Pawnbroker and second-hand dealer business obligations in NSW

There are laws that you must follow to run a business as a pawnbroker, or for a business where you buy or sell some second-hand goods.

Pawnbrokers and Second-hand Dealers Act 1996 and regulations

The Pawnbrokers and Second-hand Dealers Act 1996 (the Act) sets out the rules that must be followed by all pawnbroker and second-hand dealers in NSW.

The Act provides protection for consumers, outlines appropriate standards of conduct, and prevents misleading or dishonest dealings.

Further information can be found in the Pawnbrokers and Second-hand Dealers Regulation 2021.

This includes detailed information on:

• licensing
• record keeping and reporting requirements
• fees, and
• business conduct.

Running your pawnbroker or second-hand dealer business

All licensees must:

• display signs at their business
• keep electronic records, and
• check the identity of customers.

Most businesses also need to hold goods for at least 14 days before selling them.

Contract numbers must be displayed on goods by either marking up the item or attaching a label.

Business addresses

You must notify NSW Fair Trading of all NSW premises that are used to conduct business and for the storage of goods. Interstate addresses will not be accepted.

If you intend to conduct business as a second-hand dealer from a market stall or any other place occupied infrequently, you must include:

• the name of the market
• street name, and
• your stall number (if applicable) in the address.

You do not need to notify NSW Fair Trading of any watercraft not kept at business premises, but you must keep a digital record of the location, and you may need to provide this information on request to NSW Fair Trading or NSW Police.

Clearly display signs

Signs need to be clearly displayed so that customers can easily read them, but you do not need to use set colours, fonts or sizes.

Signs should be in English, but you can post them in another language as well.

Licence information

You must display at each place of business:

• the name of the licensee
• the licensee's number
• the category of licence.

Restoration of goods

You must display at each place of business the public has access to:

“You have a legal right to claim goods from these premises that you have good reason to believe are yours. Go to any police station and a police officer will advise you of your rights and what you will need to do.”

Information to police

You must display the following notice at each place of business the public has access to:

"Any information provided to the licensee by or about a customer in relation to the trading of second-hand goods may be furnished to the police."

Interest and other fees or charges (pawnbrokers only)

Pawnbrokers must display at each place of business a sign with:

• the rates of interest charged
• any other fees and charges.

Check the identity and title of a supplier

Before taking goods for sale or pawn, you need to check the supplier's identity. ID documents can include the following:

• Australia drivers’ licence
• Australian passport, or
• foreign passport with additional proof of address, for example, lease or utility bill.

Before you purchase an item or accept a pawn, your customer must complete an ownership statement that includes:

• details of the licensee
• details of the supplier
• a detailed description of the goods.

Make sure you hold onto regulated goods

Second-hand dealers must hold regulated goods for 14 days after receiving them. There are some exceptions to this rule, including goods for sale on consignment and goods purchased by the licensee at auction.

The goods cannot be altered until after this retention period has ended.

During this time, second-hand dealers must keep the goods on notified premises.

Second-hand dealers can keep boats in any convenient place but should keep electronic records of the location.

Pawnbrokers also need to keep goods on approved premises during the redemption period, which must be at least 3 months.

Keep compliant records

You need to record information about any transactions of second-hand or pawned goods and keep them for three years.

The details that you need to keep are in Part 2 of the Pawnbrokers and Second-hand Dealers Regulation 2021.

You must:

• record the buyer’s name and address if the sale price of an item is $100 or more
• always record the sale price of an item (if any)
• record the disposal (or sale) of an item by close of business the same day.

Market promoters must keep records of:

• all vendors selling second-hand goods at a market
• the kinds of goods sold
• person selling or pawning the goods
• a description of the goods
• the date the transaction takes place
• the price paid for the goods.

Generally, licensees must create and store records electronically, using approved record-keeping software.

Licensees must keep the following in hard copy:

• written statements of ownership
• pawnbroker’s record of pledge.

It is a requirement that all records of prescribed goods acquired be sent by electronic transmission to the Commissioner of Police via their weblink site within 3 days after the record was made.

Stolen goods

NSW Police can require you to hold goods that they suspect were stolen or unlawfully obtained for 56 days. If needed, this can be extended by another 56 days.

Title to stolen goods

The purchaser of an item does not gain title to it if they were not sold with the owner’s consent or with the necessary authority.

Recovery of stolen goods

If a person tells you that you are in possession of stolen goods, you must direct the person to report this to the police.

If the theft or unlawful dealing of the goods has been reported to the police before, the person (known as a claimant) must provide the police with:

• documentary evidence of ownership or a statutory declaration, and
• make a written claim to the police they are the owner of the goods and that the goods have been stolen or otherwise unlawfully dealt with.

If the police have no reason to suspect that the documents or statements are false or misleading, they may give you a ‘restoration notice.’ After receiving it, you have 28 days to:

• return the goods to the claimant, or
• lodge a hearing to have the matter resolved with the NSW Civil and Administrative Tribunal.

If administrative or criminal proceedings begin, you must keep the goods in their original form until the case or proceedings finish.

If no decision is made about ownership of the goods during the proceedings, the 28-day period will carry on after those proceedings

Pawnbroking transactions

Some rules apply to pawnbrokers only. The aim of these rules is to protect both pawnbrokers and consumers entering into pawn agreements.

Pawnbrokers must make a record of the pawn agreement, sell unredeemed items for the best possible price, and give notice to the customer if they can claim money back.

Keep a record of the ownership agreement

You must make a record of the ownership agreement and give the customer a copy (known as the ‘pawn ticket’).

A pledge is only valid if the person pawning the goods signs an original hard copy record of the agreement that contains all the details below.

An employee who accepts a pawn does not need to sign the agreement. The agreement can contain either their name or a unique identifier like an employee ID.

Details of the pledge must contain:

• the date of the pledge
• the total amount lent on the goods
• a reasonable description of the goods, including each identifying number or other mark (for mobile phones this must include the International Mobile Equipment Identity (IMEI)
• the Media Access Control (MAC) must be recorded for mobile phones, tablets, computers or laptops, containing a wireless local area network (WLAN) interface
• the name and residential address of the owner of the goods and any agent through which they are pawned.

Interest, fees and charges must be included to show:

• the interest rate charged by week, month or another period
• any other charges
• an equivalent annual interest rate
• a statement that the pawner has the option of paying interest monthly if the interest period is going to be greater than a month
• the agreed frequency of interest charges and when they become payable (for example, on a Friday or on the 20th of the month)
• an itemised statement of:
  • the fees and charges that are or may become payable, including those deductibles from the proceeds of sale of the goods
  • the amounts of the fees and charges
  • the manner of calculating the fees and charges.

Details for the redemption of items must include:

• whether goods can be redeemed separately if the pawn ticket covers more than one item
• the address where the goods will be held during the redemption period
• the date on which the redemption period ends
• the method by which the goods will be sold if they are not redeemed.

Your customer must be provided with information that explains their rights and responsibilities.

You must replace lost pawn tickets if the customer asks and gives proof of their identity.

Entering into an extension agreement

A pawnbroker and a customer can agree to extend the redemption period even if the original redemption period has expired.

You must make a record of the extending agreement and provide the pawner with a copy. The agreement must:

• include an identifying reference to the original agreement which must be attached or incorporated
• include the new redemption period
• include the date the extending agreement was entered into
• specify any new or varied rates, fees or charges
• be signed by the pawner or the person extending the agreement for the pawner.

Sell unredeemed items for the best possible price

If a customer does not redeem their goods during the redemption period, you can sell the items.

You must sell items in a manner that will make sure that you get the best price reasonably possible, either by auction at any premises or in any manner at your approved business premises.

In legal proceedings, the burden of proof is on the pawnbroker to show that they have complied with these rules.

This can also be done by anyone else who is entitled to redeem the goods. If the pawner is unable to extend the agreement, they can provide an authority to someone who can do it on their behalf.

Give notice about any surplus proceeds of sale

If you sell an unredeemed item and there are ‘surplus proceeds of sale,’ you must notify the customer within 21 days of the sale.

You do not need to provide notice if:

• the customer has requested in writing not to receive notice
• the amount that may be claimed is less than $100.

Surplus proceeds of sale is any amount exceeding the sum total of the loan amount and any charges received upon sale of a pawned good.

You must post the notice to the last known address of the customer. It should:

• include any amount that may be claimed
• state that the person is entitled to receive that amount at the business premises of the pawnbroker, or in another agreed way, at any time within 12 months of the sale.

Exemptions

An applicant may seek an exemption from NSW Fair Trading against certain provisions of the Act.

Previously granted unconditional or conditional exemptions are published on the NSW Fair Trading website.

Apply for an exemption

Download and digitally complete the exemption application form ensuring you clearly outline the exemption you are seeking and why.

Return the completed application to licensing.exemptions@customerservice.nsw.gov.au

Penalties for non-compliance

There are a range of potential penalties for breaking the rules including being issued with a 'show cause' notice for licence revocation if you incur a total of 12 or more demerit points within three years.

You will accrue demerit points if you or any of your employees have:

• been convicted of an offence under the regulations
• paid a penalty
• been issued with a penalty notice enforcement order.

Media access control (MAC) address

A MAC address is a unique identifying number that may be used to identify a device.

Licensee records of MAC addresses may assist police with identifying and locating possible stolen electronic goods.

To assist licensees, a step-by-step guide on how to access MAC addresses from different types of devices and operating systems has been developed by NSW Police.

A device may have more than one MAC address if it has multiple network interfaces. For example, a computer with an ethernet, and Wi-Fi connection.

Personal Properties Security (PPS) Register

The Personal Property Securities Act 2009 (PPS Act) sets out rules relating to the priority and enforcement of security interests in personal property.

Pawnbrokers and second-hand dealers may be required to comply with the PPS Act. Get more information at the PPSR website.