“The California Pawnbrokers Association requires all of its members to adhere to a strict Code of Ethics, as well as conform to local, state, and federal regulations. As an example, pawnbrokers are governed under the Gramm-Leach-Bliley Act, which requires financial institutions – companies that offer consumers financial products or services like loans, financial or investment advice, or insurance – to explain their information-sharing practices to their customers and to safeguard sensitive data.”
Taylor points out “Every pawnbroker in the United States must comply with two regulations promulgated by the Federal Trade Commission (FTC) that focus on the privacy and security of information provided by consumers.”
The first of these rules is the Rule Concerning the Privacy of Customer Information (“Privacy Rule”), 16 C.F.R. Part 313, which went into full effect on July 1, 2001. This rule requires pawnbrokers and others who meet the definition of “financial institution” under the Gramm-Leach-Bliley Financial Services Modernization Act of 1999 (GLBA) to provide notices to their consumer customers about their privacy policies and to use and share information only in accordance with the policies they describe in those notices or in the exceptions provided in the rule. Pawnbrokers should be complying with this FTC rule already.
The second rule, entitled “Standards for Safeguarding Customer Information” (“Safeguards Rule”), 16 C.F.R. Part 314, became effective on May 23, 2003. This rule requires that all GLBA “financial institutions” including their service providers who receive customer information from financial institutions have written policies and procedures demonstrating their administrative, technical, and physical safeguards for customer information.