Beware of the pawnbroker

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Ask a Lawyer

A.H. of Branford writes:

“I pawned a piece of jewelry at a local pawn shop several months ago, with every intention of getting it back within the time limit, only to be told by the pawnbroker when I returned that his place of business had been burglarized and my piece of jewelry was stolen. He refuses to do anything about it. What can I do?”


Dear A. H.; 

In order to answer your question, I’m going to have to make a few assumptions…first of all, I am going to assume that you have a written contract, which is a reasonable assumption since Florida’s Pawnbroking Act requires all pawnbrokers to complete a transaction form and to keep that form on its premises for at least one year from the date of the transaction.

The next assumption is a little more difficult…I am going to assume that the terms as found in that pawnbroker agreement you signed are similar to ones I have seen and am familiar with. That may not be the case. You must look at the form you signed and read, very carefully, what is contained therein. As all lawyers will tell you, you should read everything before you sign anything, and keep a copy of it.

That said, the language of a “standard” pawnbroker agreement, if there is such a thing, can be deadly to your case. For example, in the form I am familiar with, it says:

“…any pledged goods not redeemed within thirty (30) days from the date of the transaction are forfeited and become the property of the pawnbroker...;” and

“…items not redeemed within the (applicable time period) may be sold…”

So if you didn’t return on time you could be in trouble, as far as either getting a replacement item or some money for what you lost. But if you returned on time, you should be alright, because there is one favorable clause in most pawnbroker agreements that you need to be aware of, since it applies directly to your case, and that is the following:

“If the pledged goods are lost or damaged while in the pawnbroker’s possession, the pawnbroker may satisfy the pledgor’s (you) claim by replacing the item with like kind of merchandise of equal value, with which the pledgor (you) can reasonably replace the goods. Such replacement is a defense to any civil action based upon the loss or damage of the goods.”

So, A.H., since you have made a claim upon the pawnbroker, in a timely fashion, as you say you have, and the pawnbroker has not offered to replace the item with like kind of merchandise of equal value, you can, and may be compelled to, sue the pawnbroker to get justice, and (this is very important) there is also a clause in the standard pawnbroker agreement which says:

“In the event of litigation or arbitration, the losing party shall be responsible for all the attorney’s fees of both parties.”

Although you didn’t tell me what item of jewelry you pawned, how much money you received when you pawned it, or how much it is worth, I would offer this thought…the main problem with pawnbrokers is that they don’t give a “fair” value for the item being pawned. They arbitrarily decide what they believe the item to be worth, at a level well below wholesale usually, and then give you a small amount of money relative to the value of the item. The customer is stuck with a “take it or leave it” decision. In most cases, the pawnbroker gives very little money in return for a much more valuable item being pawned. They prey upon people who are in desperate need of money and have nowhere else to turn.

In one case I recently handled involving a pawnbroker, he would only loan 10% of the value of the pawned item, which is an enormous profit margin of 90%. It was in his best interests that my client never returned, but even when the client returned, he had to pay the interest rate on the loan, which was at a rate of 296% per year (!) in that case. 

Incidentally, courts use the “fair market value” standard when deciding what your item was worth, not wholesale, or retail, or cost when you purchased it, but what it would sell for on the open market, which should be good for you. It is much better than wholesale value and undoubtedly much higher than what the pawnbroker would be willing to give you for it.

Therefore, if you win, and I believe you will, you will recover the fair market value of your item, plus your costs and attorney’s fees! And most attorneys would, I think, accept your case with knowledge that they can recover their fee from the pawnbroker, pursuant to the written agreement. The costs for filing suit are going to be a few hundred dollars and that, in and of itself, can be a deterrent to someone suing to obtain justice, since those who go to pawnbrokers don’t usually have a few hundred dollars to spare. Again, if you win, you get that back from the pawnbroker.

One final point, in the event the pawnbroker were to argue that the jewelry wasn’t “lost” it was stolen, and he’s not responsible for the loss, there is a case on point, Beam Radio, Inc. vs. Cielos de Peru, which can be found at 831 So. 2d 812 (Fla, 3rd DCA, 2002) in which the court says the word “lost” is to be interpreted to mean “no longer possessed,” or “lost to you,” so that argument should fail, since the written agreement, or contract, says the pawnbroker is responsible if the pawned item is “lost.” Again, I believe you will prevail.

I hope I have answered your question, A.H., and I hope you are able to extract a full measure of justice…sometimes you have to stick up for yourself and fight, even though it might take some time and cost some money. If you do, in the end, I believe it will be worth your while.

Any readers with specific legal questions for this “Ask a Lawyer” column are invited to submit those questions to the Editor of this newspaper, who will pass it along to me. If you need assistance with a consumer matter, such as an unfair and deceptive collection practice, or garnishment of wages, a mortgage foreclosure or other such things, and you cannot afford an attorney, call the Legal Services office closest to you, which provides free legal assistance to qualified individuals, or call the Florida Bar Referral service at 1-800-342-8011. I wish you good luck in obtaining access to our legal system, no matter what your income and asset level might be.

The foregoing was written by attorney Pierce Kelley, who is a member of the Florida Bar Association. The contents reflect his personal opinions and beliefs.