peace officer to inspect the pawnbroker's books, accounts, papers, correspondence, or other records that relate to the business of the pawnbroker at any reasonable time without judicial writ or other process. §371.205. REFUSAL TO ALLOW EXAMINATION OR INSPECTION. A pawnbroker who fails or refuses to permit an examination or copying of books or other documents or an examination or inspection of goods authorized by this subchapter violates this chapter. The failure or refusal is grounds for the suspension or revocation of the license. §371.206. CONFIDENTIALITY. Information obtained during an examination or inspection authorized by this subchapter is confidential and privileged except for use by the commissioner or in a criminal investigation or prosecution.


§371.207. FEE. A pawnbroker shall pay to the commissioner an amount assessed by the commissioner to cover the direct and indirect costs of an examination and a proportionate share of general administrative expenses. §371.208. VERIFICATION OF NET ASSETS. If the commissioner questions the amount of a pawnbroker's net assets, the commissioner may require certification by an independent certified public accountant that: (1) the accountant has reviewed the pawnbroker's books, other records, and transactions during the reporting year; (2) the books and other records are maintained using generally accepted accounting principles; and (3) the pawnbroker meets the net assets requirement of Section 371.072.


SUBCHAPTER F. LICENSE REVOCATION, SUSPENSION, AND SURRENDER §371.251. REVOCATION OR SUSPENSION OF PAWNSHOP LICENSE. (a) After notice and hearing, the commissioner may revoke or suspend a pawnshop license if the commissioner finds that: (1) the pawnbroker has not paid a fee or charge imposed by the commissioner under this chapter; (2) the pawnbroker, knowingly or without exercising due care to prevent the violation, has violated this chapter or a rule adopted or an order issued under this chapter; (3) a fact or condition exists that, if it had existed or had been known to exist at the time of the original license application, clearly would have justified refusal to issue the license; (4) the pawnbroker has established an association with an unlicensed person who, with the knowledge of the pawnbroker, has violated this chapter; (5) the pawnbroker has aided or conspired with a person to circumvent this chapter; (6) the pawnbroker or a legal or beneficial owner of the pawnbroker is not of good moral character or has been convicted of a crime that the commissioner finds directly relates to the duties and responsibilities of the occupation of pawnbroker or would otherwise make the person unfit for a pawnshop license under Section 371.052; (7) the financial responsibility, experience, character, or general fitness of the pawnbroker or its owners and managers do not command the confidence of the public or warrant the belief that the business will be operated lawfully, fairly, and within the purposes of this chapter; or (8) the pawnbroker has not maintained the minimum net assets required by Section 371.072. (b) The commissioner may: (1) place on probation a person whose license is suspended; or (2) reprimand a pawnbroker for violating this chapter or a rule adopted under this chapter. §371.252. EFFECT OF REVOCATION, SUSPENSION, OR SURRENDER OF PAWNSHOP LICENSE. Revocation, suspension, or surrender of a pawnshop license does not affect a preexisting contract between the pawnbroker and a pledgor. §371.253. NOTICE OF REVOCATION. (a) On revocation of a pawnshop license by the commissioner, the pawnbroker shall send notice of the revocation to each pledgor with goods in the possession of, but not forfeited to, the pawnbroker on the revocation date. (b) The notice must be: (1) in a form prescribed by the commissioner; and (2) mailed not later than the fifth day after the revocation date to the pledgor at the address recorded on the pawn ticket. §371.254. REDEMPTION OF GOODS AFTER LICENSE REVOCATION OR SUSPENSION. (a) After revocation of a pawnshop license, the pawnbroker, for the sole purpose of allowing a pledgor to redeem pledged goods, shall maintain usual business hours at the pawnshop for 60 days after the latest maturity date of any pawn transaction made at that pawnshop. (b) If after the revocation of a license and within the period provided by Section 371.169 a pledgor requests an extension of that period, the pawnbroker shall grant an extension not to exceed 30 days . (c) The commissioner may exercise any authority conferred on the commissioner to protect the interest of a pledgor of goods in the possession of a pawnbroker whose license has been revoked, including assessment of a penalty or administrative enforcement under this chapter.


(d) On suspension of a pawnshop license by the commissioner, the pawnbroker shall maintain the pawnshop's usual business hours during the suspension for the sole purpose of allowing a pledgor to redeem goods or to renew a pawn transaction that matures during the suspension. (e) A pawnbroker shall renew a pawn transaction that matures during a suspension if, not later than the 60th day after the maturity date, the pledgor requests a renewal. §371.255. REVOCATION OR SUSPENSION OF PAWNSHOP EMPLOYEE LICENSE. After notice and hearing, the commissioner may revoke or suspend a pawnshop employee license if the commissioner finds that: (1) the license holder knowingly or recklessly violated this chapter or a rule adopted or order issued under this chapter; (2) a fact or condition exists that, if it had existed or had been known to exist at the time of the original license application, clearly would have justified refusal to issue the license; or (3) the moral character, business repute, and general fitness of the license holder do not warrant belief that the license holder will operate the business lawfully and fairly within the provisions of this chapter. §371.256. HEARING. (a) The commissioner shall send written notice of a pawnshop employee license revocation or suspension hearing to: (1) the license holder; and (2) the employing pawnbroker. (b) The commissioner shall hold the hearing not earlier than the 21st day after the date the notice was sent. §371.257. SURRENDER OF LICENSE. (a) The holder of a pawnshop license or a pawnshop employee license may surrender the license by delivering it to the commissioner with written notice of surrender. (b) Surrender does not affect a license holder's civil or criminal liability for an act committed before the surrender. §371.258. REINSTATEMENT OF LICENSE. (a) This section applies to a pawnshop license or a pawnshop employee license. (b) The commissioner may reinstate a suspended pawnshop license or pawnshop employee license or issue a new license to the person whose license or licenses have been revoked if no fact or condition exists that clearly would have justified refusal to issue the license originally. (c) The commissioner shall reinstate an expired pawnbroker license if, not later than the 180th day after the date on which the license expired, the pawnbroker pays the commissioner the delinquent $125 annual fee plus a reinstatement fee of $1,000. After a pawnbroker's license has expired, the commissioner shall promptly send notice of reinstatement rights to the delinquent pawnbroker by certified mail. §371.259. CERTIFICATE OF STANDING; COPIES. The commissioner, under the commissioner's seal and signature, shall provide a certificate of good standing or a certified copy of a pawnshop license or a pawnshop employee license to a person who applies and pays for the certificate or copy.


SUBCHAPTER G. ENFORCEMENT; PENALTIES

§371.301. COMMISSIONER'S ENFORCEMENT POWERS. For purposes of enforcing this chapter, the commissioner: (1) has the powers granted to the commissioner under Chapter 14; (2) may exercise those powers in the same manner as those powers may be exercised under: (A) Chapters 14, 392, and 394; (B) Subtitle B, Title 4; and (C) Chapters 38-41, Business & Commerce Code; and (3) has any authority granted the commissioner by other law. §371.302. ORDER TO END VIOLATION; INJUNCTION; DAMAGES. (a) If the commissioner has reasonable cause to believe that a person is violating this chapter, the commissioner, in addition to and without prejudice to other authority provided by this chapter, may enter an order requiring the person to stop or to refrain from the violation. (b) At the commissioner's request, the attorney general or an attorney authorized to represent this state in district court shall sue in any district court with venue or in a district court of Travis County to enjoin a person from violating or


continuing a violation of this chapter or from acting to further a violation. The court may enter an order or judgment awarding a preliminary or permanent injunction. The court may issue an additional order or judgment for actual damages suffered by a person as a result of the violation. §371.303. ADMINISTRATIVE PENALTY. (a) The commissioner may assess an administrative penalty against a person who violates this chapter or a rule adopted under this chapter. (b) The commissioner may assess the administrative penalty in an amount not to exceed $1,000. (c) Each day a violation continues or occurs may be considered a separate violation for purposes of this section. The aggregate amount of penalties that may be assessed under this section against a person during one calendar year may not exceed $10,000 for violations an element of which occurred at the same business location. (d) In determining the amount of a penalty, the commissioner shall consider: (1) the seriousness of the violation, including the nature, circumstances, extent, and gravity of the prohibited act; (2) the history of previous violations; (3) the amount necessary to deter future violations; (4) efforts to correct the violation; and (5) any other matter that justice may require. (e) If, after investigation of a possible violation and the facts relating to that possible violation, the commissioner determines that a violation has occurred, the commissioner shall issue a preliminary report that states: (1) the facts on which the conclusion is based; (2) the fact that an administrative penalty is to be imposed; and (3) the amount to be assessed. (f) Not later than the 10th day after the date on which the commissioner issues the preliminary report, the commissioner shall send to the person charged with the violation a copy of the report and a statement that the person has a right to a hearing on the alleged violation and the amount of the penalty. (g) Not later than the 20th day after the date on which the report is sent, the person charged may make a written request for a hearing or may pay to the commissioner the amount of the administrative penalty. A person who does not request a hearing or pay the amount of the penalty within the prescribed time waives the right to a hearing. (h) If the person charged accepts the commissioner's determination, the commissioner shall issue an order approving the determination and ordering payment of the recommended penalty. (i) If it is determined after a hearing that the person has committed the alleged violation, the commissioner shall give written notice to the person of each finding established by the hearing and the amount of the penalty and shall enter an order requiring the person to pay the penalty. (j) Not later than the 30th day after the date on which the notice is received, the person charged shall pay the administrative penalty in full. §371.304. ACTING WITHOUT A LICENSE; OFFENSES. (a) A person who violates Section 371.051 commits an offense. (b) A person commits an offense if the person: (1) accepts employment at a pawnshop writing pawn transactions; and (2) does not comply with Section 371.101(a). (c) A person commits an offense if the person continues employment at a pawnshop after: (1) the person's application for a pawnshop employee license is denied; or (2) the person's pawnshop employee license has expired or has been revoked, suspended, or surrendered. (d) Except as provided by Subsection (e), an offense under this section is a Class B misdemeanor. (e) An offense under Subsection (a) is a misdemeanor punishable by: (1) a fine not to exceed $10,000; (2) confinement in county jail for a term not to exceed one year; or (3) both the fine and confinement. §371.305. WILFUL VIOLATION OF CHAPTER; OFFENSE. (a) A person commits an offense if the person holds a license under this chapter and: (1) wilfully violates this chapter; or (2) wilfully makes a false entry in a record specifically required by this chapter. (b) An offense under this section is a misdemeanor punishable by a fine not to exceed $1,000.


§371.306. PENALTY FOR CERTAIN VIOLATIONS. (a) A pawnbroker who contracts for, charges, or collects a pawn service charge that is greater than the amount authorized by this chapter or otherwise violates this chapter: (1) is liable for twice the amount of the pawn service charge contracted for; and (2) shall return the goods pledged in connection with the pawn transaction on request of the pledgor and payment of the balance due. (b) A pawnbroker who contracts for, charges, or collects a pawn service charge that is greater than twice the amount authorized by this chapter: (1) is not entitled to collect any amount on the pawn transaction; and (2) shall return the goods pledged in connection with the pawn transaction on request of the pledgor. (c) Subsection (a) or (b) does not apply to a violation that results from an accidental and bona fide error, corrected upon discovery

PAWNSHOP RULES

Pawnshop Rules 2005 1

TEXAS ADMINISTRATIVE CODE TITLE 7. BANKING AND SECURITIES

PART 5. CONSUMER CREDIT REGULATION CHAPTER 85. RULES OF OPERATION FOR PAWNSHOPS

SUBCHAPTER A. GENERAL PROVISIONS.

§85.101. PURPOSE AND SCOPE. (a) Purpose. The purpose of this chapter is to assist in the administration and enforcement of the Texas Finance Code, Chapter 371, which may be cited as the Texas Pawnshop Act. (b) Scope. This chapter applies to a person engaged in the business of: (1) lending money on the security of pledged goods; or (2) purchasing goods on condition that the goods may be redeemed or repurchased by the seller for a fixed price within a fixed period. Source Note: The provisions of this §85.101 adopted to be effective September 5, 1999, 24 TexReg 6712. §85.102. DEFINITIONS. Words and terms used in this chapter that are defined in Texas Finance Code, Chapter 371, have the same meanings as defined in that chapter unless the context clearly indicates otherwise. The following words and terms, when used in this chapter, shall have the following meanings unless the context clearly indicates otherwise. (1) Bank deposits--Cash on deposit in banks or in other federally insured depository institutions. The value of deposits shall be reduced by any taxes or penalties that would be due and payable if the funds were withdrawn on the date of valuation. (2) Book value--The dollar amount assigned to assets using generally accepted accounting principles (GAAP). In evaluating merchandise inventory, the lower of the cost or the market value of the asset method is generally used when determining book value. (3) Commissioner--The Commissioner of the Office of Consumer Credit Commissioner of the State of Texas as defined in Chapter 14 of the Texas Finance Code. (4) Facility--The physical space used or proposed for the use of the operation of a pawnshop. (5) Law enforcement agency--An agency of government having jurisdiction over ensuring compliance with the criminal statutes where the pawnshop is physically located. (6) Merchandise inventory--Tangible personal property held by a pawnbroker or applicant for immediate sale in the pawnshop or proposed pawnshop. (7) Month--The period from a date in one month to the corresponding date in the succeeding month. If the succeeding month does not have a corresponding date, the month ends on the last day of the succeeding month. (8) Operator--A person or entity who manages the daily operations of a pawnshop. This term includes a party to a management agreement for oversight and supervision of the operations of the pawnshop on behalf of the owners of the pawnshop. (9) Pawnbroker--A person who has an ownership interest in a pawnshop as shown in an application for a pawnshop license filed with the commissioner. When general duties and prohibitions are described, pawnbroker also includes a pawnshop employee unless the context indicates otherwise. (10) Pledged goods--Tangible personal property held by a pawnbroker as collateral for a pawn loan and that has not become the property of the pawnbroker by a taking into inventory due to non-payment of the loan. (11) Principal party--Each proprietor and adult individual with a substantial relationship to the proposed business of the applicant. An individual with a substantial relationship to the proposed business of the applicant shall include but is not limited to: (A) a general partner; (B) a voting member of a limited liability corporation; (C) a corporate officer, including the Chief Executive Officer or President, the Chief Financial Officer or Treasurer, and an officer with substantial responsibility for operations or compliance with the Texas Pawnshop Act; (D) a director of a corporation; (E) a shareholder owning 5% or more of the outstanding voting stock; (F) a trustee; and (G) an operator. Source Note: The provisions of this §85.102 adopted to be effective September 5, 1999, 24 TexReg 6712; amended to be effective October 1, 2000, 25 TexReg 9211. §85.103. ATTEMPTED EVASION OF CHAPTER. A person may not use any device, subterfuge, or pretense to evade the application of this chapter. A device, subterfuge, or pretense includes any transaction that in form may appear on its face to

2 Pawnshop Rules 2005

be something other than a pawn transaction, but in substance meets the definition of a pawn transaction as defined in the Texas Pawnshop Act, §371.003(8). Source Note: The provisions of this §85.103 adopted to be effective September 5, 1999, 24 TexReg 6712. §85.104. RENEWAL DATES OF LICENSES. A pawnshop license and a pawnshop employee license shall expire on June 30th of each year unless the annual fee for the following year has been paid. Source Note: The provisions of this §85.104 adopted to be effective September 5, 1999, 24 TexReg 6712.

SUBCHAPTER B. PAWNSHOP LICENSE. §85.201. ENGAGING IN BUSINESS. An application must be filed and approved before any person engages in the business of making pawn loans. The application and approval is required without regard to the rate of interest or pawn service charge contracted for, charged, or received, if any. An applicant shall not advertise the opening of a new pawnshop prior to approval. Source Note: The provisions of this §85.201 adopted to be effective September 5, 1999, 24 TexReg 6714. §85.202. FILING OF NEW APPLICATION. (a) An application for issuance of a new pawnshop license must be submitted on forms prescribed by the commissioner at the date of filing. The application shall include the following: (1) Required forms. All questions must be answered. (A) Application for License (ADM 10a). (i) A physical street address must be listed for the proposed location for which the applicant can show proof of ownership or an executed lease agreement. A post office box or a mail box location at a private mail-receiving service may not be used except for a physical location that does not receive general mail delivery. An application will not be accepted if the address or the full legal property description has not yet been determined or the application is for an inactive license. (ii) Each person who is responsible for the day-to-day operation of one or more of the applicant's proposed locations must be named. This person must be: (I) a principal party as defined below; (II) a licensed pawnshop employee identified by license number; or (III) an applicant for a pawnshop employee license with the date of application. (iii) On an application for a sole proprietorship or a partnership, the proprietor and each general partner must sign. On an application for a corporate applicant, two officers must sign unless only one officer of the corporation has been appointed. On an application for a limited liability company, two authorized members must sign unless the company only has one member. On an application for a trust or an estate, each trustee or executor must sign. (B) Application Questionnaire (ADM 10b). All questions must be answered. (C) Disclosure of Owners and Principal Parties (ADM 11). (i) If the applicant is a corporation, then the officers and directors' sections on the form (ADM 11) must be completed. (ii) The section inquiring about owners requires an answer based upon the applicant's entity type. If an individual's interest in an entity is community property, then a spouse with a community property interest must also be listed. If the business interest is owned by a married individual as separate property, documentation establishing or confirming that status must be provided. (I) Sole proprietorship. The individual owning and operating the business must be named. (II) General partnership. Each partner must be listed and the percentage of ownership stated. (III) Corporation. Each shareholder holding voting stock must be named if the corporation is privately held. If a parent corporation is the sole or part owner of the proposed business, a narrative or diagram must be attached that describes each level of ownership and management. This narrative or diagram requires the listing of the names of all officers, directors, and stockholders owning 5% or more stock at each level. (IV) Limited partnership. Each partner, general and limited, must be listed and the percentage of ownership stated. If a partner is a business entity and not an individual, a narrative or diagram must be attached that describes each level of ownership. This narrative or diagram requires the listing of the names of all officers, directors, and stockholders owning 5% or more stock at each level. (V) Limited liability company. Each manager, officer, agent, and member, as those terms are used by the Texas Limited Liability Company Act, Texas Civil Statutes Art. 1528n, must be named. If a member is a business entity and not an individual, a narrative or diagram must be attached that describes each level of ownership. This narrative or diagram requires the listing of the names of all officers, directors, and stockholders owning 5% or more stock at each level. (VI) Trusts or estates. Each beneficiary, trustee, and executor must be named.


(D) Statutory Agent Disclosure (ADM 13). This form must be completed by all applicants. The statutory agent is the person or entity to whom any legal notice may be delivered. The agent must be a Texas resident and list an address for legal service. If the statutory agent is an individual, the address must be a residential address. On an application for a corporation, the statutory agent listed on Form ADM 13 should be the registered agent listed in the articles of incorporation. On an application for a limited liability company, the statutory agent listed on Form ADM 13 must be the registered agent listed in the articles of organization. If the statutory agent is not listed in the relevant organizational document, then the applicant must submit certified minutes appointing the new agent. (E) Personal Affidavit (ADM 15a). Each individual listed on the Disclosure of Owners and Principal Parties (ADM 11) as a principal party must complete this form. The record of business association must also include the individual's association with the entity applying for the license. (F) Personal Employment History (ADM 15b). A continuous 10-year history must be provided. (G) Personal Questionnaire (ADM 16). All questions must be answered. (H) Fingerprint Cards. A complete set of legible fingerprints shall be provided for each individual having a substantial relationship with the applicant. An individual has a substantial relationship with an applicant if it is a "principal party" as that term is defined in §85.102 of this title. An individual who has previously been licensed by the commissioner or a principal party of an entity currently licensed by the commissioner is not required to provide fingerprints. The commissioner may require fingerprints of an employee or another person with some relationship to the applicant if the commissioner believes that the individual's involvement in the pawnshop operation is relevant to the applicant's eligibility for a license. All fingerprints should be submitted on the format provided by the agency and approved by the Department of Public Safety and the Federal Bureau of Investigation. A request for fingerprint cards may be made by submitting a completed Fingerprint Order Form (ADM 68). (I) Personal Financial Statement (ADM 17) and Supporting Financial Information (ADM 18/19). (i) General information. A financial statement must be dated no earlier than sixty (60) days prior to the date of application. An applicant may also submit an audited financial statement dated within one year prior to the application date in lieu of completing the Supporting Financial Information (ADM 18/19). A financial statement must be certified as true, correct, and complete by a principal party. A financial statement should be prepared in accordance with generally accepted accounting principles (GAAP). A financial statement must reflect the net assets as defined in the Texas Pawnshop Act §371.003 of at least the lesser of the following amounts: (I) As required in the Texas Pawnshop Act §371.072(a), $150,000; or (II) The amount required by the Texas Pawnshop Act §371.072(b) as the license existed or should have existed under the law and rules in effect on August 31, 1999. A change in net asset requirement occurs with respect to any change of ownership or other event causing a change in the net asset requirement that may have occurred prior to September 1, 1999. The change in the net asset requirement is effective as of the date of change of ownership or other event causing the change of the net asset requirement. (ii) Sole proprietorship. A sole proprietor must complete all sections of the Personal Financial Statement (ADM 17) and the Supporting Financial Information (ADM 18/19), or provide a personal financial statement that contains all of the information requested by Forms ADM 17/18/19. (iii) Partnership. A balance sheet for the partnership itself must be submitted. In addition, each general partner must submit a balance sheet. Each balance sheet for the partnership and the partners must be dated the same day. The information requested in Supporting Financial Information (ADM 18/19) must be submitted and attached to any balance sheet that is appended to the application. (iv) Corporation or limited liability company. A corporation or a limited liability company must file a balance sheet. The information requested in Supporting Financial Information (ADM 18/19) must be submitted and attached to any balance sheet that is appended to the application. A financial statement is generally not required of related parties, but may be required by the commissioner if the commissioner believes the information is relevant. (v) Trusts or estates. A trust or an estate must file a balance sheet. The information requested in Supporting Financial Information (ADM 18/19) must be submitted and attached to any balance sheet that is appended to the application. A financial statement is generally not required of related parties, but may be required by the commissioner if the commissioner believes the information is relevant. (J) Assumed Name Certificate. For an applicant that does business under an assumed name as that term is defined in Tex. Bus. & Comm. Code, §36.02(7), an assumed name certificate must be filed as provided in this subparagraph. (i) Corporation, limited partnership, or limited liability company. An applicant using or planning to use an assumed name must file an assumed name certificate (ADM-21 or its equivalent) in compliance with Tex. Bus. & Comm. Code, §36.0011, as amended. Evidence of the filing bearing the appropriate filing stamp must be submitted or, alternatively, a certified copy. (ii) All other applicants. An applicant using or planning to use an assumed name must file an assumed name certificate (ADM-20 or its equivalent) with the county clerk of the county where the proposed business is located in


compliance with Tex. Bus. & Comm. Code, §36.0010, as amended. An applicant must provide a copy of the assumed name certificate that shows the filing stamp of the county clerk or, alternatively, a certified copy. (2) Other required filings. (A) Statement of experience. An applicant for a new license should provide an attached statement setting forth the details of the applicant's prior experience in the pawn or credit-granting business. If an individual named on the application does not have significant experience in the pawnshop business as planned for the prospective licensee, the applicant must provide a written statement explaining the applicant's relevant experience and why the commissioner should find that the applicant has the necessary experience. (B) Entity documents. (i) Partnership. A partnership applicant must submit a complete copy of the partnership agreement. This copy must be signed and dated by each partner. A limited partnership must submit a copy of the articles of partnership filed with the secretary of state, any amendments, and a copy of the secretary of state's acknowledgment. (ii) Corporation. (I) A corporate applicant, domestic or foreign, must provide the following documents: (-a-) A copy of the articles of incorporation and any amendments; (-b-) A copy of the corporate by-laws; (-c-) Minutes of corporate meetings that record the election of each current officer and director as listed on the Disclosure of Owners and Principal Parties (ADM 11); and (-d-) A certificate of good standing from the comptroller of public accounts. (II) A foreign corporate applicant must provide a certificate of authority to do business in Texas; and (III) A publicly held corporation or an applicant owned by a publicly held corporation must submit the most recent quarterly and annual reports required by §15(d) of the Securities Exchange Act of 1934 (Form 10-K and Form 10-Q) for the applicant or for the parent company respectively. (iii) Trusts. A copy of the instrument that created the trust and the trust agreement must be filed with the application. (iv) Estates. A copy of the instrument establishing the estate must be filed with the application. (C) Map. A map must be provided of the area where the proposed license will be situated graphically defining the site of the proposed pawnshop, the location, including the name and address, of each pawnshop within three miles of the location, and the scale at which the map was constructed. The commissioner may require a survey to determine the distance from the proposed pawnshop location to existing operating pawnshops. (D) Zoning. Each applicant shall file a certificate of occupancy or other evidence that the operation of a pawnshop is permitted at the proposed site. (E) Lease agreement or proof of ownership. Each applicant shall file an executed lease agreement, deed, or other evidence that the entity has control of the proposed site. (F) Proof of general liability and fire insurance. Each applicant shall file proof of insurance as required in §85.403 of this title. The policy must explicitly cover loss of pledged goods. (b) Subsequent applications. If the applicant is currently licensed and filing an application for a new location, the applicant must provide the forms and other information that are unique to the new location including the Application for License (ADM 10a) and an updated financial statement as provided in this section. Other information required by this section need not be filed if the information on file with the agency is current and valid. (c) Distances shall be measured in a direct line despite travel patterns and natural or manmade obstacles and shall be measured from front door to front door. The commissioner may require a survey to determine distances from the proposed pawnshop location to existing operating pawnshops. In examining the distance requirements of a proposed pawnshop, the existence or location of an inactive license will not be considered in the determination of the distance requirements. An application for a new license may not be approved unless the eligibility requirements are met and the proposed facility is within: (1) a county with a population of less than 250,000 according to the most recent decennial census regardless of distance from another operating pawnshop; (2) a county with a population of 250,000 or more according to the most recent decennial census and the pawnshop is not less than two miles from another operating pawnshop. Source Note: The provisions of this §85.202 adopted to be effective September 5, 1999, 24 TexReg 6714; amended to be effective September 19, 2005, 30 TexReg 5335. §85.203. RELOCATION. (a) Definition. (1) As used in §371.059 of the Texas Pawnshop Act and in this section, the "relocation of a licensed pawnshop" means either:


(A) the act of moving an existing licensed operating pawnshop from its existing location to a new location, or (B) the activation of an inactive license for purposes of establishing and operating a pawnshop at a facility. (2) As used in §371.059 of the Texas Pawnshop Act and in this section, the relocation of a licensed pawnshop means the act of moving an existing pawnshop license from a location at which or premises in which a pawnbroker holds a pawnshop license to a new location. (b) Approval of relocation. A pawnshop may not be relocated without the prior approval of the commissioner. When a relocation is requested, an application for relocation must be filed. (c) Filing requirements. An application for relocation must be submitted on forms prescribed by the commissioner. The application for relocation shall include the following: (1) Application for Relocation (ADM 36). (2) Personal Financial Statement (ADM 17) and Supporting Financial Information (ADM 18/19). If the license requested for relocation includes the activation of a license that is inactive at the date of the request for relocation, an updated financial statement is required. The instructions in §85.202 of this title are applicable to this filing. (3) Other required filings. (A) Map. A map must be provided of the area where the proposed license will be situated graphically defining the site of the proposed pawnshop, the location, including the name and address, of each pawnshop within three miles of the location, and the scale at which the map was constructed. The commissioner may require a survey to determine the distance from the proposed pawnshop location to existing operating pawnshops. (B) Zoning. Each applicant shall file a certificate of occupancy or other evidence that the operation of a pawnshop is permitted at the proposed site. (C) Lease agreement or proof of ownership. Each applicant shall file an executed lease agreement, deed, or other evidence that the entity has control of the proposed site. (D) Proof of general liability and fire insurance. If the license requested for relocation includes the activation of a license that is inactive at the date of the request for relocation, proof of insurance as required in §85.403 of this title must be filed. The policy shall explicitly cover loss of pledged goods. (d) Engaging in business. An applicant may not advertise the opening of a relocated pawnshop prior to approval, except that a pawnbroker who intends to relocate a pawnshop may, beginning 90 days or less prior to the projected date of relocation, post a sign inside the existing shop and give customers a written notice of the anticipated relocation pursuant to the subsection below. (e) Notice to customer. A written notice of relocation must be given to each pledgor whose pledged goods will be moved. Five days prior to relocation the pawnbroker must mail written notices to each pledgor who has not been given a written notice prior to that date. A notice must identify the pawnshop, both the old and the new locations, the telephone number of the new location, and the date the relocation is effective. The commissioner may modify the notification requirement if the relocation adversely affects pledgors. The modification may require the pawnbroker to extend the maturity date of pawn transactions or waive the collection of pawn service charges which may accrue after relocation. No relocation may be made which will adversely affect pledgors to the extent that redemption is unreasonable or impossible due to the distance between the locations. The commissioner may approve notification by signs in lieu of notification by mail if no pledgors will be adversely affected. When a relocation also involves a transfer of ownership, the buyer may agree to assume responsibility for compliance with this subsection. (f) Relocation distances. Distances shall be measured in a direct line despite travel patterns and natural or manmade obstacles, and shall be measured from front door to front door. The commissioner may require a survey to determine distances from the proposed pawnshop location to existing operating pawnshops. In examining the distance requirements of a proposed pawnshop, the existence or location of an inactive license will not be considered in the determination of the distance requirements. An application for relocation may not be approved unless the eligibility requirements are met. (g) Pawn transactions. If the pawnbroker is only transferring pawn transactions from one licensed location to another licensed location, the pawnbroker must comply with subsection (e) of this section and provide, if requested, a list of pawn transactions transferred. This list of transferred pawn transactions shall include the pawn ticket number and the full name of the pledgor. Source Note: The provisions of this §85.203 adopted to be effective September 5, 1999, 24 TexReg 6714; amended to be effective September 19, 2005, 30 TexReg 5335. §85.204. TEMPORARY AND PERMANENT OPERATION OF FACILITY. (a) The pawnshop must commence operation within a period of six months after the date of approval unless an extension is granted, in writing, by the commissioner. No more than one six- month extension will be approved by the commissioner, unless good cause for the extension is shown. At the end of any approved extension, if the pawnshop has not been opened, the authority for approval of the pawnshop shall be forfeited.


(b) The commissioner may approve opening and operating a temporary facility for an approved application, provided that the facility is within a one-half mile radius of the approved, permanent site. The operation of the temporary facility will cease immediately upon the permanent facility being completed for occupancy. The temporary facility shall not operate longer than 18 months unless extended in writing by the commissioner. Source Note: The provisions of this §85.204 adopted to be effective September 5, 1999, 24 TexReg 6714. §85.205. TRANSFER OF LICENSE. (a) Definition. As used in this section, a "transfer of ownership" occurs whenever an existing owner relinquishes any interest in a licensee or an entirely new person has obtained an ownership interest in the licensee. This term also includes any purchase or acquisition of control over more than 5% of the outstanding voting stock of any licensed corporation or of any corporation which is the parent or controlling stockholder of a licensed corporation. This term also includes any acquisition of a license by gift, devise, or descent. (b) Approval of transfer. No pawnshop license may be sold, transferred, or assigned without written approval of the commissioner. (c) Filing requirements. An application for transfer of a pawnshop license must be submitted on forms prescribed by the commissioner. The application for transfer must include the following: (1) Application for License (ADM 10a). The instructions in §85.202 of this title are applicable to this filing. (2) Application Questionnaire (ADM 10b). The instructions in §85.202 of this title are applicable to this filing. (3) Disclosure of Owners and Principal Parties (ADM 11). The instructions in §85.202 of this title are applicable to this filing. (4) Statutory Agent Disclosure (ADM 13). The instructions in §85.202 of this title are applicable to this filing. (5) Personal Affidavit (ADM 15a). Each individual listed on the Disclosure of Owners and Principal Parties (ADM 11) as a principal party, of the transferee must complete this form. The instructions set forth in §85.202 of this title are applicable to this filing. (6) Personal Employment History (ADM 15b). A continuous 10-year history must be provided. (7) Personal Questionnaire (ADM 16). All questions must be answered. (8) Fingerprint Cards. A complete set of legible fingerprints shall be provided for each individual having a substantial relationship with the applicant. An individual has a substantial relationship with an applicant if it is a "principal party" as that term is defined in §85.102 of this title. An individual who has previously been licensed by the commissioner or a principal party of an entity currently licensed by the commissioner is not required to provide fingerprints. The commissioner may require fingerprints of an employee or another person with some relationship to the applicant if the commissioner believes that the individual's background history is relevant to the applicant's eligibility for a license. All fingerprints should be submitted on a format provided by the agency and approved by the Department of Public Safety and the Federal Bureau of Investigation. A request for acceptable fingerprint cards may be made by submitting a completed Fingerprint Order Form (ADM 68). (9) Evidence of the transfer of ownership. Documentation evidencing the transfer of ownership must be filed with the application. This must include one of the following: (A) a copy of the asset purchase agreement when the license or other assets have been purchased, including a statement relating to the sale of the license; (B) a copy of the stock purchase agreement or other evidence of a stock transfer; or (C) a copy of any document that transferred ownership in a license by gift, devise, or descent, such as a probated will or a court order. (10) Personal Financial Statement (ADM 17) and Supporting Financial Information (ADM 18/19). The instructions in §85.202 of this title are applicable to this filing. (11) Other required filings. All filings required of new license applicants pursuant to §85.202 of this title must be filed and completed by any applicant for transfer of a license. If the applicant is currently licensed and acquiring another location, the applicant must provide the information that is unique to the new location. Other information required by this subsection need not be filed if the information on file with the agency is current and valid. (d) Transferee operating under transferor's license. The commissioner may approve a written agreement whereby a transferor grants a transferee the authority to operate under the transferor's license pending approval of the transferee's license application. Within three (3) business days after the date of sale the written agreement between the transferor and transferee must be submitted with a request to operate under the transferor's license. The agreement must provide that the transferor accepts full responsibility to the commissioner and any customer of the licensed business for any acts of the transferee in connection with the operation of the business. The written agreement between the transferor and the transferee must be submitted with a request to operate under the transferor's license. The agreement may include a provision whereby the transferee may operate using the transferee's name during the pendency of the application if the transferee has an existing pawnshop license issued under this chapter. The agreement shall be for a limited time as provided in the agreement and in no


case may such authority extend beyond 180 days. The commissioner may deny a request for permission to operate during the pendency of the application. (e) Application filing deadline. An application filed in connection with a transfer of ownership may be filed in advance but must be filed no later than ten (10) calendar days following the actual transfer. Source Note: The provisions of this §85.205 adopted to be effective September 5, 1999, 24 TexReg 6714; amended to be effective September 19, 2005, 30 TexReg 5335. §85.206. PROCESSING OF APPLICATION. (a) Initial review. A response to an application will ordinarily be made within 10 working days of receipt stating that the application is accepted for filing or stating that the application is incomplete and specifying the information required for acceptance. (b) Application acceptance. An application will not be accepted until it contains the appropriate fees and substantially all of the items required in accordance with 7 TAC §§85.202, 85.203, or 85.205 as appropriate. (c) Complete application. An application is complete when it: (1) conforms to the statutes, rules, and the commissioner's published instructions; (2) all fees have been paid; and (3) all requests for additional information have been satisfied. (d) Competing application. An application in a county with a population of 250,000 or more will be acted upon based on the chronological order in which the application was accepted pursuant to Subsection (b) of this section. A competing application may not be granted until a final ruling on any preceding competing application has been made. (e) Notice of application and protest procedures. A notice of the application will be mailed to each pawnshop licensee in the county of the proposed location. The notice will state a date and time, 10 working days following the date of notice, by which any interested person may request a hearing. Any pawnbroker who believes that the applicant's proposed pawnshop will significantly affect that pawnbroker's current business may submit a sworn petition to be admitted as a party in opposition to an application for a new or relocated pawnshop. The petition must present the commissioner with relevant facts designed to show how the protesting pawnshop licensee will be affected by the approving of the proposed application and the basis for the protest. Upon a showing that the pawnshop licensee would be significantly affected by the granting of the license, the commissioner shall admit the protesting pawnshop licensee as a party. Any person intending to appear, present evidence, and be heard on a license application may do so only if written notice of the intention is filed and received by the commissioner as required in the notice of application. A copy of the written notice shall be delivered to the applicant and certification of that delivery shall be made to the commissioner at the time of filing. (f) Decision on application. The commissioner may approve or deny an application. (1) Approval. The commissioner shall approve the application upon payment of the appropriate fees and a finding of the eligibility and statutory location requirements. (A) Eligibility requirements. (i) Good moral character. In evaluating an applicant's moral character the commissioner will consider criminal history information described in 7 TAC §85.601 and the applicant's conduct and activities as described in 7 TAC §85.602. (ii) A belief that the pawnshop will be operated lawfully and fairly. In evaluating this standard, the commissioner will consider an applicant's background and history. If the commissioner questions the applicant's ability to meet this standard, the commissioner may require further conditions, such as probation, to favorably consider an applicant for a license. (iii) Financial responsibility. In evaluating the financial responsibility of an applicant, the commissioner may investigate the history of an applicant and the principal parties of the applicant as to the payment of debts, taxes, and judgments, if any, and handling of financial affairs generally. (iv) Experience. In evaluating experience, the commissioner will consider the applicant's background and history as well as the personnel that the applicant plans to use in the operation and management of the pawnshop. (v) General fitness to command the confidence of the public. The applicant's overall background and history will be considered. Providing misleading information on the application or failing to disclose information to the agency may be grounds for denial. (vi) Net assets. Net assets are calculated by taking the sum of current assets and subtracting all liabilities either secured by those current assets or unsecured. Liabilities not included in the calculation are those liabilities that are secured by assets other than current assets including subordinated debt. Debt that is either unsecured or secured by current assets may be subordinated to the net asset requirement pursuant to an agreement of the parties providing that assets other than current assets are sufficient to secure the debt. (B) Distance requirement. A pawnshop within a county with a population of 250,000 or more must be not less than two miles from an existing pawnshop or if the application is for a relocation it must meet the requirements in 7 TAC §85.203(f)(2).


(2) Denial. (A) If an application has not been completed within 30 days after notice of deficiency has been sent to the applicant, the application may be denied. (B) The commissioner may also deny an application when the applicant fails to demonstrate the eligibility requirements or the applicant fails to meet the distance requirements. (g) Hearing. When an application is denied, the applicant has 30 days from the date of the denial to request a hearing in writing to contest the denial. Also, upon a proper and timely protest pursuant to subsection (e) of this section, a hearing shall be set. This hearing shall be conducted within 60 days of the date of the appeal or protest unless the parties agree to an extension of time or the administrative law judge grants an extension of time pursuant to the Administrative Procedure Act, Texas Government Code, Chapter 2001 and §9.1 et seq. of this title. The commissioner shall make a final decision approving or denying the license. (h) Processing time. The commissioner shall ordinarily approve or deny a license application within 60 days after the date the application is complete. The commissioner may take more time if previous competing applications are on file, the placement of a reinstated expired pawnshop license would have an impact on the approval of an application, or where other good cause exists as defined by Texas Government Code, §2005.004 for exceeding the established time periods in this section. Source Note: The provisions of this §85.206 adopted to be effective September 5, 1999, 24 TexReg 6714; amended to be effective September 19, 2005, 30 TexReg 5335. §85.207. BOND. The commissioner may require a bond under Texas Pawnshop Act §371.056, when the commissioner finds that this would serve the public interest. When a bond is required, the commissioner shall give written notice to the applicant. Upon failure to submit a bond within 40 calendar days of the date of the commissioner's notice, the pending application may be denied. Source Note: The provisions of this §85.207 adopted to be effective September 5, 1999, 24 TexReg 6714. §85.208. CHANGE IN FORM OR PROPORTIONATE OWNERSHIP. (a) Organizational form. If a licensee desires to change the organizational form of its business (e.g. from sole proprietorship to corporation), the licensee must advise the commissioner in writing of the change within ten (10) calendar days by filing the appropriate transfer documents as provided in 7 TAC §85.205. (b) Merger. A merger of a corporate licensee is a change of ownership and requires the filing of a transfer application pursuant to 7 TAC §85.205. A merger of the parent corporation of a licensee with another corporation that results in the creation of a new corporate entity requires a transfer application pursuant to 7 TAC §85.205. A merger of the parent corporation of a licensee with another corporation that results in the situation where the surviving corporation is not the existing parent corporation requires a transfer application pursuant to 7 TAC §85.205. A merger of another corporation with a beneficial interest beyond the parent corporation only requires notification within 10 calendar days. (c) Proportionate ownership. A mere change in the proportion of ownership among the current owners does not require the filing of a transfer application. A change in the proportionate interests of two or more current owners of pawnshop licenses must be reported in writing. (d) Notice deadline. A notice filed in connection with a change in proportionate ownership may be filed in advance but must be filed no later than ten (10) calendar days following the actual change. Source Note: The provisions of this §85.208 adopted to be effective September 5, 1999, 24 TexReg 6714. §85.209. AMENDMENTS TO PENDING APPLICATIONS. Each applicant shall provide the commissioner with information supplemental to that contained in the applicant's original application documents and attachments. Any action, fact, or information that would require a materially different answer than that given in the original license application and which relates to the qualifications for license must be reported to the commissioner within 10 business days after the person has knowledge of the action, fact, or information. Source Note: The provisions of this §85.209 adopted to be effective September 5, 1999, 24 TexReg 6714. §85.210. DESIGNATION OF ACTIVE OR INACTIVE STATUS. (a) Inactivation of an active license. A licensee may cease operating a pawnshop and render the license inactive by giving notice of the cessation of operations to the commissioner not less than 30 days prior to the anticipated cessation date. Notification must be filed on the license amendment form (ADM 37). The notice must include a valid mailing address, the fee for amending the license, a certification that no loans will be made or collected under this license until it is activated, a notice to pledgors that pawn loans are being relocated, and a plan ensuring pledged goods are made available for redemption. If an active license is not being used for the active operation of a pawnshop, the commissioner may unilaterally place the license in inactive status. (b) Activation of an inactive license. Activation of an inactive license to a location other than that listed on the license must comply with the relocation requirements set forth in 7 TAC §85.203.


Source Note: The provisions of this §85.210 adopted to be effective September 5, 1999, 24 TexReg 6714; amended to be effective September 19, 2005, 30 TexReg 5335. §85.211. FEES. (a) New licenses. A $500 investigation fee is assessed each time an application for a new license is filed and is non-refundable. In addition, the applicant is initially required to pay the fees required by subsection (e)(6) of this section. (b) Subsequent licenses. A $250 investigation fee is assessed each time an application for a new license of an existing licensee is filed or if the application involves substantially identical principals and owners of a licensed pawnshop and is non-refundable. In addition, the applicant is initially required to pay the fees required by subsection (e)(6) of this section. (c) License transfers. An investigation fee of $500 for the first license transfer and $250 on each additional license transfer sought simultaneously is required and is non-refundable. If the application involves substantially identical principals and owners of a licensed pawnshop, then the fee is $250 for the first license transfer. (d) Fingerprint checks. The fee to investigate each applicant's fingerprint record is $40 per set and is non-refundable. This fee must be paid for each set of fingerprints filed with applications for new licenses or license transfers. (e) Annual renewal and examination assessment. (1) An annual renewal fee is required for each licensed pawnshop of: (A) A fixed fee of $430; and (B) A volume fee of $0.05 per each $1,000 loaned as calculated from the most recent annual examination report as described in §85.502 of this title (relating to annual examination report). (2) The minimum annual assessment for each active license shall be no less than $430. (3) The maximum annual assessment for each active license shall be no more than $1,000. (4) The minimum annual assessment for each inactive license shall be no less than $125. (5) A pawnshop license shall expire on June 30 unless the assessment has been paid. (6) Upon approval of a new pawnshop license pursuant to §85.206 of this title, the first year's operational assessment fee shall be $430. (f) License amendment. A fee of $25 must be paid each time a licensee seeks to amend a license by rendering a license inactive, activating an inactive license, changing the assumed name of the licensee, or relocating an office. An activation or relocation in a county with a population of 250,000 or more shall require a $250 investigation fee and other fees as may be required of a new license applicant. (g) License duplicate. The fee for a license duplicate is $10. (h) Each applicant for a new or relocated license shall pay $1.00 to the commissioner for each notice of application that is required to be mailed. (i) Costs of hearing. The commissioner or administrative law judge may assess the costs of an administrative appeal hearing afforded under 7 TAC §85.206(g), including the cost of the administrative law judge, the court reporter, and agency staff representing the agency at a hearing. If it is determined that a protest is frivolous or without basis, then the cost associated with the hearing may be assessed solely to the protesting party. (j) Excess payment of fees. Any excess payment of fees received by the commissioner may be held to offset anticipated fees that may be owed by the licensee or applicant. Source Note: The provisions of this §85.211 adopted to be effective September 5, 1999, 24 TexReg 6714; amended to be effective March 14, 2002, 27 TexReg 1727; amended to be effective September 19, 2005, 30 TexReg 5335. §85.212. APPLICATIONS AND NOTICES AS PUBLIC RECORDS. Once a license application or notice is accepted by the commissioner, it becomes a "state record" under Texas Government Code, §441.180(11), and "public information" under Texas Government Code, §552.002. Certain information, such as social security numbers, may be protected under the provisions of the Texas Government Code. Under Texas Government Code, §§441.190, 441.191 and 552.004, the original applications and notices must be preserved as "state records" and "public information" unless destroyed with the approval of the director and librarian of the State Archives and Library Commission under Texas Government Code, §441.187. Under Texas Government Code, §441.191, the commissioner may not return any original documents associated with a license application or notice to the applicant or licensee. An individual may request copies of a state record under the authority of the Texas Government Code, Chapter 552. Source Note: The provisions of this §85.212 adopted to be effective September 5, 1999, 24 TexReg 6714.

SUBCHAPTER C. PAWNSHOP EMPLOYEE LICENSE. §85.301. FILING OF NEW APPLICATION. An application for issuance of a new employee license must be submitted on forms prescribed by the commissioner. The application shall include the following required forms. All questions must be answered. (1) Application Form (ADM 30/31).


(A) Identifying information. The application shall contain complete and accurate information identifying the applicant. (B) Residence information. The application shall report a continuous five-year residential history. (C) Employment information. The application shall report a continuous five-year employment history. If an applicant was unemployed for a period of time or was enrolled as a student during a period of time, the application shall state that fact. (D) Background and history. Any response about an employee's background and history must be true, correct, and complete. Additional information as required must be provided as an attachment to the application. (E) Signature. The applicant must sign and affirm the application as true, correct, and complete. (2) Fingerprint Cards. A complete set of legible fingerprints shall be provided for each applicant. An individual who has previously been licensed by the commissioner is not required to provide fingerprints. The commissioner may require fingerprints of an employee if the commissioner believes that the individual has not been fingerprinted for a significant amount of time and believes a new set of fingerprints might provide additional information about the person's criminal background. All fingerprints should be submitted on the format provided by the agency and approved by the Department of Public Safety and the Federal Bureau of Investigation. A request for acceptable fingerprint cards may be made by submitting a completed ADM 68. Source Note: The provisions of this §85.301 adopted to be effective September 5, 1999, 24 TexReg 6723; amended to be effective September 19, 2005, 30 TexReg 5336. §85.302. NOTIFICATION OF TERMINATION. It is the responsibility of a pawnshop to notify the commissioner within a reasonable period of time when an employee ceases working at a pawnshop. A reasonable period of time is within one week from the issuance of the final wage payment or in accordance with a standard preapproved reporting schedule. Source Note: The provisions of this §85.302 adopted to be effective September 5, 1999, 24 TexReg 6723. §85.303. NOTIFICATION OF HIRING. It is the responsibility of a pawnshop to notify the commissioner within a reasonable period of time when a licensed employee begins working at a pawnshop whose address is different from that printed on the employee's license. A reasonable period of time is within one week from the issuance of the initial wage payment or in accordance with a standard preapproved reporting schedule. Source Note: The provisions of this §85.303 adopted to be effective September 5, 1999, 24 TexReg 6723; amended to be effective September 19, 2005, 30 TexReg 5336. §85.304. PROCESSING OF APPLICATION. (a) Application acceptance. An application for a pawnshop employee license will not be accepted until it contains the appropriate fees and the items required in accordance with 7 TAC §85.301. (b) Complete application. An application is complete when: (1) the application conforms to the rules and the commissioner's published instructions; (2) all fees have been paid; and (3) all requests for additional information have been satisfied. (c) Decision on application. The commissioner may approve or deny an application. (1) Approval. The commissioner shall approve the application upon payment of the appropriate fees and finding of the eligibility requirements. A license is the personal property of the employee and may not be retained by a pawnshop when an employee terminates employment with the pawnshop. (A) Good moral character. In evaluating an applicant's moral character, the commissioner will consider criminal history information described in 7 TAC §85.601 and the applicant's conduct and activities as described in 7 TAC §85.602. (B) Good business repute. In evaluating an applicant's business repute, the commissioner will consider the applicant's background and history. (C) Character and fitness to warrant the belief that the pawnshop will be operated lawfully and fairly. The applicant's overall background and history will be considered. Providing misleading information on the application or failing to disclose information to the agency may be grounds for denial. (2) Denial. (A) If an application has not been completed within 30 days after notice of delinquency has been sent to the applicant, the application may be denied. (B) The commissioner may also deny an application when the applicant fails to demonstrate the eligibility requirements. (d) Probationary license. The commissioner may conditionally approve an application for a probationary period of time when an employee's background and history indicate that confidence in the employee's ability to operate lawfully within the purposes of the Texas Pawnshop Act is questionable. If the commissioner determines that the terms of the probation are not being met, the commissioner may issue an order setting a hearing to suspend or revoke the employee's license.


(e) Hearing. When an application is denied, the applicant has 30 days from the date of the denial to request a hearing in writing to contest the denial. This hearing shall be conducted pursuant to the Administrative Procedure Act, Texas Government Code, Chapter 2001 and §9.1 et seq. of this title. When a hearing is requested following an initial license application denial, the hearing shall be held within 60 days after a request for a hearing is made unless the parties agree to an extension of time. The commissioner shall make a final decision approving or denying the license application after receipt of the proposal for decision from the administrative law judge. (f) Processing time. The commissioner shall ordinarily approve or deny a license application within 60 days after the date the application is complete. The commissioner may take more time where good cause exists, as defined by Texas Government Code, §2005.004. Source Note: The provisions of this §85.304 adopted to be effective September 5, 1999, 24 TexReg 6723; amended to be effective September 19, 2005, 30 TexReg 5336. §85.305. AMENDMENTS TO PENDING APPLICATIONS. Each applicant shall provide the commissioner with information supplemental to that contained in the applicant's original application documents and attachments. Any action, fact, or information that would require a materially different answer than that given in the original license application and which relates to the qualifications for license must be reported to the commissioner within 10 business days after the person has knowledge of the action, fact, or information. Source Note: The provisions of this §85.305 adopted to be effective September 5, 1999, 24 TexReg 6723. §85.306. FEES. (a) New licenses. A $25 investigation fee is assessed each time an application for a new license is filed and is non- refundable. The fee is not refundable if the license application is denied. (b) Fingerprint checks. The fee to investigate each applicant's fingerprint record is $40 per set and is non- refundable. This fee must be paid for each set of fingerprints filed with applications. (c) Annual Renewal fee. The annual renewal fee for a pawnshop employee license is $15. The fee must be paid by June 30 each year. (d) License amendment. An employee seeking to amend a license by changing the name of the licensee or relocating to another pawnshop is not required to pay an additional fee. Any relocation shall require notice on the form provided by the commissioner to the pawnshop. (e) License duplicate. The fee for a license duplicate is $10. (f) Cost of hearing. The commissioner or the administrative law judge may assess the cost of an administrative appeal hearing afforded under 7 TAC §85.304(e), including the cost of the administrative law judge, the court reporter, and agency staff representing the agency at a hearing. Source Note: The provisions of this §85.306 adopted to be effective September 5, 1999, 24 TexReg 6723. §85.307. APPLICATIONS AND NOTICES AS PUBLIC RECORDS. Once a license is accepted with the commissioner, it becomes a "state record" under Texas Government Code, §441.180(11), and "public information" under Texas Government Code, §552.002. Certain information, such as social security numbers, may be protected under the provisions of the Texas Government Code. Under Texas Government Code, §§441.190, 441.191 and 552.004, the original applications and notices must be preserved as "state records" and "public information" unless destroyed with the approval of the director and librarian of the State Archives and Library Commission under Texas Government Code, §441.187. Under Texas Government Code, §441.191, the commissioner may not return any original documents associated with a license application or notice to the applicant or licensee. An individual may request copies of a state record under the authority of the Texas Government Code, Chapter 552. Source Note: The provisions of this §85.307 adopted to be effective September 5, 1999, 24 TexReg 6723. §85.308. AVAILABILITY OF PAWNSHOP EMPLOYEE LICENSE INFORMATION. A pawnbroker must maintain adequate written documents demonstrating that all pawnshop employees are either properly licensed pursuant to Texas Finance Code, §371.101 or have applied for a pawnshop employee license. During an examination by the commissioner or the commissioner's representative, or an inspection by a peace officer, copies of the pawnshop employee licenses or copies of records relating to any pending applications for pawnshop employee licenses must be readily available. Source Note: The provisions of this §85.308 adopted to be effective September 19, 2005, 30 TexReg 5336.

SUBCHAPTER D. OPERATION OF PAWNSHOPS. §85.401. HOURS AND DAYS OF OPERATION. (a) Public posting. A pawnshop's normal operating schedule must be posted so it is visible from the main public entrance. The schedule must include the hours for each day the shop will normally be open for business. Normal hours may include regular periods of closing during a day, such as a lunch time closing. The


pawnshop must be open for business according to its posted schedule unless there is an approved closing pursuant to subsection (b) of this section. (b) Approved closing. (1) Holiday closing. (A) A pawnshop may be closed on any federal holiday without notice. (B) A pawnshop may close for a state or religious holiday after posting notice five (5) calendar days prior to the date of closing. (2) Non-holiday closing. Pledgors must be advised of a closing five (5) days in advance through use of a posted notice or the mailing of notices to pledgors prior to the date of a temporary, non-emergency closing. Any closing in excess of three (3) business days requires notification to the commissioner fifteen (15) days in advance. A notice of closing must be posted so it is visible from the main public entrance. A day that the pawnshop is normally closed under its posted schedule is not a non-holiday closing as defined in this section. (3) Emergency closing. A notice of closing must be posted so it is visible from the main public entrance if a pawnshop is closed during regular posted hours due to an emergency. If determinable, the notice must include the date and time when the pawnshop will reopen for business. As soon as reasonable, the commissioner should be notified in writing of closings extending over three (3) business days in duration. (c) Effect of closing. (1) Non-holiday closing. The amount of pawn service charge scheduled to accrue on each pawn transaction from the date of non-holiday closing pursuant to subsection (b)(2) of this section until actual redemption must be waived for any person who states an attempt was made to redeem goods during the closing. (2) All closings. If a pawnshop is closed on the "last day of grace," the pledgor or holder of the pawn ticket must have until the close of business on the next normal business day the pawnshop is open to redeem the pledged goods, renew, or extend the pawn transaction. Source Note: The provisions of this §85.401 adopted to be effective October 1, 2000, 25 TexReg 9435; amended to be effective September 19, 2005, 30 TexReg 5337.

§85.402. RECORDKEEPING. (a) Minimum records. Books and records must be sufficient to demonstrate compliance with Texas Finance Code, Chapter 371, and this chapter such that the books and records: (1) allow for the documentation of all transactions to the extent that any single transaction may be re-created; and (2) allow for the documentation of any set of transactions governed by the Texas Finance Code, Chapter 371, to the extent that the set of transactions may be re-created. (b) Record retention. Any required book, record, or instrument pertaining to a transaction, whether paper or electronic, must be available for a minimum of two (2) years from the date of the last recorded event for inspection during normal business hours by the commissioner's authorized representative. For purposes of this section, the date of the last recorded event is the date a pledged item is taken into inventory, redeemed, or renewed. (c) Compliance file. A separate file must be maintained for regulatory communications at each licensed location. This file must include, at a minimum, copies of the current Texas Finance Code, Chapter 371, the last three (3) examination reports, correspondence relating to compliance, compliance bulletins issued in the last two (2) years, and current rules issued by the commissioner. (d) Recordkeeping systems. An approved software system must be used unless a manual system that complies with subsection (f) of this section is used. All approved systems in place on the effective date of this rule are not required to submit to reapproval. (e) Approval documentation. (1) A licensee or vendor seeking approval of a system must make available a complete and detailed written description of the system proposed to be utilized, including: (A) a statement specifying whether the system will be used in its entirety; (B) operating manuals; (C) instructions; (D) a copy of the software to be used; and (E) a full description of backup systems in place that will ensure business continuity and the protection of pledged goods. (2) Amendments. Any change to a software system is required to meet the minimum reporting requirements as established by this section. (3) Who must file. A private vendor may make a filing on behalf of a pawnbroker. It is the pawnbroker's responsibility, however, to ensure approval is received before utilizing the system.


(4) Withdrawal of approval by the commissioner. The commissioner may withdraw approval upon finding the system does not provide information as anticipated at the time of approval or does not comply with this section. Upon withdrawal of approval, the use of the system must cease unless the commissioner grants time to make modifications. Reasonable time to make modifications will be granted if it can be shown that the granting of time will not be detrimental to pledgors. (f) Requirements of a manual record system. In a manual record system, the pawn ticket must be a four-part form. Manual entries to the top copy must be legible and simultaneously reproduced on the remaining parts. The form must provide a perforated stub to be utilized in labeling and identifying pledged goods. Each part of the pawn ticket form must be numbered sequentially by the supplier of the pawn ticket form. The stub must be numbered simultaneously with the same sequential number. The portion of the pawn ticket made available to local law enforcement may, with the approval of the local law enforcement agency receiving it, omit the preprinted text of the pawn ticket. The portion of the pawn ticket maintained in the numerical pawn ticket file must provide an appropriately designated space for posting amounts paid on the pawn transaction. (g) Requirements of an electronic record system. In an electronic recordkeeping system, the pawn ticket must be a three-part form. Entries made to the top copy of the pawn ticket must be legible and simultaneously reproduced on the remaining parts. The form must provide a perforated stub to be utilized in labeling and identifying pledged goods. Each part of the pawn ticket must be numbered sequentially by the supplier of the pawn ticket form unless the commissioner approves, in writing, an alternative method of numbering the pawn ticket. The stub must be numbered simultaneously with the same sequential number. The second part of the pawn ticket (law enforcement copy) may be omitted or properly destroyed (i.e., pawn ticket is completely shredded or incinerated) if the pawn and purchase ticket information is exchanged electronically, directly or indirectly, with the primary law enforcement agency in the jurisdiction that the pawnshop is located. (1) Required electronic information. A pawnbroker who chooses to maintain pawn and purchase ticket information electronically must comply with the requirements of Chapter 371 of the Texas Finance Code and the rules governing electronic records. The information relating to the dates and amounts of all payments made on the pawn transaction, the final disposition or status of the pawn transaction (i.e., renewed, redeemed, voided, forfeited, or seized), and the final disposition date, must be either manually recorded on the hard card pursuant to subsection (f) of this section, or electronically stored pursuant to this subsection. The final disposition or closing date is the date that the pawn transaction is renewed, redeemed, voided, or the pledged goods are forfeited by the pledgor or seized by a law enforcement agency. For the electronic system, the final disposition information must be stored and accessible for the entire record retention period required by Texas Finance Code, §371.152(b). If subsection (g)(2) of this section applies, the loan disposition report and supplemental loan disposition report must be timely printed or stored as an electronically imaged record. (2) Loan disposition report and supplemental loan disposition report. For the purposes of this paragraph, a calendar month means every day from the first day of the month to the last day of the month. (A) Loan disposition report. The loan disposition report is a listing of all pawn transactions that were made in a calendar month. The loan disposition report is printed or stored as an electronically imaged record and is sorted by using the field of the date made as recorded on the pawn ticket. (B) Supplemental loan disposition report. The supplemental loan disposition report is a listing of all pawn transactions that were closed (i.e., renewed, redeemed, voided, forfeited, or seized) in a calendar month. The supplemental loan disposition report is printed or stored as an electronically imaged record and is sorted by using the field of the final disposition or closing date. A supplemental loan disposition report is only required to be printed or stored as an electronically imaged record if the pawnbroker extends the maturity date of the pawn transaction using a memorandum of extension or if the pawnbroker does not exercise the option to forfeit pledged goods on the day after the last day of grace recorded on the pawn ticket. (C) Content. (i) Required information. The loan disposition report and the supplemental loan disposition report must contain the following: (I) pawn or loan ticket number; (II) name of the pledgor; (III) the original date made; (IV) the original maturity date; (V) the loan amount or amount financed; (VI) the original pawn service charge; (VII) the final disposition or closing date; (VIII) the action taken to close the pawn transaction (i.e., renewed, redeemed, voided, forfeited, or seized); (IX) if applicable, the date and dollar amount of each memorandum of extension payment; and


(X) if applicable, the dollar amount paid to redeem or renew the pawn transaction (i.e., amount paid itemized to show the allocation between the amount financed, pawn service charge, additional daily charges, and the lost pawn ticket statement). (ii) The loan disposition report may contain active or open pawn transactions. If a pawn transaction is active or open when the loan disposition report is printed or electronically imaged, the closing date should be left blank and the action taken to close the pawn transaction should be shown as "active" or "open." (D) Timing. If required, the loan disposition report and supplemental loan disposition report must be printed or stored as an electronically imaged record every month. (i) The loan disposition report must capture all pawn transactions, including active or open, that were made for a particular calendar month. The report must be produced four or five months after the completion of the reporting period, depending upon the length of the grace period. If a 30-day grace period is offered, the report must contain information for pawn transactions made four months prior. If a 60-day grace period is offered, the report must contain information for pawn transactions made five months prior. As an example, in May, 2005, the loan disposition report must be printed or electronically imaged to include all pawn transactions that were made during the calendar month of December, 2004 (60-day grace period) or January, 2005 (30-day grace period). (ii) The supplemental loan disposition report must be printed to capture all pawn transactions that were closed or have had a final disposition (i.e., renewed, redeemed, voided, forfeited, or seized) in the previous calendar month. As an example, in May, 2005, the supplemental loan disposition report must include all pawn transactions that were closed in the previous month of April, 2005 (i.e., April 1, 2005 to April 30, 2005). (3) Disaster recovery plan. A pawnbroker must maintain a sufficient disaster recovery plan to ensure that the pawn and purchase ticket information is not destroyed, lost, or damaged. (4) Access by agency personnel. The pawnbroker must provide reasonable access to a computer workstation capable of accessing and retrieving the pawn and purchase ticket information throughout the examination or investigation conducted by the commissioner or the commissioner's representatives. A pawnbroker may provide the commissioner or the commissioner's representatives the same information in physical form as an alternative to reasonable access to a computer workstation. Source Note: The provisions of this §85.402 adopted to be effective October 1, 2000, 25 TexReg 9435; amended to be effective Februray 1, 2006, 30 TexReg 8856. §85.403. INSURANCE. (a) Insurance provisions. General liability and fire insurance must be maintained in an amount sufficient to protect pledged goods as provided in Texas Finance Code, §371.154. The insurance policy must specifically cover the loss of pledged goods including jewelry. (1) General liability. (A) At a minimum, the amount of general liability insurance coverage must be $100,000 per occurrence from an insurance company with an A.M. Best rating of B+ or better. (B) In addition, pawnshops operating more than one licensed location must purchase an additional $10,000 of general liability insurance coverage per each operating location, excluding the first location. (2) Fire insurance. Fire insurance coverage must be purchased from an insurance company with an A.M. Best rating of B+ or better for: (A) pawnshops not operating as part of a chain must purchase fire insurance in an amount not less than the lesser of: (i) the amount of pawn loans receivable due the pawnshop at the close of business on December 31st of the preceding year; or (ii) one hundred thousand dollars ($100,000); (B) pawnshop chains that operate more than one licensed location must purchase fire insurance in an amount not less than the lesser of: (i) one-half the outstanding amount of the total pawnshop chain's pawn loans receivable due on December 31st of the preceding year; or (ii) five million dollars ($5,000,000). (b) Variance. If a pawnshop's unique circumstances create a justifiable reason for not complying with subsection (a), the pawnshop may submit a written request for variance from this section. The request should explain in sufficient detail why compliance with the section is not feasible and the alternative measures that are proposed to manage the associated risk and protect pledged goods. Source Note: The provisions of this §85.403 adopted to be effective October 1, 2000, 25 TexReg 9435.


§85.404. SECURITY OF PLEDGED GOODS. (a) Alarm system. Adequate security must be maintained to provide for the protection and security of pledged goods. Adequate information must be provided, at the time of examination, on the security system used by the pawnshop to determine the system's adequacy. (b) Security of jewelry. A pawnshop that accepts jewelry as pledged goods must have a vault or safe that provides an additional level of security above the required alarm system. (c) Exterior storage of pledged goods. If pledged goods are accepted and cannot reasonably be stored inside the pawnshop (e.g., motor vehicles, boats, trailers, construction equipment), the goods must be stored adjoining the pawnshop and must be securely enclosed by protective fencing unless those goods are stored in compliance with subsection (d) of this section. Any damage or deterioration of the pledged goods resulting from outdoor storage will be handled in accordance with §85.413 of this title. (d) Remote storage. A pawnshop that stores pledged goods in a remote location is subject to subsections (a) through (c) of this section. A remote location is defined as a location not immediately accessible from the pawnshop. If upon redemption a pledged item cannot be retrieved from the remote location within thirty (30) minutes, the pledgor, prior to the transaction, must be notified in writing that the goods may not be available immediately. The written notice must also state the maximum length of time it will take to retrieve the item from remote storage upon redemption. (e) Public display of pledged goods prohibited. Pledged goods must not be placed in a public area of the pawnshop. Source Note: The provisions of this §85.404 adopted to be effective October 1, 2000, 25 TexReg 9435; amended to be effective September 19, 2005, 30 TexReg 5337. §85.405. PAWN TRANSACTION. (a) Pawn Ticket. (1) Prescribed form. (A) The front and back of the original pawn ticket are prescribed in Figures 1 and 2: 7 TAC §85.405(a)(1)(A). The original portion of the pawn ticket must be given to the pledgor when the pawn transaction is made. Appendix 1 – §85.405(1)(A) and Appendix 2 – §85.405(1)(A) (B) The prescribed back of the printed copy of the pawn ticket, as shown in Figure: 7 TAC §85.405(a)(1)(B), must be maintained in the numerical pawn ticket file. Appendix 3 – §85.407(1)(B) (2) Modifications of the pawn ticket. (A) Spacing. Spacing of the forms prescribed may be modified. (B) Other changes. Any other changes to the prescribed forms must be approved, in writing, in advance, by the commissioner. (3) Information required on pawn ticket. The pawn ticket must contain all information required in the Texas Finance Code, §371.157, and satisfy the requirements of the Truth in Lending Act, 15 U.S.C. §1601 et seq., and Regulation Z, 12 C.F.R. §226.1 et seq. The pawn ticket must disclose the date that is thirty (30) days following the maturity date, and it must be captioned "last day of grace." The system used to create and store information about pawn transactions must include alphabetical or numerical characters sufficient to identify the pawnshop employee or owner writing the pawn ticket and handling the renewal or redemption of the pawn transaction. All parts of the pawn ticket form must be sequentially numbered by the automated information system unless produced manually in accordance with the requirements of §85.402(f) of this title. (4) Prescribed copies. (A) Original. The top original copy is to be given to pledgor. This is the copy that is to be presented upon redemption and filed with the numerical file of redemptions and renewals. The original copy of the pawn ticket, presented to the pawnbroker upon redemption of the pledged goods and renewal of the pawn transaction, may be kept in chronological order by date if through the use of an automated system, the records pertaining to the pawn transaction may be readily located. Additionally, the original copy of the pawn ticket may be maintained in the numerical pawn ticket file. (B) Alphabetical. This copy is for use in maintaining an alphabetical index. This copy may be omitted where an automated system is capable of producing the alphabetical index. (C) Law enforcement copy. This copy is for the use of law enforcement as defined in §85.406 of this title. If the law enforcement agency is given all of the information on the pawn ticket electronically, this copy may be omitted. (D) Hard card. This copy is maintained in a sequential file in the records of the pawnshop. (5) Legible information. Reasonable procedures must be in place to ensure that all information on the original pawn ticket and all copies of the pawn ticket are legible. (6) Proper identification. The pledgor must present a proper form of identification at the time of the pawn transaction. For purposes of this paragraph, any form of identification found in Texas Finance Code, §371.174(b), that is either current or has not been expired for more than one (1) year, will be considered acceptable. (b) Term of transaction. The maturity date of a pawn transaction may not be greater than one month from the date of the transaction. The "last day of grace" is a date no less than thirty days following the maturity day. A pawnbroker may, at the pawnbroker's option, choose to extend the last day of grace. The pawn loan will be considered to be an open pawn loan


until the expiration of the last day of grace or until the pawnbroker exercises the option to take the pledged goods into inventory as provided in section §85.414, whichever is later. (c) Identification of pledged goods. A unique label for each item pledged must be produced in order to ensure that the correct item is returned to the pledgor. (d) Voided pawn tickets. Voided pawn tickets must be clearly marked "VOID." All printed parts of a voided pawn ticket except those produced for local law enforcement must be retained and filed with the fourth part of the pawn ticket. The printed part must be made available to a local law enforcement agency. (e) Standards for describing goods. Pledged goods and purchases must be accurately and fully described. All serial numbers, including vehicle identification numbers and boat hull numbers that are reasonably available, must be accurately entered on required documents. Any visible owner applied number or other identifying marks must be recorded on the original pawn ticket and all copies and entered in the system that produces the pawn ticket. As applicable, the item type, brand, make, model number, engraving, inscriptions, color, size, length, unique markings, and design must be recorded. In addition, a record of the additional descriptors in paragraphs (1) - (4) of this subsection, must be included as applicable. (1) Firearms. Descriptions of firearms must include caliber and type of firearm (e.g., handgun, rifle, shotgun, black powder weapon). (2) Jewelry. Descriptions of jewelry must include weight, type of metal including purity, style, stones, and the gender of the person for which the item was manufactured. Stones must be described as to type, including results of electronic testing, color as apparent to the untrained eye, shape, number, size, and approximate weight. Class ring descriptions must also include school name and class year. (3) Motor vehicles. Descriptions of motor vehicles must also include the year of manufacture, model, body style, license plate number, and state of registration. (4) Accessories. Descriptions of accessories must include the applicable information required within this subsection. (f) Titled goods. (1) Negotiation. Goods pledged on a pawn transaction, a motor vehicle, or other property having a certificate of title may be accepted. When entering into the pawn transaction, the pawnbroker must not permit or require the owner to endorse the title to effect transfer. (2) Limited power of attorney. If a pawn transaction involves titled property, the owner may be required to sign a power of attorney form appointing the pawnbroker as the owner's attorney-in-fact for the sole purpose of transferring the ownership of the property in the event the pledgor fails to pay the pawn transaction. (3) Documentation. A notation of the location of powers of attorney, certificates of title, and registration receipts must be made on the printed copy of the ticket in the numerical pawn ticket file or an alternative filing method must be provided to facilitate retrieval of these documents. (g) Items usually sold as a set in a retail transaction or pledged together with their accessories. (1) Items usually sold as a set in a retail transaction or pledged together with their accessories may not be required to be split into separate transactions or that they be pledged separately where the result would be a total pawn service charge over the legal maximum for the single transaction. (2) If items usually sold as a set in a retail transaction or pledged together with their accessories are split into separate transactions, the effective rate of the separate transactions must not be greater than the rate a single transaction would have produced. (3) Items that may usually be sold as a set in a retail transaction or pledged together with their accessories, but which are pledged on separate days will not normally be considered to fall within the provisions in paragraph (2) of this subsection. (4) If a pledgor requests separate pawn transactions on items usually sold as a set in a retail transaction or pledged together with their accessories, a notation of that request in the description field of the pawn ticket must be made and will not normally be considered to fall within the provisions in paragraph (2) of this subsection. (h) Alphabetical file of pawn tickets. Either an automated or a manual system capable of allowing searches utilizing the pledgor's name in the case of a lost or destroyed pawn ticket must be maintained. Source Note: The provisions of this §85.405 adopted to be effective October 1, 2000, 25 TexReg 9435; amended to be effective November 8, 2001, 26 TexReg 8797; amended to be effective Februray 1, 2006, 30 TexReg 8856. §85.406. LAW ENFORCEMENT REPORTING. (a) Reporting requirements. The information on the pawn ticket must be made available to the law enforcement agency electronically or through the production of a separate copy of the pawn ticket. (b) Suggested electronic reporting guidelines. These suggested guidelines are intended to give pawnshops considerable flexibility to fit individual needs while providing some guidance. Modifications to the guidelines may be made without the loss of protection from any liability defense. Electronic reporting is voluntary and should occur under mutually acceptable terms to the pawnbroker and the law enforcement agency. Information reported electronically should be


transmitted by a method mutually acceptable to both the pawnshop and the law enforcement agency. The suggested guidelines are: (1) the transmission be made using a 3.5 inch reusable diskette, CD-ROM, remote access to secure sites maintained by law enforcement, or remote access to secure bulletin boards or web sites; (2) the information be provided in comma-delimited ASCII text with field titles as the first record of the transmission; (3) the information be sent in batches no smaller than the daily activity; (4) the information include all purchase and pawn transactions in a single transmission; and (5) the law enforcement agency not be given direct access to a pawnshop's computer system. Source Note: The provisions of this §85.406 adopted to be effective October 1, 2000, 25 TexReg 9435. §85.407. MEMORANDUM OF EXTENSION. (a) Prescribed form and content. If an extension of a pawn transaction is made, a written memorandum must be used to document the extension of the maturity date. The prescribed memorandum form is shown in Figure: 7 TAC §85.407(a). The printed portions of the memorandum must be legible and all the information must be reproduced on all parts. Appendix 4 – §85.407(a) (b) Modification of prescribed form. Modification of the spacing of the form is allowed. Other changes to the form must be approved, in writing, in advance, by the commissioner. (c) Distribution of copies. The original memorandum must be given to the person paying for the extension or, if paid by mail, sent to the pledgor. The location of all memorandum copies relating to a particular pawn ticket must be documented: (1) in the electronic system (if the memorandum of extension form can be reproduced in its actual original printed format); or (2) in the numerical pawn ticket file. (d) Procedure. The daily rate of finance charge may not exceed 1/30th of the finance charge shown on the pawn ticket. The amount a pledgor pays for the extension may not exceed the maximum of the total amount that could be charged divided by the daily rate. The pledgor and pawnshop may negotiate any amount of pawn service charge for the extension not to exceed the maximum amount authorized by the Texas Finance Code, Chapter 371, Subchapter D. (e) Early redemption. If a pledgor negotiates an extension and subsequently pays a pawn transaction in full prior to the original maturity date, the original terms of the original pawn transaction are restored. The maximum pawn service charge that may be collected is calculated from the date of the original transaction to the date of redemption. Any charge collected for the extension must be credited against the total pawn service charge. Any remaining balance may be collected from the pledgor. (f) Renewal or extension of open pawn transaction. Any open pawn transaction may be renewed by payment of pawn service charges accrued to the date of renewal or may be extended, unless the pawn ticket provides that the pawn transaction is not eligible for renewal or extension. Source Note: The provisions of this §85.407 adopted to be effective October 1, 2000, 25 TexReg 9435; amended to be effective September 19, 2005, 30 TexReg 5337. §85.408. PRESENTATION OF PAWN TICKET. (a) Record of payment. A record of an amount collected in connection with a pawn transaction must be made immediately upon receipt. In a manual system, the payment notation must be made in the numerical pawn ticket file. If the amount of money received includes any costs for packing, shipping, or insuring goods redeemed by mail, the costs must be itemized. (b) Identification of a person. The person presenting a pawn ticket for redemption must be identified by requiring the person to produce an acceptable form of identification unless the person is known and recognized as the pledgor. An acceptable form of identification for a person other than the pledgor must be any form of identification listed in Texas Finance Code, §371.174(b), that is either current or has not been expired more than one (1) year. A record in the electronic system or on the original pawn ticket must be made including the type of identification, the name on the identification, and the identifying number presented by any person other than the pledgor. (c) Receipt. A receipt for payment must be given upon request. A memorandum of extension form, properly completed as described in §85.407 of this title, may serve as a receipt for payment of charges. (d) Original pawn ticket. The original of each pawn ticket returned upon redemption must be promptly filed in the redemption and renewal file. For purposes of this subsection, the numerical file of redemptions and renewals is a file where the documents used to redeem pawn transactions are kept in sequential order or in chronological order by date if through the use of an automated system the records pertaining to the pawn transaction can be readily located. Separate lost pawn ticket statement forms or other documents taken to document a redemption or renewal must be filed with the numerical pawn ticket file or in the redemption and renewal file according to the sequential number of the related pawn ticket. (e) Power of attorney. In the event the original pledgor desires to designate another person to redeem the pledged goods and the original pledgor has lost the pawn ticket, a proper power of attorney, which must include the pledgor's


notarized signature, is required from the original pledgor designating the person for redemption. A power of attorney must be filed in the numerical pawn ticket file or the numerical index of redemptions and renewals. Source Note: The provisions of this §85.408 adopted to be effective October 1, 2000, 25 TexReg 9435. §85.410. LOST OR DESTROYED PAWN TICKET. (a) Notice of lost pawn ticket. When oral notification is received from a pledgor that the pledgor's pawn ticket has been lost or stolen, the pledgor must be instructed to give the notice in writing and informed that pledged items may still be taken into inventory after the last day of grace if the pawn transaction is not renewed, redeemed, or extended. The date and time the oral notification was received must be documented. If the pledgor is present in the pawnshop at the time of giving oral notice, the pledgor must be provided with a form to give written notice. If the suggested guideline is employed in subsection (d) of this section, the pledgor who gives oral notification should be informed that without a written statement of the lost pawn ticket, the goods will be surrendered to someone who properly presents the pawn ticket for redemption. A lost pawn ticket statement must be filed in the numerical pawn ticket file. (b) Record of payment. If a payment is made in connection with the redemption of pledged goods or the renewal of a pawn transaction and a separate lost pawn ticket statement is used, the requirement may be satisfied by recording the payment on the front of the lost pawn ticket statement, as well as the date of the transaction and the amount of money actually received. The lost pawn ticket statement must be filed in the numerical pawn ticket file. (c) Procedure. Appropriate procedures must be employed to ensure that only a person with a valid claim to a pledged item is able to redeem that item. Upon receipt of written notice the original pawn ticket is void. (d) Suggested guidelines. These suggested guidelines are intended to give pawnshops considerable flexibility to fit individual needs while providing some guidance. Modifications to the guidelines may be made without the loss of protection from any liability defense. When oral notification that a pawn ticket has been lost or stolen is received, the pledgor is instructed to give the notice in writing within the next two (2) business days. If a person other than the pledgor presents the pawn ticket in an attempt to redeem the item prior to timely receiving written notice, it is suggested that: (1) an immediate attempt to contact the pledgor by telephone be made in order to determine if the presenter has a valid claim to the item; (2) a record of identifying information be made in the numerical file of loans, including name, identification number, address, and phone, of the presenter of the pawn ticket; (3) when ownership cannot be immediately determined, a request is be made that the presenter of the pawn ticket return in a mutually agreeable time frame to redeem the merchandise and return the original pawn ticket to the holder; and (4) all actions taken relating to the situation be documented clearly enough to accurately record the events. Source Note: The provisions of this §85.410 adopted to be effective October 1, 2000, 25 TexReg 9435; amended to be effective September 19, 2005, 30 TexReg 5337. §85.411. MODIFICATION OF PLEDGED GOODS. (a) Use prohibited. Use of goods pledged in connection with any open pawn transaction is prohibited. (b) Character of goods. No modification or change of the characteristics of any goods held in connection with any open pawn transaction is allowed. Source Note: The provisions of this §85.411 adopted to be effective October 1, 2000, 25 TexReg 9435. §85.412. REDEMPTION BY MAIL. (a) Persons authorized. A pledgor may redeem by mail by providing: (1) the signed pawn ticket; and (2) a photocopy of the identification used in making the pawn transaction. (b) Acceptable alternatives. If the pawn ticket is unavailable, the pledgor may mail a request to redeem the pawn transaction. If a photocopy of the identification used in making the pawn transaction is unavailable, the pledgor may send a photocopy of any identification acceptable for redeeming pledged goods under Texas Finance Code, §371.174. (c) Redemption period. A request for redemption must be honored within five (5) business days unless prior written notice that the pawn ticket has been lost, destroyed, or stolen has been received. (d) Method of payment. Payment by cashier's check, certified check, or money order may be required for: (1) the principal amount of the pawn transaction; (2) all pawn service charges due on the pawn transaction; and (3) the charges authorized in subsection (e) of this section. (e) Shipping, handling, and insurance charges. The pawnbroker is entitled to recover the reasonable and necessary expenses involved in packaging and shipping of goods and any additional charges to insure the goods. Goods must be insured during shipment for an amount determined by the pledgor. The pledgor may choose the carrier to use for shipment. Goods may be shipped cash on delivery (C.O.D.). (f) Firearms. Shipments of firearms may only be made to a holder of a federal firearms license. Source Note: The provisions of this §85.412 adopted to be effective October 1, 2000, 25 TexReg 9435.


§85.413. LOST OR DAMAGED GOODS. (a) Responsibility. A pawnbroker must repair or replace, with like kind merchandise, pledged goods that are either lost or damaged while in the pawnshop's possession. (b) Acceptance of payments. Any payment may not be accepted from the pledgor and the original pawn ticket must be returned when pledged goods are: (1) lost and not replaced; (2) damaged and not restored to their condition at the time pledged; or (3) unavailable for redemption. (c) Accrual of pawn service charges. No pawn service charge may be earned after a pledgor offers to redeem, renew, or extend pledged goods through the date the pledged goods or their equivalent replacements are available for redemption and that fact is communicated to the pledgor. (d) Documentation. Certain information must be retained concerning pledged goods that have been lost or damaged. The information may be recorded in the numerical pawn ticket file or in the automated records of the pawn transaction, must be readily available for examination, and must include the following information: (1) the date of discovery of the loss or damage; (2) the pawn ticket number; (3) identification of the lost or damaged property; (4) evidence of delivery of the disclosure required in subsection (e), paragraph (6) of this section; (5) the date of resolution; and (6) the manner in which the matter was resolved. (e) Communications with pledgors. (1) A pledgor must not be misled as to the pawnbroker's liability whether through any posting, oral statements, or any other conduct. (2) A prompt attempt must be made to satisfy the pledgor by repairing or replacing the lost or damaged goods. (3) A pledgor may not be advised that the replacement of lost or damaged pledged goods will be accomplished in any manner that is more limited than replacement with like kind goods or restoration of damaged goods to their condition at the time pledged. (4) Replacement items must be made available for the pledgor's inspection at the same location where a pledgor would redeem, renew, or extend the pawn transaction. (5) A pledgor must be informed that the pledgor has a right to have the like kind replacement or restoration reviewed by the Office of Consumer Credit Commissioner in accordance with subsection (h) of this section and that no judicial remedy may be sought until ninety-one (91) days after a complaint has been filed with the agency. (6) When an attempt or offer to redeem, renew, or extend a pawn transaction is made and it is known or learned that pledged goods have been lost or damaged, the pledgor must accurately be informed of the facts of the situation, the status of the pledged goods, the pawnbroker's responsibility under the Texas Finance Code, Chapter 371, and the pledgor's rights under paragraph (5) of this subsection. A model disclosure is provided in Figure: 7 TAC §85.413(e)(6). Appendix 5 – 7 TAC §85.413(e)(6) (f) Alternative resolution. Once compliance with subsection (e) of this section is accomplished, at the pawnbroker's option, an offer of a cash settlement or a substitution as an alternative to replacing or repairing the lost or damaged goods may be made. (g) Partial redemption. If one or more items pledged on a pawn transaction are not lost or damaged and are available for redemption, the pledgor may redeem the available items by negotiating a partial, proportionate payment not to exceed the pawn service charge limitations in the Texas Finance Code, Chapter 371, Subchapter D. (h) Replacement complaints. Upon request by the person attempting to redeem pledged goods, a complaint form issued by the commissioner must be provided. The complaint form is provided in Figure: 7 TAC §85.413(h). The agency will begin review of a complaint for lost or damaged items upon receipt of the written complaint. Appendix 6 – 7 TAC §85.413(h) (1) Upon receipt of a written complaint, the commissioner may: (A) request copies of the pawn ticket and all related documentation; (B) analyze the complainant's authority to receive a replacement; (C) review additional information (e.g., appraisal, picture, insurance information) provided by either party; (D) provide a time frame for producing proposed like kind replacement merchandise. (2) When a replacement item is available, the pledgor and the commissioner must be informed that: (A) a replacement item is available for inspection; and (B) the replacement item has not been inspected by the commissioner to determine if it is like kind merchandise. (3) The commissioner may initiate an on-site inspection to review the replacement. (4) After conducting an on-site inspection, the commissioner may either:


(A) direct another item be produced for replacement within a specified period of time for inspection; or (B) issue a letter of determination stating that the merchandise offered is like kind and the complaint is closed. At that time the pledgor may seek a court remedy at the pledgor's expense if the pledgor is dissatisfied with the determination of the commissioner. Source Note: The provisions of this §85.413 adopted to be effective October 1, 2000, 25 TexReg 9435; amended to be effective September 19, 2005, 30 TexReg 5337. §85.414. FORFEITURE OF PLEDGED GOODS. Documentation of the date that pledged goods have been forfeited and have become the property of the pawnshop must be made in the numerical pawn ticket file or in the electronic records. When the option is exercised to take pledged goods as the pawnshop's property, the property is not eligible to be returned to pledged goods status until another disposition of the property is made (e.g., sale, layaway). If goods have not been taken into inventory and documented, the pawn transaction is still considered an open pawn transaction even if the grace period has expired. The pledged goods on any open pawn transaction may be redeemed by payment of the amount financed and pawn service charges accrued to the actual date of redemption. Source Note: The provisions of this §85.414 adopted to be effective October 1, 2000, 25 TexReg 9435. §85.415. PROPER IDENTIFICATION TAGS REQUIRED. Each item of forfeited property located in a pawnshop must be tagged or otherwise marked to identify the pawn transaction that resulted in the item being taken into inventory. This section only applies to forfeited property with a retail value that equals or exceeds twenty-five dollars ($25). Source Note: The provisions of this §85.415 adopted to be effective October 1, 2000, 25 TexReg 9435. §85.416. ADVERTISEMENTS. (a) File. A file must be maintained, either at the licensed office or at a principal Texas office designated to the commissioner, that contains a complete record of pawn advertising or other advertising material pertaining to lending money (e.g., radio broadcasts, billboards, signs not at the licensed place of business) for a period of not less than one year from the date of use, or until the next examination. The date or period of use of each advertisement must be indicated. (b) Content. Advertisements must comply with Texas Finance Code, §371.180(b). (c) Translation of foreign text of advertisement. If any language other than English is used in any advertising material, a true and correct translation must be maintained along with the advertising material. (d) Use of state agency name. Advertisements with the name of the Office of Consumer Credit Commissioner may only be used in connection with the following statement: "This office is licensed and examined by the Office of Consumer Credit Commissioner of the State of Texas." Source Note: The provisions of this §85.416 adopted to be effective October 1, 2000, 25 TexReg 9435; amended to be effective September 19, 2005, 30 TexReg 5337. §85.417. FALSE, MISLEADING, OR DECEPTIVE ADVERTISING. (a) Prohibitions. Advertising that is false, misleading, or deceptive and that directly relates to the making, arranging, or negotiating of a pawn transaction subject to Texas Finance Code, Chapter 371, is prohibited. No advertising may be made under any name that is not on the pawnshop license for the location advertised. (b) Unauthorized advertisers. No person may advertise the availability of pawn transactions or suggest by use of any sign or other advertisement that a location of business is a pawnshop unless that person holds a pawnshop license for that location of business. Use of the words or phrases "loan outlet" or "pawn outlet" constitute prohibited advertising under this subsection. Advertising under a heading, category, or title of "pawnbroker" or "pawnshop" or similar words shall constitute prohibited advertising under this subsection if the person does not hold a pawnshop license for that location of business. Source Note: The provisions of this §85.417 adopted to be effective October 1, 2000, 25 TexReg 9435. §85.418. ACCEPTANCE OF GOODS. (a) Monitoring of transactions and customers. (1) Type of goods offered. An item on which the serial number has obviously been defaced, altered, or removed may not be taken into pawn. An item previously taken in pawn in which the serial number has been previously documented may be repawned if proper documentation exists and can be accurately traced to the same item if the serial number on the item is missing, worn, defaced, or blurred due to normal wear and tear. (2) Written policy. A written policy must be established for the acceptance of pledged goods. The policy must expressly identify situations which may involve the attempted pawn of stolen goods and must list procedures to be followed in order to avoid the acceptance of stolen goods. A copy of the policy must be provided to each employee. Each employee must sign a document acknowledging receipt and understanding of the policy. A copy of each signed receipt must be placed in the compliance file. Alternatively, a pawnshop may employ another systematic method of filing receipts that allows for the appropriate retrieval of records for inspection. A model policy may be found in Figure: 7 TAC §85.418(a)(2). Appendix 7 – 7 TAC §85.418(a)(2)


(3) Acceptance of uniquely marked goods. An item may not be accepted into pawn that is clearly marked in a manner that indicates ownership by a third party (e.g. rental company, motel, governmental body). An item marked in a manner that indicates ownership by a third party may, however, be accepted into pawn when the pledgor produces a valid receipt or other evidence of ownership of the item or the pawnbroker obtains independent verification. Independent verification may include records of phone calls to the third party with name, time, and verbal approval that are documented on the pawn ticket. (4) Responsibility. The pawnbroker must monitor goods in order to identify and prohibit transactions involving stolen goods and must make reasonable efforts to avoid accepting stolen goods. (5) Coordination with law enforcement. A pawnbroker must work with law enforcement agencies regarding matters relating to stolen goods and must aid in the prompt resolution of an official investigation by providing, if available: (A) information to appropriate law enforcement officers (e.g. additional description of pledged and purchased goods, a physical description of the pledgor or seller, copies of all documents surrounding the transaction); (B) physical inspection of the goods; (C) a copy of the surveillance tape relating to the transaction; (D) access to pawnshop employees for information; and (E) cooperation with any court order. (b) Documentation of goods not lawfully possessed by a pledgor. Certain information must be maintained concerning pledged goods that a pledgor did not have the right to possess. The information may be recorded in the numerical pawn ticket file or in the automated records of the pawn transaction. Each record must be readily identifiable and available for examination. The record must include: (1) the pawn ticket number; (2) the specific goods concerned; (3) the person to whom the goods were released; and (4) the terms and conditions under which possession of the goods was relinquished (e.g., redeemed by owner, voluntarily returned without compensation, seized by law enforcement officers, awarded to another following a judicial hearing). Source Note: The provisions of this §85.418 adopted to be effective October 1, 2000, 25 TexReg 9435; amended to be effective September 19, 2005, 30 TexReg 5337. §85.419. HOLD ORDER. (a) A law enforcement agency may place a hold order on property. (b) Suggested guidelines. This section provides suggested guidelines for the placement of hold orders. These suggested guidelines are intended to give pawnshops considerable flexibility to fit individual needs while providing some guidance. Modifications to the guidelines may be made without the loss of protection from any liability defense. (1) A hold order should be placed in writing by a law enforcement agency. The term of a hold order should not exceed sixty (60) days from the receipt of the written hold order. The law enforcement agency may extend the term of the hold order for additional thirty (30) day increments by notifying the pawnshop in writing. The hold order and all applicable extensions automatically terminate upon expiration. (2) A hold order or extension should specify: (A) the name and address of the pawnshop; (B) the name, title, case number, and phone number of the responsible officer at the law enforcement agency; (C) a complete description of the property to be held, including model number and serial number, if applicable, and the related pawn or purchase ticket number; (D) the expiration date of the hold order or the extension; and (E) the name of the law enforcement agency that prepared the investigative report and the associated number. (3) A written hold order may be transmitted to the pawnshop by a mutually agreeable method. (4) Except as provided by this subsection, the property subject to a hold order should not be released, sold, redeemed, or disposed of except under: (A) release authorization from the official placing the item on hold; (B) expiration of the hold order and the applicable extensions; (C) court order, including a search warrant; or (D) seizure by a law enforcement official. (5) Property may be released to the custody of a law enforcement agency for use in a criminal investigation if the officer has furnished a written receipt for the property. The release of the property to the custody of the law enforcement agency is not considered to be a waiver or release of the pawnbroker's rights or interest in the property. Upon the earlier of the completion of the criminal investigation or the expiration of the hold order and applicable extensions, the property should


be returned to the pawnshop unless a court order provides for other disposition. If other disposition is ordered, the court may order the pledgor or seller to pay restitution in the amount received by the pledgor or seller for the property, plus accrued pawn service charges. Source Note: The provisions of this §85.419 adopted to be effective October 1, 2000, 25 TexReg 9435. §85.420. PURCHASE TRANSACTIONS. (a) Relevant pawn provisions. Accepting goods in a purchase transaction must be done in compliance with all relevant administrative rules, in the context of the purchase transaction in the same manner as if the transaction were a pawn transaction. These rules include: (1) §85.405(a)(5) of this title--Legible information; (2) §85.405(a)(6) of this title--Proper identification; (3) §85.405(c) of this title--Identification of pledged goods; (4) §85.405(e) of this title--Standards for describing goods; (5) §85.405(f) of this title--Titled goods; (6) §85.406 of this title--Law enforcement reporting; (7) §85.418 of this title--Acceptance of Goods; and (8) §85.419 of this title--Hold Orders. (b) Hold Period. (1) Each item of personal property purchased from the general public must be held at the licensed pawnshop location for a period from the purchase date before being modified, changed, sold, or disposed of in any manner of: (A) at least twenty days; or, (B) a period of less than twenty days if a local jurisdiction has enacted an ordinance that specifies the hold period. (2) A reduced hold period may be agreed upon by the pawnbroker and the law enforcement agency if the pawn and purchase ticket information is exchanged electronically. The agreement for a reduced hold period must be submitted to the commissioner in writing by and through the chief local law enforcement officer for the jurisdiction. Source Note: The provisions of this §85.420 adopted to be effective April 5, 2001, 26 TexReg 2536; amended to be effective September 19, 2005, 30 TexReg 5337. §85.421. CONSUMER INFORMATION. (a) Consumer education. The commissioner will furnish each pawnshop, at the time of initial licensing, a display and printed materials that must be placed in a location clearly visible to the consumer from the register. The pawnshop must assist the commissioner by refilling the display as necessary. (b) Crime victim assistance. (1) Victim's request for assistance. A crime victim or the victim's representative may make an inquiry by presenting a copy of a law enforcement agency offense report that describes stolen property in a manner that would permit positive identification. The name of the department where the stolen property report was filed must be requested and a telephone number for the victim. (2) Property search. When a victim's request for assistance has been received, a search must be made of all records of purchases and pawn transactions made on or subsequent to the date of loss. From the time of receipt of the request until the records search is completed, no property of the type described in the offense report may be released without examining the property to determine if it is the property of the victim. (3) Report of findings. If the stolen property has come into the pawnshop's possession, the law enforcement agency that originated the report must be notified. The item must be placed on hold pursuant to §85.419 of this title unless the other instructions are received from the law enforcement agency. The pawnshop is not obligated to allow the redemption of items located pursuant to paragraph (2) of this subsection until the hold order has expired. (4) Victim inspection. A pawnbroker is not required to permit a victim to examine the records of a pawnshop, the pledged goods of a pawnshop, or any property purchased by a pawnshop which is not on public display. (5) Crime victim assistance recordkeeping. Documentation on the offense report or an attachment to the report must be made. The record of the report findings as required in paragraph (3) of this subsection must include the person to whom the report was given, the date and time of the report, and the nature of the report. The records must be retained in a manner which makes the reports readily available for examination. Source Note: The provisions of this §85.421 adopted to be effective October 1, 2000, 25 TexReg 9435. §85.422. UNCLAIMED FUNDS. An amount due a pledgor unclaimed for one (1) year must be transferred to an escheat suspense account. Reference to the transfer must be made on the printed copy in the numerical pawn ticket file. (1) Proof of attempt to pay refund. Evidence of a bona fide attempt to pay a refund to a pledgor must be maintained in a file readily available for examination. The minimum acceptable evidence is a registered or certified letter addressed to the last known address of the pledgor. The file must include any information that indicates the pledgor's whereabouts are unknown, the pledgor has left the community, or has died leaving no wills or heirs.


(2) Use of unclaimed monies. Use of unclaimed monies within the business until such time as paid to the pledgor, the estate of the pledgor, or to the State of Texas is not prohibited; however, funds transferred to the escheat account must not be commingled with the funds of the business. (3) Payment of unclaimed funds. At the end of three (3) years, the unclaimed funds must be paid to the State of Texas Comptroller of Public Accounts, Treasury Division, as required by Texas Property Code, §72.101. Source Note: The provisions of this §85.422 adopted to be effective October 1, 2000, 25 TexReg 9435. §85.423. COMPLAINTS AND INQUIRIES NOTICE. (a) Definitions. "Privacy notice" means any notice that a pawnbroker gives regarding a consumer's right to privacy as required by a specific state or federal law. (b) Required Notice. (1) The following notice must be given to let consumers know how to file complaints: The (your name) is (licensed and examined or registered) under the laws of the State of Texas and by state law is subject to regulatory oversight by the Office of Consumer Credit Commissioner. Any consumer wishing to file a complaint against the (your name) should contact: Office of Consumer Credit Commissioner, 2601 North Lamar Boulevard, Austin, Texas 78705-4207. Telephone No.: 800/538-1579. Fax No.: 512/936-7610. E-mail: [email protected]. Website: www.occc.state.tx.us. (2) The required notice must be given in the language in which a transaction is conducted. (3) The required notice must be included with each privacy notice. If a pawnbroker delivers a privacy notice simultaneously with the delivery of the pledgor's copy of the pawn ticket, the pawnbroker may fulfill the required notice delivery under this section by complying with paragraph (4) of this subsection. (4) A notice is required on each pawn ticket of a licensed pawnbroker pursuant to §14.104, Texas Finance Code and §85.405 of this title. (A) The text of the notice required by subsection (b)(1) of this subsection is acceptable to meet this requirement; or (B) A pawnbroker may use the following notice:

"TEXAS PAWNBROKERS ARE LICENSED AND REGULATED BY THE TEXAS CONSUMER CREDIT COMMISSIONER. FOR INFORMATION OR ASSISTANCE WITH ANY PAWN OR OTHER CREDIT PROBLEM CALL 1-800-538 1579."

Source Note: The provisions of this §85.423 adopted to be effective May 21, 2002, 27 TexReg 4328.

SUBCHAPTER E. INSPECTIONS AND EXAMINATION. §85.501. EXAMINATION ACCOMMODATIONS. When a representative of the commissioner appears at a pawnshop to make an examination, the pawnshop must make available a desk or table providing adequate working space. The pawnshop must also provide a suitable chair, adequate lighting, and convenient access to a 110 volt electrical outlet in an area reasonably suited for office and administrative work. Source Note: The provisions of this §85.501 adopted to be effective October 1, 2000, 25 TexReg 9211. §85.502. ANNUAL EXAMINATION REPORT. As part of an annual examination, a report must be filed in conjunction with the pawnshop license renewal providing certain information on a form furnished by the commissioner. These submissions will be collected under the examination authority of Texas Finance Code, §371.201, and will be treated as confidential under the provisions of Texas Finance Code, §371.206. The commissioner may publish an aggregated report. A report for each licensed location must be filed for the period of January 1st to December 31st of the preceding year and include: (1) Number of pawn loans made during the year; (2) Amount advanced in connection with the pawn loans made during the year; (3) Number of pawn loans outstanding on the December 31st immediately preceding the due date of the report; and (4) Amount of pawn loans outstanding on the December 31st immediately preceding the due date of the report. Source Note: The provisions of this §85.502 adopted to be effective October 1, 2000, 25 TexReg 9211. §85.503. FOLLOW-UP EXAMINATION FEES. If a follow-up examination visit is required within nine (9) months after a written deficiency report has been given as a result of a failure to comply with Chapter 371 of the Texas Finance Code, this chapter, or the special instructions section of the examination report, an examination fee at the hourly rate of $100 may be assessed.


Source Note: The provisions of this §85.503 adopted to be effective October 1, 2000, 25 TexReg 9211; amended to be effective September 19, 2005, 30 TexReg 5337.

SUBCHAPTER F. LICENSE REVOCATION, SUSPENSION, AND SURRENDER. §85.601. EFFECT OF CRIMINAL HISTORY INFORMATION ON LICENSES AND APPLICATIONS. (a) In submitting an application for a license, a principal party to an applicant for a pawnshop license or an applicant for an employee license is required to provide fingerprint information to the commissioner. Fingerprint information is forwarded to Texas Department of Public Safety and to the Federal Bureau of Investigation to obtain criminal history information. The commissioner will continue to receive information on new criminal activity reported to those agencies after the fingerprints have been processed through those agencies. In the case of a new application or if the commissioner finds a fact or condition that existed or, had it existed the license would have been refused, the commissioner may use the criminal history information obtained to issue a denial or initiate a revocation or suspension action. Criminal history information relates to good moral character and the information gathered is relevant to the licensing or enforcement action decision as described below: (b) Information on arrests, charges, indictments, and convictions. In responding to the information requests in the application, all arrests, charges, indictments, and convictions shall be disclosed. The applicant must, to the extent possible, secure and provide to the commissioner reliable documents or testimony evidencing the information required to make a determination under subsection (c) of this section, including the recommendations of the prosecution, law enforcement, and correctional authorities. The applicant must also furnish proof in such form as may be required by the commissioner that the individual has maintained a record of steady work history and has supported the individual's dependents and has otherwise maintained a record of good conduct. At a minimum the individual must furnish proof that all outstanding court costs, supervision fees, fines, and restitution as may have been ordered have been paid. Failure to disclose arrests, charges, indictments, and convictions reflects on an applicant's honesty and moral character. (c) Effect of criminal conviction on an applicant for or a holder of a pawnbroker license. (1) The commissioner may deny an application for a license if the applicant is an individual who has been convicted of any felony or a crime involving moral character that is reasonably related to the individual's fitness to hold a license. For purposes of this subsection, the crimes listed below are considered to be crimes involving moral character: (A) Fraud, misrepresentation, deception, or forgery; (B) Breach of trust or other fiduciary duty; (C) Dishonesty or theft; (D) Assault; (E) Violation of a statute governing pawnshops of this or another state; (F) Failure to file a required report with a governmental body, or filing a false report; or (G) Attempt, preparation, or conspiracy to commit one of the preceding crimes. (2) Effect of other criminal convictions on proposed or existing license. The commissioner may deny an application for a license, or revoke an existing license if a principal party of the license applicant or holder has been convicted of a crime that directly relates to the duties and responsibilities of a pawnbroker. Adverse action by the commissioner in response to a crime specified in this section is subject to mitigating circumstances and rights of the applicant or licensee. (3) Crimes directly related to fitness for a license. Being a pawnbroker involves or may involve representations to borrowers and sellers, maintenance of accounts to make loans and replace lost or damaged goods, and compliance with reporting requirements to governmental agencies relating to certain transactions including firearms. Consequently, a crime involving the misrepresentation of costs or benefits of a product or service, the improper handling of money or property entrusted to the individual, or a crime involving failure to file a governmental report or filing a false report is a crime directly related to the duties and responsibilities of a license holder and may be grounds for denial or revocation. (4) Mitigating considerations. In determining whether a conviction for a crime renders a person or an entity related to the person unfit to be a license holder, the commissioner shall consider: (A) the extent and nature of the person's past criminal activity; (B) the age of the person at the time of the commission of the crime; (C) the time elapsed since the person's last criminal activity; (D) the conduct and work activity of the person prior to and following the criminal activity; (E) the person's rehabilitation or rehabilitative effort while incarcerated or following release; and (F) the person's present fitness for a license, evidence of which may include letters of recommendation from prosecution, law enforcement, and correctional officers who prosecuted, arrested, or had custodial responsibility for the person, the sheriff and chief of police in the community where the person resides, and other persons in contact with the convicted person.


Source Note: The provisions of this §85.601 adopted to be effective September 5, 1999, 24 TexReg 6724. §85.602. LICENSEE'S OR APPLICANT'S CONDUCT. Upon submission of application for a license a principal party to an applicant for a pawnshop license or an applicant for an employee license is investigated by the commissioner. If the commissioner finds a fact or condition that existed or, had it existed the license would have been refused, the commissioner may use the information obtained to issue a denial or initiate an enforcement action. Certain conduct relates to good moral character and the ability of the applicant to operate lawfully and fairly within the Texas Pawnshop Act. The commissioner may revoke a license or deny an application for a license if an individual is found to have engaged in conduct that is reasonably related to the individual's fitness to hold a license. For purposes of this subsection, any conduct related to the items listed below are considered to be relevant to moral character: (1) Fraud, misrepresentation, deception, or forgery; (2) Breach of trust or other fiduciary duty; (3) Dishonesty or theft; (4) Assault; (5) Violation of a statute governing pawnshops of this or another state; or (6) Attempt, preparation, or conspiracy to evade the Texas Pawnshop Act and its provisions or to evade the laws relating to the receiving or conveyance of stolen property. Source Note: The provisions of this §85.602 adopted to be effective September 5, 1999, 24 TexReg 6724. §85.603. REINSTATEMENT OF AN EXPIRED PAWNSHOP LICENSE. If a pawnshop license expires on June 30 for failure to pay the annual renewal fee, the commissioner shall by July 31 of that same year notify the pawnshop license holder via certified mail that the license has expired and that the licensee may not make or renew a pawn loan. The holder of the expired license may elect to reinstate the license by submitting the fees required by §85.211(e) of this title and a $1,000 reinstatement fee postmarked on or before December 27 of that same year. An expired pawnshop license holder may not conduct any licensed business at the formerly licensed location during the time the license is expired. Any unlicensed acts are subject to administrative action of the commissioner should the holder of the expired license not cease operations upon expiration of the license on July 1. An expired license is considered an operating pawnshop location for the duration of the period of reinstatement right for the purpose of statutory distance requirements. Source Note: The provisions of this §85.603 adopted to be effective September 5, 1999, 24 TexReg 6724; amended to be effective September 19, 2005, 30 TexReg 5338. §85.604. REVOCATION OR SUSPENSION OF PAWNSHOP LICENSE OR PAWNSHOP EMPLOYEE LICENSE. (a) The commissioner may initiate an administrative action for the reasons in subsection (b) of this section and assess any or all of the penalties below: (1) revoke or suspend a license; (2) assess an administrative penalty. (b) Basis for administrative actions. (1) Eligibility. A pawnbroker who does not continue to meet the eligibility requirements in Texas Finance Code, Chapter 371, Subchapter B or a pawnshop employee who does not continue to meet the eligibility requirements in Subchapter C and the administrative rules promulgated by the commissioner, is subject to suspension or revocation. (2) Character and fitness. A pawnbroker or a pawnshop employee must report to the commissioner knowledge of any arrest, charge, indictment, or conviction of any person named on a pawnshop or pawnshop employee license or application filed with the commissioner. Traffic violations and any action previously reported to the commissioner are not required to be reported. Any known investigation of potential violations by the pawnbroker of federal laws or rules relating to firearms must be reported to the commissioner, but this does not include compliance inspections by the United States Bureau of Alcohol, Tobacco, and Firearms. A notice of revocation, suspension, or imposition of civil fine issued by the United States Bureau of Alcohol, Tobacco and Firearms (Form 4500 notice) against the federal firearms license must also be reported. Reports must be made within three (3) business days. (3) Failure to comply with the law. A pawnbroker or pawnshop employee who fails to comply with this chapter or the provisions of the Texas Finance Code, Chapter 371, is subject to suspension, revocation, or an administrative penalty. (4) Accepting stolen property. A pawnbroker or pawnshop employee who knowingly or without exercise of due care accepts stolen property or accepts property which has been represented to be stolen without reporting it to law enforcement may be subject to suspension, revocation, or an administrative penalty. A pawnbroker or pawnshop employee who has personal knowledge of a pawnbroker or a pawnshop employee accepting stolen property without reporting it to law enforcement is subject to suspension or an administrative penalty. (5) Failure to comply with commissioner's order. A pawnbroker or pawnshop employee who fails to comply with an order of the commissioner is subject to suspension, revocation, or an administrative penalty.


(6) Responsibility for compliance. Any licensed pawnbroker or pawnshop employee who knowingly or without exercise of due care violates the purposes of the Texas Finance Code, Chapter 371, or this chapter is subject to suspension, revocation, or an administrative penalty. (7) Responsibility for acts of others. Any person who holds a pawnshop license will be responsible for the acts of its officers, directors, employees, and agents in the conduct of the pawnshop business. Source Note: The provisions of this §85.604 adopted to be effective October 1, 2000, 25 TexReg 9213. §85.605. REDEMPTION OF GOODS AFTER LICENSE REVOCATION OR SUSPENSION. A pawnshop that ceases operation must make reasonable accommodations to ensure that a pledgor has an opportunity to redeem pledged goods. A sign must be posted in compliance with §85.401(b) of this title that informs a pledgor of the process of redemption. A copy of the posting along with additional contact information must be submitted to the commissioner. The opportunity for redemption may be made by allowing the pledgor to redeem even though the pawnshop is no longer in business or by providing accommodations so that the pledgor may redeem goods through another licensed pawnshop. Source Note: The provisions of this §85.605 adopted to be effective October 1, 2000, 25 TexReg 9213. §85.606. SURRENDER OF LICENSE. (a) Winding down. When a licensee surrenders its license or ceases business operations, the licensee must comply with §85.605 of this title. (b) Surrendering to avoid administrative action. A licensee may not surrender a license after an administrative action has been initiated without the written agreement of the agency. Source Note: The provisions of this §85.606 adopted to be effective October 1, 2000, 25 TexReg 9213. §85.607. HEARINGS. Hearings held under this chapter will be held in accordance with Administrative Hearing Process and Rules of Procedure in the Finance Commission Agencies, §9.1 et seq. of this title, the Administrative Procedure Act, the Texas Rules of Civil Procedure, and the Texas Rules of Evidence. Source Note: The provisions of this §85.607 adopted to be effective October 1, 2000, 25 TexReg 9213; amended to be effective September 19, 2005, 30 TexReg 5338. §85.608. CERTIFICATE OF STANDING; COPIES. Upon request, a certificate of good standing must be provided in accordance with §82.2 of this title. Source Note: The provisions of this §85.608 adopted to be effective October 1, 2000, 25 TexReg 9213.

SUBCHAPTER G. ENFORCEMENT; PENALTIES. §85.701. FAILURE TO TIMELY FILE A PAWNSHOP EMPLOYEE APPLICATION. (a) Reasonable ground for denial. Failure to file a pawnshop employee application with the Office of Consumer Credit Commissioner within seventy-five (75) calendar days of the first day the employee participated or trained in a transaction subject to Texas Finance Code, §371.101(c), shall be a reasonable ground for denial of the license. Should the commissioner find that no other ground is present on which to base a denial of the license, the commissioner may grant the license with an agreed suspension as set out in subsection (b) of this section. (b) Agreed suspension. As stated in subsection (a) of this section, if the commissioner finds that no grounds other than failure to timely file is present, the parties may agree upon one of the following options in lieu of denial: (1) if the applicant has not previously held a pawnshop employee license, the application will be granted and then immediately suspended for the number of days equal to 20% of the total number of days past the seventy-fifth (75th) calendar day which the applicant worked without a license; (2) if the applicant has previously held a pawnshop employee license, the application will be granted and then immediately suspended for the number of days equal to 30% of the total number of days past the seventy-fifth (75th) calendar day which the applicant worked without a license; (3) in cases where the pawnshop accepts responsibility for failure to timely file, and the suspension calculated under paragraph (1) or (2) of this subsection results in a suspension period in excess of fourteen (14) days, the pawnshop may pay thirty dollars ($30) per suspension day to reduce the suspension period; or (4) some other option agreeable to all parties. (c) Suspension calculations. There will be no suspension of less than one (1) complete day. All calculations resulting in fractions shall be rounded up to the next full day. (d) A pattern of violations may result in an additional administrative action, denial, or the forfeiture of the options in this section. Source Note: The provisions of this §85.701 adopted to be effective October 1, 2000, 25 TexReg 9215.


§85.702. ACCEPTING PROHIBITED MERCHANDISE. (a) Reasonable ground for revocation. Reasonable ground for revocation of the license exists when a pawnbroker or pawnshop employee violates Texas Finance Code, Chapter 371, by knowingly or without exercising due care fails to prevent a transaction of stolen property. Should the commissioner find that no other ground is present on which to base a revocation of the license, the commissioner may agree to a suspension or an administrative penalty as set out in subsections (b) and (c) of this section. (b) Individual violations. A pawnbroker or a pawnshop employee found to have taken items in violation of §85.418(a)(1) and (3) of this title, is subject to the following penalty: (1) If the violation results from the action of ownership or management, the pawnshop license shall be suspended for one day per each item found on premises or the pawnshop may pay an administrative penalty per each item found on premises of: (A) one hundred dollars ($100) for the first violation; (B) two hundred dollars ($200) for the second violation subsequent to the date the first violation is cited; (C) five hundred dollars ($500) for a violation subsequent to the date the second violation is cited. (2) If the violation results from the action of a pawnshop employee, the employee license shall be suspended for one day per each item found on premises or the pawnshop employee may pay an administrative penalty of fifty dollars ($50) for each item found on premises. (c) Multiple violations. A pawnshop that is found to have more than ten (10) violations of any of the provisions of §85.418(a)(1) and (3) of this title in a two (2) year period is subject to the following penalties in addition to the penalties of subsection (b): (1) suspension of three (3) days; or (2) in lieu of suspension an administrative penalty of one thousand dollars ($1,000) for each day of suspension. (d) Alternative resolution. If a pattern of violations indicate a lack of the management's affirmative duty to supervise its employees to prohibit violations of §85.418(a)(1) and (3) of this title, then forfeiture of the options in subsections (b) and (c) of this section will result. If the agency has independent proof of violations of §85.418 of this title, the pawnbroker or pawnshop employee may be subject to stronger administrative actions than required by this section. Source Note: The provisions of this §85.702 adopted to be effective April 5, 2001, 26 TexReg 2537. §85.703. SAVINGS CLAUSE. If any portion or provision of this chapter is found to be illegal, invalid, or unenforceable, such illegality, invalidity, or lack of enforceability shall not affect or impair the legality, validity, and enforceability of the remainder hereof, all of which shall remain in full force and effect. Source Note: The provisions of this §85.703 adopted to be effective October 1, 2000, 25 TexReg 9215.

PAWNSHOP RULES APPENDICES

Pawnshop Rules Appendices 2005 31

Appendix 1 – 7 TAC §85.405(a)(1)(A)

PLEDGOR=S NAME (Last Name First)

LOAN #

ORIGINAL LOAN #

( SEQUEN TIAL

NOHERE TICKET .

)

PLEDGOR=S ADDRESS (Residence) CITY STATE ZIP

DATE MADE

IDENTIFICATION TYPE AND NUMBER

HEIGHT

SEX

D.O.B.

DATE DUE

EMP. IN

(

NAME, ADDRESS, AND TELEPHONE NUMBER OF PAWNSHOP HERE

)

EMP. OUT AMOUNT FINANCED.

The amount of cash advanced or credit extended to you.

$

FINANCE CHARGE.

The dollar amount the credit will cost you.

$

YOU ARE GIVING A SECURITY INTEREST IN THE FOLLOWING PLEDGED GOODS:

TOTAL OF PAYMENTS.

Amount required to redeem pledged goods on date due.

$

ANNUAL PERCENTAGE RATE. The cost of your credit as a yearly rate.

% PAYMENT SCHEDULE: Total of Payments is due on Date Due shown above.

PREPAYMENT: If you pay off early, you may be entitled to a refund of part of the finance charge if it exceeds $15.

ADDITIONAL CHARGE PAID ON REDEMPTION

$

DATE PAID

$

AMOUNT PAID

SEE OTHER SIDE FOR INFORMATION ABOUT NON-PAYMENT, AND PREPAYMENT REFUNDS.

LAST DAY OF GRACE:

ITEMIZATION OF THE AMOUNT FINANCED: GIVEN TO YOU DIRECTLY PAID TO US TO RENEW A PRIOR LOAN This loan may be renewed or extended unless this box is marked.

This loan may not be renewed or extended.

I AM THE OWNER OF THE PLEDGED GOODS AND / OR HAVE THE RIGHT TO POSSESS THEM. PLEDGED GOODS ARE FREE AND CLEAR OF ANY ENCUMBRANCE, LIEN OR CLAIM.

REDEMPTION USE ONLY___________________________________________________

REDEMPTION SIGNATURE (IF PERSON REDEEMING IS NOT THE ORIGINAL PLEDGOR, THEN FILL IN INFORMATION ON REVERSE)

x _______________________________________________________________________ PLEDGOR=S SIGNATURE NOTICE: SEE REVERSE SIDE

Appendix 2 – 7 TAC §85.405(a)(1)(A) We have made you a loan of the Amount Financed that is secured by the pledged goods you have deposited with us as listed on the front of this ticket. You do not have to pay this loan. If you want to recover the pledged goods you must pay us the Amount Financed plus the Finance Charges we have earned. If the Finance Charge shown on the front is $15 or less we earn all the Finance Charge when the loan is made. If the Finance Charge is greater than $15 and you pay the loan in full or renew it before the Date Due, we will reduce the Finance Charge by 1/30th for each day from the day you pay or renew the loan to the Date Due, but the Finance Charge will never be reduced below $15. The Total of Payments is the amount you owe on the Date Due. If you pay the loan after the Date Due, we will add 1/30th of the Finance Charge for each day from the Date Due until the date you pay. If you do not pay the loan on or before the Last Day of Grace your pledged goods may become our property if we so choose. If your pledged goods become our property we may sell it to you or any other person at a price determined by us and the buyer must pay sales tax. IF YOU NEED ADDITIONAL TIME TO PAY YOUR LOAN, YOU MUST GET OUR AGREEMENT IN WRITING. VERBAL AGREEMENTS FOR ADDITIONAL TIME ARE NOT BINDING. You have certain rights to extend or pay this loan by mail. If you redeem by mail, you must pay us the amount due on the loan plus reasonable and necessary expenses of packaging and shipping and the expense of insuring the goods in an amount specified by you. Payment for mail transactions may be required to be made by cashier=s or certified check or money order. If you pay the loan we will return the property to you in the same condition we received it. If we lose your property or if it is damaged while in our possession, we will replace it with identical or similar property of the same kind and quality or have your property restored to its condition at the time you deposited it with us. All replacements are subject to approval by the Consumer Credit Commissioner. Any person who possesses this pawn ticket may pay us the amount due and we must give that person the pledged goods if we have not been notified in writing that this ticket has been lost or stolen. IF THIS TICKET IS LOST OR STOLEN, YOU MUST NOTIFY US IN WRITING TO PROTECT YOUR PLEDGED GOODS. Fee for lost ticket and statement: $1.00. I authorize __________________________________, ID type and number________________________________, to renew or extend this loan in my name.

TEXAS PAWNBROKERS ARE LICENSED AND REGULATED BY THE TEXAS CONSUMER CREDIT COMMISSIONER. FOR INFORMATION OR ASSISTANCE WITH ANY PAWN OR OTHER CREDIT PROBLEM CALL 1-800-538-1579.

NOTICE: SEE REVERSE SIDE

NO GOODS SENT

C.O.D. NO GOODS SHOWN FOR REDEMPTION UNTIL PAID

If redeeming by person other than original pledgor. Name ________________________________________________ ID type and number _____________________________________

NO PERSONAL

CHECKS OR CREDIT CARDS ACCEPTED FOR

PAYMENT

32 Pawnshop Rule Appendices

Appendix 3 – 7 TAC §85.405(a)(1)(B)

CASH RECEIVED EXTENSIONS

DATE

Amount Financed

Finance Charges Other Charges Date Due Amount Due

LOST PAWN TICKET STATEMENT C FEE $1.00 Date __________________

I have verified ID and description as on other side. Employee/PS _________________________________

My ticket was lost, destroyed, stolen. (Circle proper word)

Pledgor X _________________________________________

PICKED UP

ID Type and Number __________________________________________________________

X _______________________________________________________________ Signature on Redemption

FORFEITED

Date Pulled ___________________ By ______________________


Appendix 4 – 7 TAC '85.407(a)

MEMORANDUM OF EXTENSION Date _______________ Pawn Ticket No. _______________

( Name, address, and telephone number of pawnshop here ) 1. Finance Charge (Pawn Service Charge) Paid Today ...........................................................................................................$ ___________________________ 2. Daily Amount of Finance Charge (Pawn Service Charge) ..................................................................................................$ ___________________________ 3. Finance Charge (Pawn Service Charge) Paid to (Date) .......................................................................................................$ ___________________________ 4. New Maturity Date ………………………………................................................................................................................ ___________________________ 5. New Last Day of Grace ......................................................................................................................................................... ___________________________

AMOUNT DUE AT REDEMPTION: a. Amount Financed (shown on pawn ticket) ..........................................................................................................................$ ___________________________

PLUS

b. Finance Charge: Number of days from date in Line 3 to date paid ________ X ________ = ...................................................................$ ___________________________

(Daily Amount) (Line 2)

c. Total Amount Due (Line a amount + Line b amount) …………………………….............................................................$ ___________________________ YOU ARE NOT OBLIGATED TO PAY THIS PAWN TRANSACTION, HOWEVER, TO PREVENT LOSS OF YOUR GOODS DUE TO NON-PAYMENT, YOU MUST EXTEND OR RENEW YOUR PAWN TRANSACTION OR PAY YOUR PAWN TRANSACTION IN FULL ON OR BEFORE THE LAST DAY OF GRACE. KEEP THIS MEMORANDUM WITH YOUR PAWN TICKET. BRING YOUR PAWN TICKET TO REDEEM YOUR PLEDGED GOODS.

34 Pawnshop Rule Appendices

Appendix 5 – 7 TAC '85.413(e)(6)

PLEDGOR DISCLOSURE LOST OR DAMAGED GOODS

You have attempted to claim your pledged goods or to renew or extend your loan. Your pledged goods have been lost or damaged by the pawnshop. $ The pawnshop is required to repair or replace your lost or damaged item. Replacements are

required to be with a like kind item. Repair of a damaged item shall return the item to the condition in which it was received by the pawnshop. A pawnshop may, but is not required to, offer you a cash settlement as an alternative.

$ Do NOT pay the pawnshop until your item or an acceptable replacement item is available. No

additional pawn service charge will be added beyond today, when you attempted to redeem, renew, or extend your loan.

$ All replacements of pledged goods are subject to review by the Office of Consumer Credit

Commissioner if you believe that a review is necessary for an equitable settlement. If you cannot reach a suitable settlement with the pawnshop, you must seek the Commissioner=s review before pursuing a remedy in court. If the Commissioner does not approve a replacement before the 91st day after the date the Commissioner receives your complaint concerning the lost or damaged goods, or if you do not accept the Commissioner=s determination, you may seek a remedy in court.

$ You may get an Office of Consumer Credit Commissioner complaint form from the pawnshop. $ If multiple items are pledged on a single loan, some of the items may be redeemed. The pawnshop

may negotiate for a partial payment to redeem the balance of the pledged goods.

Office of Consumer Credit Commissioner

Consumer Helpline

(800) 538-1579

2601 N. Lamar Blvd. Austin, TX 78705 www.occc.state.tx.us 512-936-7600 512-936-7610 - Fax

Pawnshop Rule Appendices 2005 35

Appendix 6 – 7 TAC §85.413(h)

Office of Consumer Credit Commissioner

2601 N Lamar Blvd Austin TX 78705

www.occc.state.tx.us

512-936-7600 Fax: 512-936-7610

CONSUMER COMPLAINT FORM

CONSUMER INFORMATION Your Full Name____________________________________________________________________________________ Address___________________________________________________________________________________________ City/State/Zip______________________________________________________________________________________ Are you age 18 or older? Yes No E-mail Address__________________________________ Home Phone ( ) ______________________________ Work Phone ( ) _____________________________ The best place and time to reach you from 8 a.m. to 5 p.m. is at work or home (circle one) at _________________ (time).

COMPANY OR INDIVIDUAL ABOUT WHOM YOU ARE COMPLAINING Company__________________________________________________________________________________________ Address___________________________________________________________________________________________ City/State/Zip______________________________________________________________________________________ Telephone ( ) _______________________________ List the names of any individuals with whom you have had contact____________________________________________ _________________________________________________________________________________________________

ACCOUNT INFORMATION Your account name (as company has it)_________________________________________________________________ Your account number (as company has it)________________________________________________________________ Did you sign any papers? Yes No Were they signed at your home? Yes No Were you given a copy? Yes No

COMPLAINT INFORMATION All complaints and accompanying information are presumed to be open records unless excepted pursuant to TEX. GOVT. CODE §552.101 et seq. Information and records not excepted must, by law, be given to anyone who requests them.

Explain your complaint fully by attaching a description of the events in the order in which they happened. Enclose copies of all documents that relate to your complaint.

Have you contacted an attorney relative to this complaint? Yes No Is there a court action pending? Yes No What do you believe would be a fair resolution to this matter?________________________________________________ __________________________________________________________________________________________________ How did you find out about the OCCC?__________________________________________________________________ By signing my name I affirm that the information provided on this form (and any attachments) is accurate to the best of my knowledge and I authorize you to relay this information to the individual or company about which I am complaining. If my complaint concerns violations of state or federal law outside OCCC jurisdiction, it may be forwarded to the appropriate agency. Signature______________________________________________________ Date______________________________ Note: You may either mail this form or return it as an attachment via e-mail. A signature is not required for those forms returned via e-mail, however, choosing to return the form via e-mail will also be considered an affirmation of the statements above.

Return to: Office of Consumer Credit Commissioner • 2601 N Lamar Blvd • Austin TX 78705 • E-mail: [email protected]

http://www.occc.state.tx.us/

36 Pawnshop Rules Appendices 2005

Appendix 7 – 7 TAC '85.418(a)(2)

ACCEPTANCE OF GOODS MODEL POLICY

The Texas Pawnshop Act requires that the pawnbroker monitor goods purchased, accepted in pawn, or

goods otherwise acquired in order to identify and prohibit transactions involving stolen goods.

This pawnshop will not accept for pledge or otherwise acquire any item that is stolen or has the

appearance of not belonging to the person offering such item for pledge or purchase.

Each employee of this pawnshop will not accept for pledge or otherwise acquire:

1. Any item on which the serial number has been defaced, altered, or removed;

2. Any item that is marked in a manner that suggests or indicates ownership by a:

a. Rental company;

b. Motel;

c. Training school;

d. Construction company;

e. Governmental body; or

f. Any person or firm other than the person offering the item.

3. Any item of new merchandise still in the box.

The only exception occurs if the seller or pledgor of the offered item produces a valid receipt or other evidence of

ownership or purchase of the item. In each case, a copy of the receipt must be attached to and retained with the

item or filed with this pawnshop's copy of the pawn or purchase ticket.

Each employee of this pawnshop will require, at a minimum, one of the following forms of identification as

a prerequisite to any pawn transaction or purchase;

1. A state-issued driver's license;

2. A state-issued identification card;

3. A passport;

4. A valid military identification;

5. A nonresident alien border crossing card;

6. A resident alien border crossing card; or

7. A United States Immigration and Naturalization Service Identification.

The form of identification must contain a photograph of the pledgor or seller. Each employee's best effort

must be used to determine that the identification used is genuine and unaltered and that the identification

presented properly identifies the pledgor or seller.

Used or secondhand personal property shall not be purchased from a person other than another

pawnbroker unless a record is established that contains:

a. The name, address, and physical description of the seller;

b. Either the driver's license number, military identification number, identification certificate number, or

other official number capable of identifying the seller;


c. A complete description of the property including the serial number if reasonably available or other

identifying characteristics; and

d. A signed document from the seller stating that the seller has the right to sell the property.

No employee shall accept as pledged goods building construction materials including copper pipes,

tubing and wiring, aluminum wire, plumbing supplies, electrical supplies, window glass, lumber, or other similar

materials unless a record is established that contains the information authorizing the purchase of used or

secondhand personal property as discussed above.

This pawnshop will not accept stolen items for pledge or purchase. Each employee should use the best

judgment possible when evaluating the pledgor or seller of goods to determine that the person is the rightful

owner of the goods. If an employee doubts the rightful ownership or authority of the person offering goods for

pledge or purchase, the transaction should not be made. Each employee is instructed to observe the actions of

the person offering the goods. It is important to pay attention to the value of the item being offered as compared

to the price requested and any other circumstances of the offer or that might relate to the validity of the

transaction.

AGAIN, THIS PAWNSHOP DOES NOT ACCEPT FOR PLEDGE OR PURCHASE ANY ITEM THAT IS STOLEN OR HAS THE APPEARANCE OF BEING STOLEN.

The undersigned employee acknowledges receipt of this policy and understands full compliance with the terms of this policy is a condition of continued employment. _____________________________________________________ Signed _____________________________________________________ Printed Name _____________________________________________________ Date

Documents

Texas Pawnshop Act Coveractionpawnshops.com/wp-content/uploads/2015/05/OCCC_Texas_Pa… · Texas Pawnshop Act Effective September 1, 2005 ... exercise the state's police power to