In case of default, some states require the collateral be sold at public auction. Thirteen states and the District of Columbia require any surplus from the sale of the collateral over the amount owed the pawnbroker, including accumulated interest and any costs related to the sale, to revert to the pawn. Pawnbrokers offer non-recourse loans, looking only to the item being pledged to recover their investment if the borrower chooses not to repay the loan. It is the choice of the customer to repay the loan. Less than one percent of all loans are identified as stolen goods.
Pawnbrokers work closely with local law enforcement.
A customer must provide positive identification to show evidence of the transaction. This information can then be presented to the police department, therefore decreasing the likelihood that a thief would bring stolen merchandise to a pawnshop. It is not in the interests of the pawnbroker to accept potentially stolen merchandise because the police can seize the merchandise and the pawnshop owner loses the collateral and the loaned money. Pawnshops are registered firearms dealers with permanent places of business. As registered licensed dealers, pawnshops comply with the statutory waiting periods and background checks.