How Pawnshops Work

Paper Work
This is the part of the store you can see ...
This is the part of the store you can see ...

A­s we mentioned in the last section a pawn shop must complete a lot of paper work for each item they acquire. There are three reasons for this level of scrutiny:

  • Every day, the pawnbroker must submit a list of all merchandise received, including serial numbers, to the police. The police compare the serial numbers against records of stolen merchandise. Anything stolen is recovered this way and returned to the owner. Why do they do this? If a stolen item is found in a pawnshop and the item was not reported to the police by the pawnshop when it came in, the pawnbroker can be charged with receiving stolen merchandise.
  • According to Ausley, a typical item pawned at a pawnshop has about a 60-percent chance of being reclaimed by the person who pawned it. This means there's about a 40-percent chance that the pawnbroker will have to sell the item to recover the loan, so the item must be in a condition to be resold.
  • Unlike someone running a garage sale or a booth at a flea market, a pawnbroker is running a stable business in the community and has to worry about his or her reputation. A pawnbroker cannot sell junk.


­When you walk into a pawnshop, you are really seeing only half of the operation. The actual shop is twice as big as the part you walk around in. The unseen part is the storage area for all of the items in pawn. Let's say that you pawn your TV -- the pawnshop has to hold it for a minimum of 90 days. For those 90 days, your TV sits in storage. This allows for any claims of stolen property to be investigated by the police.

... and this is the part you don't see.


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