Keywords Finance

Because human need, greed and desperation are intrinsic to this trade, pawnbroking has had a colourful past and some murky connotations. Unscrupulous lenders were known in the past to strip desperate clients by accepting clothes, shoes, false teeth and glass eyes; to charge usurious interest rates; or to sell someone's cherished possession almost as soon as he or she had pledged it and left the shop. As well, some thieves saw pawnshops as places to dump stolen goods.

However, pawnbroking in Canada today is so well regulated that nearly all risks - both to borrowers and shoppers - as well as some of the drama have disappeared. A federal Pawnbrokers' Act was passed in 1886, and more recently various provincial laws concerning pawnbroking have come into effect. In general, the areas that are regulated include the safekeeping of objects left as collateral; the level of interest rates that may be charged; the length of time pledged items must be kept before being sold (usually one year); and requirements for municipal licensing. Local police usually monitor pawnbroking businesses by checking the pawnbrokers' daily records of transactions against lists of stolen goods.

Though pawnshop merchandise is often still a grab bag of odd items, pawnbrokers in Canada are more selective, some specializing only in precious metals. Approximately 80% of the items placed are redeemed by their owners.

Author RUTH DANYS