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Pawn industry asks committee to raise allowable rates, cites competition from unregulated resale
Summary
Representatives of the Michigan Pawnbrokers Association urged the Regulatory Reform Committee to approve legislation that would raise allowable pawnbroker charges and close market gaps created by businesses operating outside pawn-rate rules.
Mark Aubrey, president of the Michigan Pawnbrokers Association, testified in favor of House Bills 4115 and 4116, describing them as reintroductions of measures that passed the Legislature previously but did not become law. Aubrey told the Regulatory Reform Committee the bills are identical to last session's and would adjust allowable charges for pawn loans from the current statutory level to a somewhat higher percentage (the industry witness described a change from 3% to 5% per month). He said the change is needed to cover rising operating costs and to reduce the incentive for "illicit" resale practices by businesses that use a resale license to avoid pawn-rate limits.
Aubrey said the industry has not updated allowable rates in more than a century of the pawn statute's history and that Michigan's current allowable rates are among the lowest in the country. He characterized the current differential as creating a marketplace where some stores circumvent pawn rules by using resale licenses to buy and quickly resell items at much higher effective rates. Aubrey said the bills passed both chambers previously and reached the governor's desk; he said the governor asked for more consumer protections and the sponsors added measures intended to address that request before reintroduction.
Lawmakers asked clarifying questions about the difference between a pawn license (loan collateral model) and a resale license (retail purchase and resale), about how pawn transactions are held and redeemed, and about whether other credit options exist at comparable cost. Aubrey said pawn loans remain a comparatively low-cost short-term option and that the association seeks a modest statutory rate increase while retaining guardrails for consumer protection. He offered to answer committee questions but no formal committee vote on these bills was recorded at this hearing.
Ending: Aubrey requested legislative action to modernize rate rules and close perceived regulatory loopholes; lawmakers and the association indicated they will continue the discussion in future sessions.
