Online pawning is a trend that may be catching on with Florida consumers who need a quick, convenient personal loan to pay bills or take a vacation.
Web-based pawnshops work much like traditional walk-in shops, offering short-term loans in exchange for loan fees and, of course, collateral -- often in the form of watches, jewelry, electronics, musical instruments and firearms. These items are returned to the borrower when the loan and fees are paid off.
Both sites cater to upscale consumers feeling the financial pinch from the down economy, as well as to newbies to pawning who would rather pay for a small loan than deal with credit checks and hassles associated with banks and other financial institutions.
Christina Reddick of Hollywood chose Pawngo to pawn a Macbook Air laptop and gold necklace for a $450 loan to pay medical bills related to shoulder surgery.
"It was very easy, I did most everything from my computer," said Reddick, an administrator at Florida International University and a first-tine pawner. "It was like a concierge service for pawn shops."
Even going to a nearby FedEx office to ship her goods to Pawngo was preferable, Reddick said, "to going to a pawn shop that might be in a bad part of town." Reddick said she paid off the loan and her goods were returned without a problem.
In June, Kevin Cope, also of Hollywood, pawned a DSLR camera, several lenses and a bag for a $1,000 loan. He used the cash as a downpayment on a 2011 Toyota Corolla. "I didn't need to put money down, but I chose to put the $1,000 down to keep my payments lower," he said. Cope repaid his loan in two months – paying about $60 in fees – and received his camera and gear back.
"It was not embarrassing like walking into a normal pawn shop to pawn things," said Cope, a design manager at a local news magazine.
Pawngo charges a maximum 6 percent interest rate per month for a loan. The average loan is for two months, meaning that a loan for $1,000 for two moths will cost at least $120 - $60 per month. The average interest rate for a pawn shop loan is 15 percent, according to the National Pawnbrokers Association. And Florida law allows pawnbrokers to charge up to 25 percent per month.
"Our value proposition is less about being cheaper and more about being more convenient, safe and comfortable," said James W. McHose, founder and chief financial officer of Pawngo.
"I know that the pawning industry is booming in Florida right now," McHose said. "Florida took a tough hit with the recession so it's no wonder that it has become the pawn shop hub of America." Of the 10,000 pawn shops in the United States, more than 12 percent operate out of Florida.
For Janet Barbour, of Charlotte, N.C., a loan from Pawngo meant a chance to take her 11-year-old grandson, Brian, to Disney World. "It was his first time there. We'll never forget it," said Barbour, a retired restaurant manager. She pawned an engagement ring and jewelry given to her by her recently-decease husband.
"I got $700, enough to pay for the tickets and some gas to get there," she said. "And it feels good to know I will get it back when I pay off the loan." She also paid her loan and got her jewelry back.
Both Pawntique and Pawngo work similarly: Send a message describing your item, possibly include a photo and wait for a preliminary offer from the online company. Accept and the company pays for shipping and insurance. The company assesses your property and makes a final offer. Accept again and the money is deposited in your bank account.
Forbes.com recently described the trend as bringing "the 3,000-year-old industry of pawn shops to the digital age."
Florida consumers appear to have relatively good luck when it comes to pawning experiences, said Sterling Ivey, a spokesperson for the Department of Agriculture and Consumer Services, which regulates pawn shops. "We get very few complaints on this industry," he said. "Last year we only had 10 out of 40,000 total complaints."
Florida regulations are strict, requiring pawn shop operators to collect information identifying those who pawn - including a driver's license number and thumbprint.
But law enforcement experts warn consumers that state laws do not apply to online companies based out of Florida. For instance, Pawngo is based in Colorado, which does not require thumbprints. Both Florida and Colorado require pawners to sign affidavits swearing the items they pawn belong to them and are not stolen. That means a consumer pawning at a shop in Florida – or online with Pawngo – would have to sign affidavits.
"As a former detective, the risk of pawning online seems high," said Eric Davis, a spokesperson for the Palm Beach County Sheriff's Office. "You are not dealing with an individual as you are at a pawn shop. You are dealing with an unknown. And if you have a problem, who do you turn to?
For instance, Davis said, a Palm Beach County resident who had a problem with an online company not returning an item would be directed to file a police report in the state or city where the company is based. "But if it were a local company, we would investigate," he said.
McHose, of Pawngo, said "the industry has worked hard with the police and regulatory authorities in every state to make a reputable pawn shop the last place a criminal would go to get rid of a stolen item."
Check out Daniel Vasquez's Consumer Talk blog for ways to spend your money wisely, use technology to make life easier and keep your family safe and healthy at SunSentinel.com/consumerblog.Copyright © 2015, Los Angeles Times