Non-workplace-based training effectiveness in the pawnbroker industry

¶ … improve or hinder the effectiveness of non-workplace-Based training programs for the American pawnbroker industry?

Overview of the Industry:

In the United States, there are two main functions of a pawnbroker. The first is making small loans, secured by personal property. The second function is the sale of merchandise.

According to the Florida Pawnbrokers Association, loans are the high profit center for pawnshops. "The retail side also generates an average of 27% of the shops revenue. The Association stated, "In 1996, the nation's 9,100 pawnshops generated $4 billion in revenue."

Pawnbrokers are regulated in the United States mostly at either the state or local area. While there is no uniformity among the regulations, laws, or ordinances, it seems most are issued licenses, required to make reports to law enforcement, and obviously prohibited from trafficking in stolen merchandise.

The amount the pawnbroker is permitted to charge as fees and interest vary, but is usually regulated. Interest rates seem to average between 2% to 21/2% per month. Loans are secured by the value of personal property. The personal property varies greatly, and includes jewelry, tools, electronics, musical instruments, photographic equipment, sports gear, bicycles, and other variable items. Pawnbrokers make loans on top quality merchandise, knowing that someday that item might be for sale on their shelves. Some pawnbrokers are permitted to trade in firearms.

The National Pawnbrokers Association said, "Between 70% and 80% of the items pawned are redeemed. Many pawnshops that cater to a repeating customer base have redemption of pledged property of over 90%.

The amount loaned is usually about 30% to 50% of the value of the item being used as security. The value is based on a worse case scenario.

When a customer of the pawnbroker defaults on a loan, the item is then sold for less than its retail value. Unlike regular retail stores, there is room for bargaining. Other customers of the pawnbroker from all income levels find pawnshops as a good place to find good deals on used but quality merchandise. Some pawnbrokers also supplement their inventory with new goods, making their stores more complete for their customers.

II. Licensure, Laws, and Regulations

All pawnbrokers are regulated on the local or state level. The Federal Securities and Exchange Commission regulates the activities of pawnbrokers on the national level if it is a public company.

Each municipality has adopted laws, rules, or ordinances designed to regulate the pawnshop. The governing authority issues a license, and collects a fee for that license. Pawnbrokers must then follow the authority's regulations, or face a forfeiture of its license. Pawnshops are required to make reports to law enforcement, and cooperate with local police departments. Failure to do so could cause the loss of a license, and in effect, putting the pawnshop out of business.

Many laws regulating the pawnbroker require the posting of a surety bond. Others require sufficient insurance to make certain the secured property is covered in case of a loss due to fire or theft. For example, the City of Boulder, Colorado requires pawnbrokers to:

Post a surety bond in the amount of $5,000

Provide proof of fire and property damage insurance policies upon the property the applicant holds as pledge in the minimum amount of one-half its' pledged value.

Pawnbrokers, through national and state associations, support regulation. Legitimate pawnbrokers take all appropriate actions to prevent receiving and lending against stolen property.

III. Cash Society

As incredible as it may first seem, there is a cash society in America. There are 25 million households (which is the equivalent of 75 million people) do not have bank accounts. Some of this group include the elderly; poor; and immigrant. The immigrant population often does not trust banks, as the country they immigrated from may have a corrupt banking system, where the money is stolen from depositors.

The pawnbroker fills the need of those that need quick cash. Those that live in a cash society cannot get traditional loans at banks. They cannot qualify for credit cards. Pawnshops serve as a source of credit to millions of Americans. They provide small, secured loans -- $50 to $100 --for a brief period -- two to four months. Traditional banks or loan companies do not look for or accept this kind of business.

Business operations

The delivery of the training is most likely needed in multiple formats. This would include home study, courses, books, audio tapes, and seminars. There is no adult vocational / technical school that is dedicated solely to those who may wish to learn about pawnbroking. Those already employed within the pawnbroker industry cannot to get any professional training to increase their knowledge. It seems more like a "learn as you go" training method which is, at best, poor.

It appears that much of the training is haphazard. It consists of a senior employee "showing the ropes" to a junior employee. The training is inconsistent, at best. The lack of structure means that the learning employee is likely missing important knowledge and skills to operate successfully as a pawnbroker.

Pawnbrokers would find it difficult to expand a business due to a lack of trained personnel. How much should an employee lend against a battered bugle or a stereo system? There is no way to take an untrained employee and place them into a pawnbroker shop, and expect immediate or profitable results from their performance. Without training, their failure is assured.

With training, a pawnshop could expand to multiple locations, severing other segments of the local community.

Accessed March 25, 2003.

American Society of Training and Development; Various publications.

Florida Pawnbrokers Association, Kissimmee, FL.; Internet;

http://floridapawnbrokers.org/; Accessed March 25, 2003.

Gee, Jack. Detective Division, Fort Lauderdale, FL Police Department. Internet; http://ci.ftlaud.fl.us/police/cid1102.html; Accessed March 24, 2003.

National Pawnbrokers Assocation, Roanoke, VA. Internet; www.nationalpawnbrokers.org.

Pawnbroker Regulations; City of Boulder, Colorado. Internet;

http://www.ci.boulder.co.us/clerk/licensing/Pawn.html; Accessed March 25, 2003.

Texas State Capital, Internet:

http://www.capitol.state.tx.us/tlo/77R/billtext/SB01370I.HTM;Internet;

Various statistics, U.S. Department of Labor and Industry, available at http://www.dol.gov/.; Accessed March 25, 2003.

U.S. Department of Labor ID Code is: 191.157-010