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Pawnshops on a candlestick. Business demands regulation

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The lending business demands regulation of the competitive pawnshop industry that thrives in a pandemic, reports Friday’s “Puls Biznesu”. As representatives of entrepreneurs indicate, in extreme cases pawnshops function as butcher shops, and the interest rate on loans reaches up to 550 percent per year.

“The pawnshop industry, whose main activity is in fact providing short-term loans against valuable items, has found its way to the candlestick. All by selectively tightening the screw to other entities” – we read in the journal.

The problem is the lack of regulation

– Banks and loan companies are heavily regulated, and pawnshops are not, despite the financial sector signaling such a need – said Piotr Palutkiewicz, deputy director of the law and legislation department at the Union of Entrepreneurs and Lawmakers, quoted in “PB”.

According to the magazine, embittered entrepreneurs took matters into their own hands. “ZPP commissioned a research boutique Maison & Partners to conduct an in-depth study of the pawnshop market. Several months of work, involving quantitative and qualitative research, data analysis, telephone interviews, electronic surveys or a mysterious customer, in May this year resulted in a 72-page report ‘The pawnshop market in Poland’ “- it was informed.

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“The problem is (…) the lack of a statutory definition of a pawnshop” – it was written. – Due to the specific nature of their business, pawnshops should be subject to the Consumer Credit Act. However, the owners of pawnshops effectively circumvent the applicable law by signing a contract with clients for the provision of commission services or storage of the item – says Palutkiewicz. “PB” writes that in extreme cases pawnshops function as butchers.

The report shows, inter alia, “that in the pawnshop industry there are no uniform rules of informing about the conditions of provided services or customer service standards. The valuation of a pledged object by eye method amounts to an average of 35%”. “It is estimated that the interest rate on loans in pawnshops reaches up to 550 percent per year” – it was reported.

Main photo source: Shutterstock

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