The dark side of pawnbroking

(Baonghean) - Pawnshop business in Vinh City has hidden corners and unpredictable consequences. Meanwhile, the management of the authorities is still ineffective.

"Backyard" of crime

In Vinh city, there are streets specializing in pawn services such as Bach Lieu, Nguyen Kiem, Nguyen Viet Xuan... The common feature of these streets is that they are located near colleges and universities - where there are many "potential" customers who are students.

Posing as a customer in need of pawning, we went to a store on Bach Lieu Street (Vinh City). When asking about the assets that could be pawned, the store owner said that the owner’s property must be used or have a power of attorney from the owner.

Pawn shops are densely packed on Bach Lieu Street (Vinh City). Photo: Phuong Thao

However, things did not go as the store owner said when a customer came to pawn a mobile phone and a laptop. This customer did not have any documents related to the property but the transaction was still carried out quickly.

At other pawnshops, similar transactions involving assets of unclear origin still take place, even though the shop owners know that they are against the law. The name of the pawner (or the pawner gives a fake name) is not even recorded on the receipt, the type of asset, the amount of money and the time of pawning. These establishments are only interested in valuing the pawned goods at a very low price, so if the customer does not redeem them, the shop owners do not suffer any loss, but can still sell them at a good price when liquidating the expired goods.

In fact, pawn services are one of the types of business that always have many potential complex factors. Many pawn shops become places to store and consume assets of unknown origin, assets obtained by others through crime... significantly affecting the security and order situation.

On March 29, the Economic Police Department of the Provincial Police coordinated with C50 (Ministry of Public Security) to arrest 3 subjects who organized gambling and gambled in the form of football betting on the Internet with a total amount of about 900 billion VND. Notably, this group of subjects also established a chain of pawnshops, financial lending, and car trading in the two provinces of Nghe An and Ha Tinh to collect debts from gamblers.

Lieutenant Colonel Dang Huu Hung - Deputy Head of the Administrative Management Team for Social Order, Vinh City Police said that some establishments operate under the guise of opening pawnshops, but in reality they are lending money at high interest rates in the form of mortgages, unsecured loans and installment loans with high interest rates. And when the "victims" are unable to pay, using gangsters to collect debts is a common occurrence.

Ineffective management

There are currently 165 licensed pawnshops in Vinh City. Vinh City Police periodically coordinate with relevant agencies to inspect the business licenses and operations of pawnshops. However, this only manages the surface, and the “underground activities” of pawnshops are very difficult to detect.

The Vinh City Police Department's administrative management team for social order inspects and seals evidence of illegal pawnshops in March 2016. Photo courtesy

Pawning services are regulated as a conditional business and are strictly managed. For goods and assets pawned under the ownership of a third party, there must be a valid authorization letter from the owner. Goods and assets of unknown origin or assets obtained through illegal acts cannot be pawned. When there is suspicion that goods and assets are obtained through crime, the shop owner must immediately notify the competent police agency to inspect and handle...

However, to deceive the authorities, pawnshops often arrange transaction points in one place and store assets in another, making it difficult to control and detect assets of unknown origin.

On the other hand, there are currently no specific regulations on the list of assets and goods that must have documents proving legal ownership. In fact, some assets and goods such as televisions, watches, computers, DVD players, and mobile phones, which are freely traded on the market without documents proving their origin and legal ownership, are still mortgaged.

Since July 1, 2016, Decree 96/2016ND-CP of the Government regulating security and order conditions for a number of conditional investment and business sectors has come into effect, regulating the conditions for establishing pawn shops. The current difficulty is in handling lending and pawn shops that use the name of financial services to lend at high interest rates, because Decree 96 does not include this form in the list of conditional investment and business sectors, so there are no sanctions to punish them.

“Since the end of 2016, we have discovered a number of establishments in Vinh city that are doing business in this form, but there have been no sanctions,” said Lieutenant Colonel Dang Huu Hung.

The demand for pawning assets and borrowing money at high interest rates from customers is increasing day by day, and the lack of thorough handling of violations has created opportunities for businesses providing these services to earn illegal money. To regulate the operation of pawn services, authorities need to step up inspections, have stricter sanctions, and severely punish pawn businesses that do not operate in accordance with the law.

Phuong Thao