As in chess, pawns serve useful purpose

By Philip Fuehrer

Pawn shops are dangerous, right? Scourge of the earth, Armageddon-type stuff, right? Relatively little discussion is usually made when community organizations or individuals give their recommendations to city councils. Certainly few hard facts are presented. Rejection of such shops is, seemingly, based only on feelings: ¡°Pawn shops are evil and certainly drag in a type of clientele from which our loved ones need protection.¡±

But, what¡¯s the truth? I consider myself a pretty could researcher - better than most. I tried to find hard facts about evils of pawn shops. There had to be dozens, perhaps thousands of comprehensive reports on the societal decay wrought from even the mention of the words ¡°pawn shop¡±. Hours of trying to find something bad (or a comparison of a pawn¡¯s good vs. bad qualities) left me with¡­.nothing.

Sure, I found a lot of innuendo. I found a lot of citizen commentary in newspapers and in public hearing testimony around the country, but nothing factual. No statistical analyses on the increase in crime. Not one single line documenting the average amount of plummeting values to area properties. Perhaps I missed it.

I did, however, discover many other things. The industry generates about $5 billion in revenues and makes about $9 billion in loans. At the very basics a pawn shop is a bank for those who don¡¯t have money. The national nonprofit ACORN, a group whose mission includes protecting the interests of the financially disadvantaged, estimate that 1 in 8 (13 percent) of American households have no form of bank account - existing on a cash only basis. A study from St. Paul-based Jobs Now showed that a third of Minnesotans don¡¯t make enough money (at least $9.27/hr) to support a family's household needs. The need for extra cash - and the pawnshops that can provide it - is far more pervasive than many people want to acknowledge. Pawnshops can serve as the only source of cash - the only safety net - for those people who have no credit to carry them through.

While pawnshops certainly continue to help fill the banking gap for those in between jobs or those waiting for the child-support check to come in, the industry has apparently changed. You may not yet consider them an asset to neighborhood property values, but they are not the landscape blight they once were. Pawnshops have worked to present their stores as traditional retail with a loan twist. I had a friendly chat with Sgt. Mike Simmons, a 19-year veteran with the St. Paul Police Department and the officer in charge of overseeing St. Paul¡¯s pawn shops. According to Sgt. Simmons pawn shops are clearly moving away from mom and pop stores. ¡°Pawnshops have gone corporate,¡± he stated. ¡°I like to call Pawn America the ¡®Best Buy¡¯ of the pawn. They¡¯ve tried to go upscale.¡± Indeed, Pawn America stores don't resemble the dark, dingy images many people still think of when you say the word ¡®pawnshop¡¯. They are clean and well-lit. Today¡¯s pawnshops have really become discount retail stores of used goods that also offer the short-term credit needed by some to pay the bills, buy groceries or fix the car .

Now don¡¯t get me wrong. I am not advocating a pawn shop on every corner. Perception can be very real and very pervasive. An excessive density of pawn shops only serves to feed into current impressions that pawn shops breed desperation and theft. Revitalization of an area can by stymied if a lot of people see pawn shops as fences.

But, criteria, rules and regulations for overseeing pawns are already in place. They must be licensed. They must record transactions and most now use video to do so. In St. Paul, these videos must be held for four months in case police need to review a specific transaction and/or use the tape as evidence in court. Pawns must make a daily report using the Automated Pawn System (APS), Minneapolis Police Department-developed system used to monitor and track the pawn business and those who use them. In addition to the APS, pawn shops use a separate national database to track down stolen property and tip them off to other questionable activity. Hours are regulated; pawns typically must be separated from residentially zoned property; and require a special conditional use permit. The final hurdle of getting neighborhood and council approvals all but ensure that you won¡¯t have high concentrations of pawn shops unless you really want that.

Pawns certainly aren¡¯t perfect, but seem to be no more a burden on society than many other businesses. Yes, some stolen property makes it into the pawn system. But, as Sgt. Simmons says, ¡°They (the pawn shops) know that we can seize these (stolen) things.¡± Indeed, in an average year between $75,000 and $125,000 is recovered one piece at a time. That may sound like a large number, but it is less than 1% of all transactions conducted. It does mean that people get some of their stolen goods back. It also means that a couple dozen people, on average, get prosecuted each year for trying to pawn those stolen goods. Sure, some things can be difficult to track like jewelry or CDs but even the highest estimates show that no more than 3% of property has been stolen.

Pawns are regulated, watched and punished when they fail to comply, so they work to follow the rules. Asked about the pawn industry and their legitimacy, Sgt. Simmons felt that they are ¡°a reasonable business that needs reasonable oversight. They¡¯ve proven themselves to be a legitimate business.¡± In fact, the effectiveness of the entire pawn shop system has led some to expand it to other second-hand goods stores. Minneapolis and St. Paul have already added reporting requirements to many second-hand goods dealers on the suspicion that since pawn shops are so heavily regulated most stolen property bypasses them.

Pawning has a long, negative history to overcome, but they, and the industry have evolved in the last 20 years. They¡¯ve simply become neighborhood businesses providing vital services and desired merchandise to the community. And, for sites that have difficulty maintaining other business they may be one storefront that can be successful in a given location.

Pawnshops really only have one major flaw - and it's all in your mind.


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