South Carolina Pawnbroker Bond: A Comprehensive Guide
At a Glance:
- Average Cost: $100 per year or $10 per month
- Bond Amount: $16,275
- Who Needs it: All pawnbrokers operating in South Carolina
- Purpose: To protect the public from financial harm if the pawnbroker engages in unethical business practices
- Who Regulates Pawnbrokers in South Carolina: The South Carolina Department of Consumer Affairs
Background
South Carolina Code 40-39-20 requires all pawnbrokers operating in the state to obtain a certificate of authority from the Department of Consumer Affairs before conducting business. The South Carolina legislature enacted the requirement to ensure that pawnbrokers engage in ethical business practices. To provide financial security for the enforcement of state regulations, pawnbrokers must purchase and maintain a $16,275 surety bond to be eligible for licensure.
In 2016, the South Carolina General Assembly passed Act No. 262 which mandates periodic dollar adjustments of the required bond amount to be made every five years. Due to this legislation, the bond amount for South Carolina pawnbrokers raised from $15,000 to $16,275 in January 2021. More on this legislation can be found here.
What is the Purpose of the South Carolina Pawnbroker Bond?
South Carolina requires pawnbrokers to purchase a surety bond as part of the application process to obtain a certificate of authority. The bond ensures that the public will be protected from financial harm if the broker fails to comply with the regulations outlined in South Carolina Code 40-39-50. Specifically, the bond protects the public in the event the broker commits any form of fraud or breaches consumer contracts. In short, the bond is a type of insurance that protects the public if the pawnbroker engages in unethical business practices.
How Can an Insurance Agent Obtain a South Carolina Pawnbroker Surety Bond?
BondExchange makes obtaining a South Carolina Pawnbroker bond easy. Simply log in to your account and use our keyword search to find the “Pawnbroker” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone at (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
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Is a Credit Check Required for the South Carolina Pawnbroker Bond?
No, a credit check is not required for the South Carolina Pawnbroker bond. Because the bond is considered relatively low risk, the same low rate is offered to all pawnbrokers operating in the state, regardless of their credit history.
How Much Does the South Carolina Pawnbroker Bond Cost?
The South Carolina Pawnbroker bond costs just $100 per year or $10 per month.
Who is Required to Purchase the South Carolina Pawnbroker Bond?
South Carolina requires pawnbrokers to purchase a surety bond as a prerequisite to obtaining a certificate of authority. To paraphrase South Carolina Code 40-39-10, a pawnbroker is a person who issues loans to individuals that leave their property, as collateral, for the broker to sell on condition that the customer may repurchase the property within a fixed period of time.
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How Do Pawnbrokers Apply for a Certificate of Authority in South Carolina?
Pawnbrokers in South Carolina must navigate several steps to secure a certificate of authority and must obtain a separate certificate of authority for each pawn shop location they operate. Below are the general guidelines, but applicants should refer to the Department of Consumer Affairs’ website for details on the process.
Certificate of Authority Term – South Carolina Pawnbroker Certificates of Authority expire on June 30 of each year and must be renewed before the expiration date.
Step 1 – Complete a Background Check
All pawnbrokers and their employees must complete a national criminal background check prior to applying for a certificate of authority. Brokers can complete this background check with IdentoGo or a third-party provider of their choice. IdentoGo will submit the results to the Department of Consumer Affairs for the broker, however, all pawnbrokers must submit a background check attestation form with their application.
Step 2 – Purchase a Surety Bond
Pawnbrokers must purchase and maintain a $16,275 surety bond.
Step 3 – Complete an Application
All South Carolina Pawnbroker Certificate of Authority applications should be submitted to the Department of Consumer Affairs at the following address:
P.O. Box 5757
Columbia, SC 29250-5757
Pawnbrokers must complete the application in its entirety and submit the following items:
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- $275 license fee (per location)
- Surety bond
- Owner/employee verification form
- Criminal background check attestation form
- Proof of liability insurance for pawned items (more on this below)
- S.C. Secretary of State Certificate of Existence/Authority, if applicable
- Names of all employees and owners, with contact information
Once the application is received and approved, the Department of Consumer Affairs will issue a certificate of authority to the pawnbroker and they may begin conducting business. Contact the Licensing Examiner for additional assistance in the application process.
How do South Carolina Pawnbrokers Renew Their Certificate of Authority?
To renew their certificate of authority, pawnbrokers should submit a renewal application to the Department of Consumer Affairs at the following address:
P.O. Box 5757
Columbia, SC 29250-5757
Pawnbrokers must pay a $275 renewal fee and ensure that they renew their surety bond to avoid termination of their certificate. Renewal applications must be submitted by May 1. All South Carolina Pawnbroker Certificates of Authority expire on June 30 of each year and must be renewed before the expiration date.
What are the Insurance Requirements for South Carolina Pawnbrokers?
South Carolina requires pawnbrokers to obtain adequate insurance coverage for all pledged goods in the event of loss by fire, theft, burglary, or liability to the pledger. Pawnbrokers must also purchase and maintain a $16,275 surety bond.
How Do South Carolina Pawnbrokers File Their Bonds?
Pawnbrokers should submit their completed bond forms, including the power of attorney, to the Department of Consumer Affairs at the following address:
P.O. Box 5757
Columbia, SC 29250-5757
The surety bond requires signatures from both the surety company, including witness signatures, that issues the bond and from the broker. The surety company should include the following information on the bond form:
- Legal name and business name of the entity/individual(s) buying the bond
- Surety company’s name and contact information
- Term of the certificate of authority
What Can South Carolina Pawnbrokers do to Avoid Claims Made Against Their Bonds?
To avoid claims on their bonds, pawnbrokers in South Carolina must ensure that they:
- Do not engage in any acts of fraud or misrepresentation
- Faithfully honor all consumer contracts
- Maintain all required transaction records
- Return all pledged goods that have been paid for
- Obtain proof of identification during each transaction
What Other Insurance Products Can Agents Offer Pawnbrokers in South Carolina?
South Carolina requires pawnbrokers to obtain liability coverage for all pawned items. However, most reputable businesses will purchase this insurance anyway. Bonds are our only business at BondExchange, so we do not issue any other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for South Carolina Pawnbroker Customers?
South Carolina unfortunately does not provide a public database of active pawnbrokers in the state. We suggest contacting the Department of Consumer Affairs for this information pawnbrokers. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.