20: The Law of Pawn with Wayne Babovich

April 11, 2018

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Yigal Adato: 00:04 Hey everyone, my name is Yigal Adato and this is the Pawn Leaders Podcast, a podcast to help you make more money, stress less and live an epic life all while working at the pawn shop. Hey pawn family welcome back to the Pawn Leaders Podcast. Thank you so much for taking time to listen to this episode of the podcast. And for those of you who are in the Facebook group, thank you so much for engaging and asking questions. And if you're not there, go to Facebook and type in the search bar, Pawn Leaders Podcast Community. And that's where we talk about the episodes and questions that come up and some of the guests are actually in there and they can answer your questions as well. So, today with me, I have Dr.Wayne Babovich who practiced law for almost 40 years until retiring. He now teaches and lectures on a regular basis, when his lectured in Europe, Canada, Australia, and throughout the United States. He holds a BA degree from Louisiana State University in Baton Rouge an MS Degree and a PHD in urban planning from the University of New Orleans and a juris doctor degree from the University of Houston. Man, that's a lot of studying my friend. Doctor Babovich has published and lectured in the area of pawnbroking and worked in the pawn industry for over 30 years. He has lectured at numerous regional state and national pawn conventions. Dr. Babovich drafted the original legislation which formed the basis for the 1993 Louisiana pawnshop act adopted by the Louisiana legislature. Wayne, thank you so much for coming on the show.


Wayne Babovich: 01:38 Thank you. And first of all, let me congratulate you. You brought on some absolute all stars on your podcast. I listened to the podcast you did with Tim Collier, Tim Collier is a gentleman, a scholar, has been part of the pawn industry and a pillar and a rock for the pawn industry for very long. You brought on Tony Gallo when it comes to security, you just don't get any better. Great podcasts. Uh, David Griffin with money laundering. I mean he is the guru when it comes to money laundering a minor that you'd even put me on the same program, I'm out of my league when you deal with those kind of guys. But I really appreciate it.


Yigal Adato: 02:25 No, it's my pleasure. And thank you for the kind words. I also agree we have some incredible leaders in this community and the goal of the podcast is to bring him on and just say, I'm bringing you on.


Wayne Babovich: 02:35 So first of all, do we change it from podcast to pawncast?
Yigal Adato: 02:38 It should be right? It should be Pawn Leaders Pawncast. I like that. Maybe I'll do that, I like that. So, we were in a chat room somewhere on Facebook or linkedin and I kept on seeing law of pawn and so I went to your website law of pawn and they say,wait a second, somebody wrote a book and I knew that I had to have you on the pawncast, right? I had to bring you on to talk about the legal issues that pawnbrokers are going through today when it comes to things like ATF and military lending act and just in their local jurisdictions. And I want to start off with a story, and I don't know if I've told this story before, but I'll say it anyways. It was a Friday afternoon in the pawn shop and all of a sudden a detective walks in and he asks to see an item and so we said, sure, we'll get it out for you. Let me look through the,the JOS 123 forms. And he said, no, I want to go inside your vault. So, being in the California Pawnbrokers Association, being a board member, I knew my rights and I said, sir, I'm really sorry unless you have some type of a warrant or something, you can come back into my vault within, I dunno, 45 seconds, Wayne.There was six sheriffs inside my store, guns drawn, requesting
for them to go into the back area of our store to search every single item. I was steadfast, I was stubborn. I was saying, no,
you don't know the law. There's no way I'm letting you back here. And in that moment, my brother grabbing me from
behind and he said, Yigal it's Friday afternoon. You're way too good looking to go to jail. If you go to jail, I can bail you out til Monday. Let me figure this out. Go upstairs. So he sent me upstairs. I was pissed off, I was angry, I knew my rights. It ended up being that the person who was the victim was some big shot and the detective was trying to show off and we took out some of the trays and we showed him some stuff and it worked out fine. But I was angry. So, I'm sure that's happened to people who are listening to the show. And I love to start with just talking about our rights as pawnbrokers.


Wayne Babovich: 04:59 I want to share a story too. The Louisiana Pawnbrokers Association, oh, I guess it's 15 years ago, decided to do sort of a meet and greet around the state of Louisiana. We divided the state into I think six regions. Each of the region the office of financial institutions, who is the regulatory body for pawnbrokers, local sheriffs, local police, local pawnbrokers. We got everybody together and we went through the Louisiana pawnshop pack due process rights and so forth was a great meeting. Then an old crotchety sheriff will look like something out of heat and heat of the night. Kind of lean forward at the conference table and said, I'll show you the law of pawn in my district, and he pulls out as 45 slams it on the table. It's a district attorney is bending down. I think anywhere you go in America,you're going to see those kinds of stories and it goes to what I divide when I give speeches, the daily challenges and what I call the land mines, those things that put you out of business and who are you described then the story I'd described those daily challenges that are the most difficult. You've got to balance between, I know my rights, I'm going to go to jail on a Friday night and let us reason together. If you get too nice, then they walk all over you, if you get too tough, we all know the terrorist
stories. It's a real challenge.


Yigal Adato: 06:37 So let's start with your history in pawn. How did you get into the
pawn industry and served upon community? How did that begin?


Wayne Babovich: 06:46 Gosh, almost 40 years ago, a dear friend of mine was manager of one of the oldest pawnshops in Louisiana and he called me to help with an issue. And I met a good number of pawnshops through that and no one knew what the law was. There was no [Incomprehensible] because at that point the law regulating pawnshops was all over our statures. So, I xeroxed them and stapled it together this compilation and passed it out. People loved it, they said, you really ought to put it together as a little book. So I went to Kinko's and bound about 50 pages with cases and so forth. And that's what I called the first edition. Then we did a second edition, which was still simply bound, but had some commentaries. And then in 1993, when we passed the act, we really had to write something more serious concerning pawn shops. And from 1993 to, I guess it was 2016, the law of the inflammation grew and this is now if you can say it


Yigal Adato: 08:00 It's a big book.

Wayne Babovich: 08:01 Louisiana Law of Pawn. When we did that, there's most people countered 18 federal laws that regulate pawnshops. And we covered all of those in the Louisiana Book. So, we did federal laws. And it's staggering when you think about this, that there's this many federal laws regulating pawnshops. It wasn't that long
ago that you had a pawnshop, you dealt with your local sheriff. And that was it. And you had a good relationship hopefully with
him. And you didn't have to worry about anything else. The truthful lending came along and the 1960s and boy that really
pushed pawn shops on their rear than the Uniform Crime Control Act had ATF regulations and Nick's, we all and love that
law. Gramm Leach Bliley, the military lending act, the bankruptcy code, it goes on and on. And you've had as a say David on David Griffin dealing with money laundering. It's a whole new ball game, the day of mom and pop running a shop and in not having to deal with very much as long gone for good.

Yigal Adato: 09:27 And it's safe to say that if you're a pawnbroker, the excuse of, I didn't know it doesn't fly anymore because the fines and what could happen to your shop are much greater than getting your book or calling an attorney or just learning the local codes and the federal codes. Correct?


Wayne Babovich: 09:47 Absolutely. In most cases I didn't know, is not an excuse whether it's driving down the interstate. I didn't know the speed limit was 55 officer. I'd thought it was still 70. If it's 55 you're going to be held responsible and you can't tell ATF. I didn't know I needed to get the model number on the gun or whatever. You can't tell [Incomprehensible] that well, our Federal Reserve, well, I didn't know how to calculate the annual interest rate. Those are the land mines and they will get you. Local level maybe you can early on work with something. But you're right and it's tough. It's a new cost of doing business.


Yigal Adato: 10:43 What are some of the biggest issues that you've been seeing lately that people have been calling you about, messaging you about that they're going through in their shops when it comes to like the federal level of regulation.


Wayne Babovich: 10:55 On the federal level bankruptcy is a real challenge. Bankruptcy attorneys do not have any concept whatsoever of the rights of pawnshops in the bankruptcy context. Basically pledge items, pawn items or immune from bankruptcy. Well, they don't understand that. They think you can have a way journal plan and have the pawnshop paid for 10 years with no interest. The case law is replete. You can't do that. But pawn is so unusual in a bankruptcy that bankruptcy attorneys don't know it. And of course, that's why in our book we have a whole chapter which gives all those cases how to fill out a form and it's one of the real challenges for a pawnbrokers that neither the courts nor the attorneys really understand bankruptcy and its relationship to pawnshops. Truth in lending, I think is pretty much in place if you have a software program, it's probably calculating it correctly. 90% of the pawnshops I'll walk in, don't have that
Gramm Leach Bliley notices sitting there and that can be a real challenge if you're a big store.


Yigal Adato: 12:24 Let's talking about the notice really quick, let's go back, explain what that is so that if people are listening and for some reason don't know what that is, explain what that notice is and why it's
important to have it in your store.


Wayne Babovich: 12:36 I'm going to give you a little bit longer history after the stockmarket crash and banks for prohibited from remaining in ancillary businesses that kind of wrapped everything together. Before the depression a bank could be an insurance company and a lender and a health insurer, a whole litany of things. Then the law changed in the 90s and allowed banks to begin doing ancillary services again. One of the things they did as a trade off was to say that annually, all lenders, all financial institutions is the term all financial institutions have to notify borrowers, is that their information is private. That it cannot be sold to an insurance company or a stockbroker or whomever without the customer's approval. They have to give a written written notice of that. Gramm Leach Bliley was the act that did that. Well, I say when I talked to pawn groups that when they go to the meeting at the kids' school or at the church, they can probably say the
federal government has determined that I own a financial institution because pawnshops are financial institutions, so they
have to give on an annual basis to their borrowers. The Gramm Leach Bliley notice. I don't know of a local pawnshop who's been held responsible. And the major nationals I think invariably do a good job of providing it. But I tell my clients, you put that stack of notices at your window, and you make sure everybody gets one. You do not ask them the sign for it because if you have everybody's signature but one and they say they didn't get it,then you're screwed. If you have everybody else's signature and you don't have theirs, you've proved their case. So, I tell him to
put it back and make sure you give it to him, but you don't require they sign.


Yigal Adato: 14:59 What's another area that pawnbrokers always kind of stay in
the gray area when, where there's a law, but they come to you and they say, well, I don't agree with it, but they're always kind of miss out on being responsible for this. What is that?

Wayne Babovich: 15:13 Income tax. No, no, I didn't say that. I've never ever, it's kind of hard to come up with a question I haven't heard before, but you know, that's a very good one. I would say the soldiers and
sailors relief act, soldiers and sailors relief act goes back to the civil war when if a soldier was fighting in the civil war, World War One, World War II, and they were on active duty, you couldn't foreclose on a house or whatever it was inequitable or they didn't get noticed, they didn't get due process. Soldiers and sailors relief act is still there. When we were writing the last version of the book, we asked two colonel high up in the judge advocate general corps, the process that pawnbrokers should follow. They both said, we have no idea. We have no clue what you should do. And we fought out with did that in sight of the colonel I said, may I use your name? And they said, yes I could.I've seen a couple of cases with a rent to own. I've seen a couple of cases with payday loans. I've never seen a case with a pawnshop where there've been popped by the soldiers and sailors relief act. Now we have the military lending act and that still really floating. And I'm not sure where that's going to come down. We've seen some interesting things. Obviously if a pawnbroker can only charge 36%, he can loan less money. Well,these military know that if they don't say they're military, then they're going to get a higher loan so they don't tell you. And if their dependence, they don't potentially show up on the checks.
So, I don't know where that's going to come down as we go forward on the MLA. That's a great question. I've never heard that question before.


Yigal Adato: 17:26 Thank you. So, it's still a gray area, right? Where we're supposed to be abiding by the military lending act, but as pawnbrokers, there isn't clear definition, like you said, from the colonel or from the government to say, this is how you have to verify or this is what you need to do to figure out who the dependence are and all that type of stuff. Is that correct?


Wayne Babovich: 17:47 I may have to tell you a story a bit. You said you are a member of the California Association. John Webster is the president. I mean the

Yigal Adato: 17:54 Attorney.

Wayne Babovich: 17:55 Attorney. Thank you. Sorry about that. John. For the association,they filed suit under the MLA, the National Pawnbrokers filed suit under the MLA, the NPA filed in Washington DC, California filed in California, same attorneys for the government. In both cases, in the two cases they define the government defined what was the safe harbor differently.


Yigal Adato: 18:25 Wow. Same attorneys.

Wayne Babovich: 18:27 Same attorneys, two different federal judges, two different answers. So yeah, it's great for the federal government as far as where the safe harbor really is on that. But the MLA is going to be around for a while with the Trump administration, not funding the consumer protection bureau. How much effort is going to be to enforce it. I don't know. Whether the Jag Corps will enforce it. No one knows yet, it is open.


Yigal Adato: 19:05 So, as we're doing businesses as pawnbrokers, obviously the military lending act is important and we're supposed to ask if they're in the military and charge them less interest. And you talked about the soldiers and sailors where you're not supposed to foreclose, but you don't know who's inactive duty. I mean it's a lot of


Wayne Babovich: 19:23 In addition, dependents. So you can't run the dependents number and then you have people using a straw man for military lending act loans like you do with the ATF. Life's not simple unfortunately.


Yigal Adato: 19:38 So, as a pawnbroker, as a pawn shop owner, what do you suggest we do to be able to steer away from the landmines knowing that there's a lot of gray areas, there is different definitions of the law. What's the best way for us to be able to proceed so we can go to sleep, put our head on our pillow and not have anxiety.


Wayne Babovich: 20:03 Great question. Belonged to the NPA. They're there for everybody. They need everybody's support as is typical. 10% of the people do the heavy lifting for everybody. And it's great source that conventions have a great number of seminars belong to your local pawnbrokers association. Three, act in good faith. If you get in trouble, but it's obvious that it's an honest mistake. If it's obvious that you would trying to follow the law, you're 100% off a better off. So, act in good faith, keep a record, build your paper trail drives me insane when ATF comes down on somebody and they could get anybody they want on a violation, it is impossible to be perfect. But if you have training, if you have procedures and it becomes obvious that you follow that training, you do in fact train people. If you do follow your procedures and you make a mistake than the ATFs going to say, well, you did everything you could. Craig Toys is a pawnbroker in Shreveport, Louisiana. I think he's a third generation pawnbroker. He had the best manuals for training, for procedures that I saw anywhere. And I asked Craig, Craig, can I put it in a book? He said, yes.


Yigal Adato: 21:41 Oh, nice.

Wayne Babovich: 21:42 Typical pawnbroker. He could have said, absolutely not. I don't want my competitors to have this, not Craig, he was typical good pawnbroker. So, I'm honored. And he allowed us to use those to set all those out. And they're like the garlic in front of the vampire, I like to say. And the ATF sees you're really doing it right. You're halfway home because boy, I tell you what, in ATF prosecution is worse than a root canal.


Yigal Adato: 22:12 Well, let's talk about ATF, especially with what's happening in the government today in our nation today with gun control. I live in California, a very democratic state. Nobody likes guns. Most of our listeners are in Texas, in the south where they have stores with guns and things like that. What do you think, or where is the nature of ATF at this moment? Where do you think it's going to go? And as a pawnbroker apart from just keeping my books straight in the paperwork straight, what do I do with all this societal backlash when it comes to ATF and


Wayne Babovich: 22:51 There again, a great, great in terrifically timely question. There was a case, I want to say it was in Minneapolis where one shop, and it wasn't a pawnshop, accounted for something like 13% of the guns used to shoot policemen and they have multimillion dollar jury verdict against him. And it was agregious. It appears from a distance from the newspaper articles and the jurisprudence that was appropriate. And now with all of the marches we just saw with the anti-gun situation, I think we're going to see more and more of that. Our Louisiana legislature's in session right now, I like to say the inmates are running the asylum. There are 32 bills dealing with regulating firearms. Well, now I would bet none will pass. This is Louisiana. We're very conservative, we're republican state and the NRA is very strong. But I think it indicates on the one hand the public attitude toward firearms and the regulation of firearms. And if they can make a scape goat of a pawnshop, they going to do it. The last thing you want to see is headline, pawnbroker sells gone to school, murderer that not pawnbroker filing all the laws, pawnbroker did everything he was supposed to. That'll be the headline. So, on the one hand, we see that activity on the other, the Trump administration after saying they will anti-gun is following the NRA line. And I think you're not going to see under the Trump administration, the ATF going overboard where it will end. I'm getting ready to speak at the Dixie convention.


Yigal Adato: 24:53 I'll be there. I'll see you there.

Wayne Babovich: 24:54 Very good. Are you buying,

Yigal Adato: 24:57 Am I what?

Wayne Babovich: 24:59 Buying.

Yigal Adato: 25:00 I speak

Wayne Babovich: 25:00 At the bar.

Yigal Adato: 25:02 Oh, I'll buy you a drink yeah, for sure.

Wayne Babovich: 25:03 See you folks, you saw it. But I'm going to be talking about the challenges were going to be facing with firearms. I really don't know where it's going to go. I know it's going to really be, the all line is all politics are local and there's a lot of merit to that. And I think with gun control, all gun control is going to be a local.What you guys out in California do will be very different than what we do. You just got to kind of compare Barbara Streisand,the James Carville and you, you've seen the difference.

Yigal Adato: 25:44 And I like what you said, as long as you act in good faith and you're training your employees, you're keeping a paper trail and the government comes down and says, Hey, well at least you did this, we're humanly can screw up. I think the issue is when a pawnshop isn't diligent and they just don't care. And that's why
we have the podcast, right? I mean, we want the industry to become better leaders and better businesses in the communities. So, if you're out there listening, make sure, and if you're selling guns, especially, make sure you're doing your due
diligence, make sure you're training your employees extensively. Make sure that you're acting in good faith and if you don't know something, give Wayne a call and we'll get you to the number of [Crosstalk]


Wayne Babovich: 26:28 commercial. What do you do, someone comes in and pawns afirearm, they can certainly do that. They go to take it out. You got to run in the nics check. It hangs. You've got a gun sitting there, you don't own it. Even though you loaned money on it, you can't give it back to them, but you can't get rid of it. When you asked the ATF, what do I do with that gun that's in never neverland. I've gotten the same answer from a dozen ATF people, beats the hell out of me. But you just act with common sense with what do you want to see on the front page of the paper? We had a pawnbroker Louisiana and called me up. He said, I think you've got a problem. Dear friend of mine was on the board of trustees of my church. His son came to me. I sold him a gun. I didn't know wait to three days because I knew it was a fine family and he went out and shot his wife. Do I have a problem?

Yigal Adato: 27:32 Shoot.

Wayne Babovich: 27:32 You better follow the rules and use some good common sense.

Yigal Adato: 27:39 Yes. To pawnbrokers listening follow the rules. I know that we've been in the industry, Wayne, when I was growing up, I know my father and my uncle, they came into rules. I remember the moment growing up as a kid where in California you had to start describing all the items in depth and you have to start separating each and every ticket with each and every item, and before it was like the wild, wild west, right? That's what's in pawnbrokers say it's a different ballgame.


Wayne Babovich: 28:07 Absolutely.

Yigal Adato: 28:07 Stop. If you keep doing business the way you were doing it 40 years ago,

Wayne Babovich: 28:12 You're in big trouble.

Yigal Adato: 28:13 You're going to be in trouble.

Wayne Babovich: 28:14 Big trouble.

Yigal Adato: 28:15 If you keep doing business the way your grandfather did it, even though your father did it when it comes to law, you might be in trouble, so we can't just


Wayne Babovich: 28:21 And they said part of it is there's a little tiny pawnshop in New Orleans, downtown, Mr Sally and his wife, mom and pop only people in the shop, tiny little place. I'm in there talking to him. A guy walks in, he says, Mr Sally, can I borrow $20 like usual on my watch? He says, of course, he says, can I have the $20 today and bring the watch in tomorrow? He said, sure. And he gave him the $20 I'm not sure today how you would handle all that on leads online. And it was a night, it was a better way to operate in many ways. But uh, that's not the world we live in,sadly. I've had several pawnbrokers, particularly out in your area who said, our policy was we did not charge interest to military. If the military came in and wanted to pawn his watch for $50, we didn't charge them a dime of interest. Now with the MLA, which charging them the 36% we almost have. So, we all hear the terror stories and so forth, but nobody wants to hear the good, I used to have a presentation that I gave where the title of it I think was like, you live upstairs from your store because back in the early 1900s, people lived upstairs and the pawn shop was downstairs. Pawnbroker's kids and the customer's kids all played ball together and they all went to the same church. And they traded their customers like that. And I had a series of film clips of movies were pawnbrokers were in Old Charlie Chaplin movie. And the very first movie was a silent movie from about 1905 I think, where the pawnbroker's the hero, he saves the little girl comes in to pawn a doll for her mother's medicine and the pawnbroker takes the doll, gives them the medicine and pawnbroker brings the doll back, brings furniture back, brings the doctor back. He's the hero. He lived upstairs from the pawnshop.


Yigal Adato: 30:38 Well now nowadays the pawnbroker is fat, sitting behind bars smoking a cigar and is a disgruntled business owner in the movies.


Wayne Babovich: 30:47 Oh yeah, I mean you go in you see the one with the aliens, I can't think

Yigal Adato: 30:54 Men In Black.

Wayne Babovich: 30:55 Men In Black, the pawnbroker's really an alien. And of course Rod Steiger in the pawnbroker and the crow, which is a very dark movie. And now you'll look at these movies and pawnbrokers are the bad guy. We've got a challenge in our industry and frankly I think you're doing the type of thing that needs to be done to help turn that. When you bring a Tim Collier, who is this class of guy you're going to get is only fault is he's an Arkansas Fan and Tony Gallo who knows security and David Griffin. Bringing those to people as you're doing is a tremendous service to the industry and I really appreciate it. And I'm going let them know that I'm moving up to their class.

Yigal Adato: 31:40 Nice. Well, they did mention you. So, but you know, I think it's important as pawnbrokers we have to continuously be learning and we're not seen as an industry that's as popular as it used to
be. Right. With all the pawn shows out and everybody still thinks it's a great business, but it's hard to be a pawnbroker. All the laws, all the legalities, all the paperwork, the retail scenarios at the moment with what's happening online. And I want pawnbrokers to know, even though this is a show about law, this episode, don't be afraid, don't stress about it just to learn about it. And the more you know, obviously like back in the day that the TV commercial of the more you know, what the star shooting across, it's important. You have to know the laws, you have to know your rights. In San Diego, we kept on battling with the police department and John came to the rescue many times because they would just step out of balance. And I don't blame them. They didn't know the law and they thought they did.

Wayne Babovich: 32:41 Police don't equate. They would never go on a car lot and pick up a car, whether it was alone with without due process. No one would think about going into a bank and just seizing somebody's bank account without due process. But they'll go in a pawnshop and pick up the camera, that watch or whatever. And it's constantly an education process that we have to do. And the rights are their for us. We just got [Crosstalk] gently.

Yigal Adato: 33:18 Quickly and ask almost every guest is who's in the industry. I want you to tell me the three biggest mistakes pawnbrokers are making at the moment when it comes to the law that you see. Three of these mistakes and just quick.


Wayne Babovich: 33:29 They don't develop carefully a relationship with the community when they can. The LPBA just donated all my instruments to a very poor public school who couldn't march in money grow and they donated all the instruments. I mean, probably $50,000 of instruments and then the local senator and state representative be the ones who actually handed him over. So they love us and they help us in the legislature. So, they don't want to go to the legislature to their legislators, to the public unless it's a problem. We got to be the pawnbroker who lives upstairs. Number two, they don't build the paper trail and have their records. So, they did their ATF homework or whatever. And then I guess number three, they don't join their local association and the NPA and keep on top of things.


Yigal Adato: 34:29 So, just to repeat those, cause I love it. They're not being a pillar of the community connecting with the community, which I think [Crosstalk]


Wayne Babovich: 34:36 working to develop the bridges that they eventually you're going to need


Yigal Adato: 34:40 Yeah. Two, they're not keeping paper trails, when they need to. And three not joining a state or the NPA, which essentially is fighting for all of us. Right. Sometimes you disagree with it, sometimes you agree with it at the end of the day, get involved,Know the law so you can sleep well at night. Wayne, I want to thank you so much for being on the show.


Wayne Babovich: 35:01 Thank you for having me. It's been fun. Do it again. Next time when you're doing some reruns or whatever, I'm available again and I look forward you buying me a drink at the Dixie.

Yigal Adato: 35:12 Done. It's done. And if you want to find Wayne, go to lawofpawn.com pick up the book. Also you can give him a call. He's been kind enough to give us his phone number, which is (504) 283-9353 and to my pawn family thank you so much for listening. Once again, join us in the Pawn Leaders Podcast community and stay tuned for the next episode of the Pawn Leaders Podcast.





Dr. Wayne Babovich practiced law for almost 40 years before retiring. He now teaches and lectures on a regular basis and has lectured in Europe, Canada, and Australia and throughout the United States. Wayne holds a B.A. degree from Louisiana State University in Baton Rouge, an MS degree and a Ph.D. in Urban Planning from the University of New Orleans and a Juris Doctor degree from the University of Houston. He has published and lectured in the area of pawnbroking for over 30 years, at various pawn conventions. He drafted the original legislation which formed the basis for the 1993 Louisiana Pawn Shop Act adopted by the Louisiana legislature.



[04:58] Wayne shares an experience he had with a sheriff at a meet and greets hosted by the Louisiana Pawnbrokers Association




[06:21] As a pawnbroker, you have to balance between being stern and being civil




[06:47] Wayne talks about collating a book regarding the pawn business after realizing that pawnbrokers were unaware of the laws surrounding the business




[07:39] In 1993, after the Louisiana Pawn Shop Act was passed, Wayne put together the federal laws governing pawn shops




[09:49] Not knowing the laws is no longer an excuse




[10:55] Bankruptcy attorneys do not have a concept of the rights of pawnshops




[11:10] “Pledged items or pawned items are immune from bankruptcy.”




[11:37] In the book, there is an entire chapter on how to fill out a form




[12:39] Wayne gives the history of notices




[14:32] “You put that stack of notices at your window, and you make sure everybody gets one…Do not ask them to sign it.”




[15:29] Soldiers and Sailors Relief Act is another law that many pawnbrokers are still unaware of




[16:23] There have been a couple of cases with Rent-to-Own and Payday Loans




[19:15] There are many grey areas to know for certain which laws are in place




[20:04] Wayne suggests the following to help pawnbrokers stay away from any problems with the law:

  • join the NPA to get support from other members
  • join a local pawn association in your community
  • act in good faith
  • keep a record of training and procedures




[22:01] “When ATF sees you really doing it right, you’re halfway home.”




[24:43“I think you’re not going to see, under the Trump administration, the ATF going overboard.”




[27:05] Use your common sense when making transactions, especially with guns




[33:29] The 3 biggest mistakes pawnbrokers are making as it relates to the law:

  • Not carefully develop a relationship with their community
  • Not keeping a paper trail
  • Not joining their local association or the NPA



[35:14] Visit the Law of Pawn website and buy a copy of the book. Also, feel free to call him at 504-283-9353

Yigal Adato

Yigal is a 3rd generation pawn broker, and is now a mentor, coach and educator with the pawnbroking industry.

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