Pawnbrokers in Ohio have to comply with new licensing requirements as of March 2017. The stricter criteria are designed by lawmakers to ensure higher level of protection for the general public.
Senate Bill 235, which was passed in 2016, increases the amount of the pawnbroker bond, a type of surety bond that pawnbrokers need to post in order to obtain their Ohio pawnbroker license. It also increases the minimum liquid assets they have to demonstrate and maintain. Additionally, the bill sets a broader definition for the pawnbroker profession and new rules regarding multiple business location licenses.
The licensing procedure that pawnbrokers undergo with the Consumer Finance section of the Division of Financial Institutions within the Department of Commerce (COM) guarantees that they meet the state standards for operating this type of business. In this way, consumers can safely use the services of licensed pawnbrokers, knowing that their interests and property are protected by the law.
Here are the most important changes that the bill introduces for pawnbrokers, and how they affect the citizens of Ohio.
The new pawnbroker bond amount
The previous bond amount was set at $25,000. As of March 2017, pawnbrokers in Ohio will have to post a doubled amount — a $50,000 pawnbroker bond.
Getting a surety bond is a common requirement for many professional licenses across industries and states. The bond is an extra layer of security that local, state and federal authorities apply to contribute for high professional standards in different fields. In this case, it is there to ensure that pawnbrokers’ customers are protected from misuse and fraud.
In the process of bonding, a surety guarantees for the pawnbroker in front of the licensing bodies. The bond is a financial proof that the bonded party will follow applicable legislation and will protect the interests of its customers. The bond amount is the maximum penal sum that an affected party can claim if a pawnbroker does not abide by the law.
The Ohio pawnbroker bond increase thus doubles the compensation that customers can receive in case an unlawful action is committed against them by a pawnbroker.
Other new provisions in the bill
The changes introduced in SB235 encompass other aspects of the licensing process for pawnbrokers in Ohio. The new legislation expands the definition of a pawnbroker, which means that more types of businesses will need to get an Ohio pawnbroker license. It states that a pawnbroker is anyone who purchases personal property for resale, or with the agreement that the property can be sold back to the original owner for a higher price.
A separate license is now required for each pawnbroker location operated. This provision is also geared to bring higher protection for consumers, as it ensures that every pawnbroker shop will pass the rigorous licensing process.
The liquid assets amounts that need to be presented and maintained while licensed have also been changed. At the time of applying for a license, pawnbrokers now have to demonstrate they have $125,000 in liquid assets, which used to be set at $100,000. During the licensing period, pawnbrokers previously had to keep them at a minimum of $50,000, but the new amount is set at $75,000.
The new rules for Ohio pawnbrokers introduced with Senate Bill 235 aim to raise the security provided for the general public. In the same time, the rules alo ensure higher standards and an improved image for this professional field.
Todd Bryant is the president and founder of Bryant Surety Bonds. He is a surety bonds expert with years of experience in helping business owners get bonded and start their business.