Pawnbroking and second-hand dealers
Pawnbroking, second-hand dealers and the Personal Property Securities Register (PPSR)
To find out about the PPSR and how it will affect your business visit the PPSR website.
The Pawnbrokers and Second-Hand Dealers Act 1996 (the Act) aims to reduce the trade in stolen goods by providing a licensing regime with record keeping and proof of identity requirements.
It also aims to constrain the exercise of market power in respect of the provision of pawnbroking services and to provide a mechanism to facilitate the return of stolen property to rightful owners quickly and equitably.
Do I need a licence?
Persons who carry on the businesses of pawnbroking or buying or selling second-hand goods which are prescribed in the Regulation are required to be licensed. The second-hand goods that are prescribed in the Regulation are those which are considered to be at high risk of theft. There are some exceptions to holding a licence; refer to the section on exceptions below.
What records do I need to keep?
Licensees must know what their obligations are under the legislation in regard to record keeping (refer to the legislation links at the bottom of the page). The legislation requires pawnbrokers and second-hand dealers to maintain records in relation to such things, the person selling or pawning the goods, a description of the goods, the date the transaction takes place and the price paid for the goods. Before taking goods for sale or pawn, licensees must obtain prescribed documentary evidence of the person’s identity and a prescribed declaration regarding ownership of the goods.
Pawnbrokers and second-hand dealers (who are not exempt) are required to, as a condition of their licence, keep computer records. For more information go to the Computerised records page.
How long must I keep goods for?
In general, licensees must hold any second hand goods which were purchased or received in the course of the licensed business, unaltered, for 14 days after receipt.
What is the minimum redemption period for pawned goods?
A minimum 3 month redemption period applies to pawned goods, however a pawner may redeem their goods at any time. The Act specifies that a record of the pawn must be made and must contain certain information, including a fair and reasonable description of the goods and the total amount lent on the goods, together with the rate of interest charged by week, month or other period and any other charges. A pawner must receive a copy of the pawn agreement (also known as a pawn ticket) and other prescribed material. Licensees must be aware of their obligation under the legislation.
What happens if I don't comply with the law?
The Director General may take disciplinary action against licensees and Police and NSW Fair Trading Officers may impose penalties for non compliance with the legislation.
Are there exceptions to holding a licence?
A person does not need a licence under the Act to:
- carry on activities conducted in accordance with a licence, permit or other authority under another Act (for example the Property, Stock and Business Agents Act 2002, the Firearms Act 1996, or the Motor Dealers Act 1974). In particular, the Act does not require a person to obtain a licence under the Act to carry on a business or any activity that is authorised by a licence, permit or other authority issued to that person under any other Act
- deal in second-hand goods as part of a fund raising appeal under the Charitable Fundraising Act 1991
conduct the business of an auctioneer (the business of an auctioneer does not include selling goods by tender)
engage in recycling programs, selling goods collected in such a program or contracting with another person to give them ownership of those goods collected in a recycling program (local government councils, their employees, contractors to local governments and their employees operating under a contract in regard to the recycling program [but only if tenders were invited for the contract and the contractor was the successful tenderer]).
If a person in the course of, or as a matter ancillary to the carrying on of a business that does not require a licence under the Act:
sells goods pursuant to a power conferred by the Uncollected Goods Act 1995 or
takes goods as a trade-in as part payment for any new or used goods, or onsells any goods so taken or
sells any goods that have become second-hand goods by reason of being used in the course of a rental business conducted by the person, or
sells any goods for the purpose of taking or enforcing securities over those goods
that person does not require a second-hand dealers licence under the Act.
Trade-in in relation to goods, means the taking of the goods as part payment for any new or used goods.
What second-hand goods do I need a licence to sell?
Prescribed second-hand goods are those that are at high risk of theft. A licence is required when a trader deals in any of the following prescribed second-hand goods:
- items of jewellery (including watches) that include gemstones or precious metals
- gemstones and precious metals
- sporting and recreational goods
- musical instruments (but not including pianos other than electric or electronic pianos)
- photographic equipment (including digital cameras and digital imaging equipment)
- portable engine-powered, motorised or air powered tools and equipment
- microwave cookers and other electric or electronic goods (other than refrigerators, washing machines or other ‘whitegoods’)
- computer hardware and interactive game consoles
- computer software and interactive game software
- compact (laser-read) discs (including compact discs, digital video discs and mini discs) and similar items that are used or designed for use with electric or electronic audio, visual or audio-visual systems.
- watercraft and parts of watercraft
- tool kits
- car accessories
- mobile phones
- devices designed to play digital audio files (such as MP3 players and iPods)
- Global positioning system equipment
Interactive game console means equipment for the playing of a game:
- that involves a display on a computer monitor, television screen, liquid crystal display or similar medium and
- where the way in which the game proceeds and the result achieved at various stages of the game is determined in response to the decisions, inputs and direct involvement of the player.
Interactive game software includes software (whether in a cartridge or otherwise) that comprises a game and that is used or designed for use with an interactive game console.
What second-hand goods can be sold without a licence?
The following goods are exempt and are not prescribed second-hand goods for the purposes of the Act and a licence is not required when buying or selling them:
- motorised wheelchairs, wheeled lounges, spinal carriages and other goods designed to carry people with a disability
- industrial machinery, or farming machinery, that cannot be driven or is not portable.
What signs do I need to display?
Signage requirements vary depending on the type of licence held:
All licensees under the Act must conspicuously display on all licensed premises the following signs.
A sign which is written in the English language, in at least 5cm high capital letters and which states the following:
the name of the licensee
the licensee's number
the category of licence
A sign which is written in the English language, in at least 2.5cm high black Arial lettering on a white background and which states the following.
“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.”
Pawnbrokers must display the following additional signs in a prominent location, to which the public has access so that the notice is clearly visible to the public, in each of their licensed premises.
A sign which is written in the English language, in at least 5cm high capital letters in Arial or similar font containing the words that 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.
A sign which is written in the English language, in at least 2.5cm high black Arial lettering on a white background which specifies the rate or rates of interest charged and any other fees and charges, including those that may be deducted from the proceeds of the sale of unredeemed goods.
Please note: If it is appropriate for your business, these signs may be reproduced in another language and displayed in addition to the English language signs.
A sign which is written in the English language, in at least 5cm high legible capital letters, in Arial or similar font, containing the words that 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.
What forms do I need to give to a customer?
The law prescribes a statement which licensees must give their customers to complete about who owns the goods that they’re offering for sale or pawn, this is known as Form 1, Statement by customer as to who is the owner of goods sold or pawned.
Form 1 can be downloaded from the Forms page or obtained from a Fair Trading Centre and can either be a separate document or incorporated into another document.
What information must accompany a pawn ticket?
- a fair and reasonable description of the goods, including any serial numbers or other identifying numbers and any hallmark, inscription or engraving of every component
- the total amount lent on the goods together with the rate of interest charged and by what period as well as any other charges
- an equivalent annual interest rate
- the name, residential address and date of birth of the owner of the goods and any agent through whom they were pawned
- the date of the pledge and the agreement signed
The following notices must accompany a pawn ticket.
- a notice about fees and charges specifying the following:
- fees and charges that are (or may) become payable, including those that are (or may) become deductible from the proceeds of the sale of the goods
- the amount of the fees and charges (so far as they are known)
- how the fees and charges will be calculated (if the amounts are not known)
- a notice regarding interest charges that disclose the following:
- that the pawner has the option of paying interest monthly if the interest period is going to be greater than a month
- the then agreed frequency of interest charges and when they become payable (for example, on a Friday or on the 20th of the month)
- a notice regarding the redemption of pawned goods specifying the following:
- the method(s) by which goods will be sold if they are not redeemed
- whether goods can be redeemed separately if the pawn ticket covers more than one item
- details of the premises where the goods will be held during the redemption period
- the date on which the redemption period ends
- a notice of a pawners rights and obligations. This notice is included in the Regulations as a prescribed form - Form 2, Notice to person pawning goods that can be downloaded from the Forms page or obtained from a Fair Trading Centre.
A copy of the pawn ticket, including all the required information, must be given to a pawner at the time that the record is made.
Can the pawn agreement be extended?
You and the pawner can agree to extend the redemption period even if the original redemption period has expired. 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.
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 in it
include the new redemption period
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.
What are my obligations regarding stolen goods?
The law provides that authorised officers may serve a notice on a licensee directing them to hold goods reasonably suspected of being stolen or unlawfully obtained for a period of 56 days. A further 56 day notice may be served on the licensee if required. This assists the police in conducting a comprehensive criminal investigation and to ascertain the owner of goods suspected of being stolen or unlawfully obtained that are in the possession of a licensee.
Who has title to stolen goods?
Section 26(1) of the Sale of Goods Act 1923 provides that where goods are sold by a person who is not the owner and they sell them without the authority or consent of the owner, the buyer of the goods does not acquire title to those goods.
How are stolen goods recovered in pawnbrokers’ or second-hand dealers’ shops?
When a person complains to a licensee that goods in the possession of the licensee are their property, the licensee is to advise them to go to a Police station. A sign specifying this is to be erected in each of the licensees’ business premises (see What signs do I need to display? section above). If the theft or unlawful dealing of the goods has been reported to the Police on an earlier occasion, then the person (known as a claimant) must then provide Police with documentary evidence of ownership or a statutory declaration and make a written claim to the Police that they are the owner of the goods and that the goods have been stolen or otherwise unlawfully dealt with. If the Police Officer has no reason to suspect that the documents or statements are false or misleading in a material particular, then he/she may serve on the licensee what is known as a Restoration Notice.
Upon being served with a restoration notice a licensee has 28 days to either return the goods to the claimant or lodge a hearing to have the matter resolved with the Consumer, Trader and Tenancy Tribunal.
The licensee must retain the goods, unaltered until the matter is resolved. If criminal proceedings in relation to the theft of the goods are commenced, the police will notify licensees of that commencement and the goods must be retained unaltered until those proceedings are completed. If no decision is made about ownership of the goods during those proceedings, the 28 day period will carry on at the conclusion of those proceedings.