By Seth Gold
Last week, here in Michigan, customers of Global Pawn in Monroe showed up to pay off their loans and collect the merchandise they’d pawned, just to find out the store had closed. The owners were long gone and so was everyone’s stuff.
There are a few bad apples in every profession – but in an industry that most people don’t understand – when something like this happens, it makes all of us look bad. So for those of you that may need a loan some day, we think it’s important that you understand what to look for when picking your pawn shop.
First of all, pawn shops – just like every other business – are regulated. The laws vary by state, but a quick google search will tell you exactly what you can expect in your area. Here in Michigan, Les worked with state legislators, back in 1998, to set one of the lowest interest rates in the country. Michigan law states pawn shops can charge no more than 3% interest a month, loans must be for valid for 90 days and shops are allowed to charge a $1.00 storage fee per month.
Yet, we see many “pawn brokers” in our area breaking that law. Not just small shops – but shops that have several locations.
At American Jewelry and Loan, we offer a “Max Cash Guarantee”. We offer our customers 20% more cash than anyone else in the area. In order to get that extra money, they need to show us their pawn tickets. So we see what’s going on and we have the evidence.
Pawn shops are doing what we call “buy backs”. They buy your merchandise for a set price and then you’re able to buy it back in 14 days (or whatever time frame they randomly set) for a much higher price. Much higher than the 3%, 90 day loan that the state requires.
Teresa Coulter is the perfect example of a customer that was taken. She brought her engagement and wedding rings into Global Pawn. She needed the money to help out a family member. So she pawned her $3000 ring for $200 and a band for $40. She was given 30 days to “buy back” her rings for $264. That’s a 10% interest rate. And with only 30 days to pay back the loan – not a lot of time to find the cash she needed to keep her jewelry from being sold to someone else.
While there aren’t a lot of shops that simply close their doors and run off with their customer’s valuables – there are a lot of shops that use the word “pawn” in their name, but don’t follow the rules that regulate the pawn industry.
So again, the laws in Michigan are hard and fast. A pawn shop cannot charge you more than 3% and a $1.00 storage fee per month. The loan must be for a 90 day period.
If they charge you anything more than that, the law states they have to give you your merchandise back for free. You don’t have to pay back the loan or the interest.
Check the laws in your state. If you think you’ve been taken, call your local police department.
Last Friday, we invited the Coulters into American Jewelry and Loan and we replaced Teresa’s rings free of charge. We felt her pain and while we couldn’t replace the originals, we wanted to give her a new memory. We’re not always as “hardcore” as you think. (You can see her husband Randy get down on one knee and propose all over again by clicking on the link below!)
After this story aired on Fox2 in Detroit, we were bombarded by calls in our area. Not just from Detroit, but the surrounding suburbs. One woman who saw the piece and realized she was being taken advantage of by a suburban pawn shop, called the local police and was told, “everyone needs to make money”. That’s not the way it works. There are laws in place to protect you.
Our family has been in business for more than 40 years and we work closely with the National Pawnbrokers Association to make sure customers are treated fairly. And while we don’t talk about this on TV, I am the president of the Michigan Pawnbrokers Association. We’re working hard to make sure customers are treated fairly when their life circumstances change and they need a little help.
If you think you’re being taken advantage of, use our “Can I Pawn This” application on our home page and send us your pawn ticket. Or leave a comment right here on our blog. We’ll do our best to point you in the right direction.
In the meantime, congratulations again – to the Coulters. Here’s the link to their “second engagement”!