Bill 292

                    Current Status

Bill Number:               292
Ratification Number:       207
Act Number                 147
Introducing Body:          Senate
Subject:                   Regulation of dealers in precious
                           metals

(A147, R207, S292)

AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 64 TO TITLE 40 SO AS TO PROVIDE FOR THE REGULATION OF DEALERS IN PRECIOUS METALS AND PROVIDE PENALTIES FOR VIOLATIONS.

Be it enacted by the General Assembly of the State of South Carolina:

Regulation of dealers in precious metals

SECTION 1. The 1976 Code is amended by adding to Title 40:

"Chapter 54

Dealers in Precious Metals

Section 40-54-10. As used in this chapter:

(1) 'Dealer' means any person, corporation or partnership who buys precious metal from the general public whether in bulk or in manufactured form with an intent to obtain a monetary profit for himself or for a principal.

(2) 'Precious metal' means any article made in whole or in part of gold, silver or platinum.

(3) 'Local law enforcement agency' means the chief of police for businesses located within the corporate limits of a municipality and the county law enforcement agency for businesses located outside the corporate limits of a municipality.

(4) 'Permanent place of business' means a fixed premises either owned by the dealer or leased by him. One year's lease shall be a presumption of permanency.

(5) 'Places proposed to do business' means the counties or municipalities in which the dealer intends to purchase precious metals.

(6) 'Purchase' means the acquisition of precious metal for a consideration of cash, goods or other precious metals. Trade-ins shall be covered by the provisions of this act unless the item traded was directly purchased from the dealer allowing the trade.

Section 40-54-20. No dealer as defined herein shall operate in the State of South Carolina unless he first obtains a permit to engage in the business of purchasing precious metals from the local law enforcement agency and operates only from a permanent place of business. No dealer shall operate upon public property nor from a vehicle, flea market, hotel room or similar temporary location.

The form of the permit to engage in the business of purchasing precious metals shall be prescribed by the State Law Enforcement Division and all applicants for a permit under this act, whether a person, firm or corporation, shall file a written sworn application signed by the applicant if an individual, by all the partners if a partnership, and by the president if a corporation, with the local law enforcement agency showing:

(a) The names of the persons managing, supervising or conducting the applicant's business in any places proposed to carry on business; the addresses of such persons; the driver's license number of such persons; the capacity in which such persons will act, that is, whether as proprietor, agent or otherwise; the name and address of the person, firm or corporation for whose account the business will be carried on, if any; and if a corporation, the state of incorporation.

(b) The permanent places of business and other places in the State of South Carolina where it is proposed to carry on the applicant's business and the places where the applicant has carried on the business of purchasing precious metals within one year preceding the date of such application.

(c) Such other reasonable information as to the identity of the persons managing, supervising or conducting the applicant's business as the local law enforcement agency may deem proper to fulfill the purposes of this act.

(d) A statement of the nature, character and quality of the precious metals to be purchased in the business.

Upon receipt of such application for a permit, the local law enforcement agency shall cause an investigation of such person's business and personal background to be made. Such investigation shall be limited to information pertinent to the purposes of this act. If, as a result of the investigation, the background is found to be unsatisfactory, the permit shall be denied. The permit shall be denied or issued within thirty days from the date of application. Upon the issuance of the permit, the local law enforcement agency shall notify the State Law Enforcement Division of the locations where the permit holder proposes to carry on his business. The permit issued under this act shall be valid for a period of one year from the date issued and the annual fee shall be fifty dollars to provide for the administrative costs. If the dealer intends to operate from more than one location within the State, then separate permits shall be issued for each place of business; provided, however, only one annual fee shall be collected.

The permits under this act shall be in addition to and not in lieu of other business licenses.

A permit may be denied, suspended or revoked at any time if the local law enforcement agency discovers that the information on the application is inaccurate or the dealer or applicant does not comply with the requirements of this act. The permit holder shall notify, within ten days, the local law enforcement agency if any substantive changes occur in the permanent place of business in the persons managing, supervising or conducting the applicant's business, or in the places the permit holder intends to do business.

Section 40-54-30. A permit issued under this chapter shall be posted conspicuously at all places of business named therein.

Section 40-54-40. Every dealer shall keep a book in which shall be written at the time of any purchase of precious metal made from the general public whether in bulk or manufactured form, the date of purchase, amount of money or other property exchanged therefor, the name, sex, race, age, address and driver's license number of the person selling the items, articles or things bought, and the number and nature and brand name of such items, articles or things. Descriptions shall include size, weight, patterns or engraving or any unusual identification marks. If the seller does not have a driver's license, some other positive identification bearing his photograph and an identifying number may be substituted. If the seller cannot produce a driver's license or other positive identification, the dealer shall not buy any merchandise from him. Every dealer shall, at the time of purchase, obtain the signature of the seller as part of the recording of the transaction.

The record book shall be kept for three years and shall at all reasonable times be open to the inspection of any judicial or law enforcement officials or their designees.

The local law enforcement agency shall not reveal a seller's identity supplied under this section except to other law enforcement agencies and prosecuting officials or pursuant to the valid order of a court or in the course of any criminal investigation or prosecution.

Section 40-54-50. (A) No dealer may purchase any precious metal from a minor unless accompanied by his parent or guardian with appropriate identification.

(B) All precious metals purchased by a dealer shall be held by the dealer at his permanent place of business or at another suitable location in the State of South Carolina without being resold, melted or altered in any manner, for a period of seven days from the purchase date. All goods required to be held under this section shall at all reasonable times be open to inspection by any law enforcement agency.

Section 40-54-60. Possession of equipment which has been used, or is being used for the melting, crushing or altering of the precious metals is unlawful unless possessed by a dealer with a valid permit as provided in Section 40-54-20.

Section 40-54-70. Any dealer buying precious metal with knowledge that the metal has been stolen shall be liable to the lawful owner of such metal in an amount triple the fair market value of the stolen items, computed at the time of the theft, and shall be liable for a reasonable attorney's fee as the court in its discretion may award. This shall be a civil remedy and in addition to any other remedies provided by the law. Provided, any dealer, having purchased precious metal in compliance with the provisions of this chapter, such metal subsequently being shown to have been stolen by a member of the immediate family of the rightful owner, may demand reimbursement from the owner equal to the amount paid for the metal before returning the metal to the owner.

Section 40-54-80. Any dealer violating the provisions of this chapter shall be deemed guilty of a misdemeanor and upon conviction, for a first offense, shall be fined not more than five hundred dollars or imprisoned not more than ninety days, or both. A second offense conviction shall be punishable by a fine of not more than two thousand dollars or imprisonment not more than one year, or both. A third or subsequent offense conviction shall be punishable by a fine of not more than five thousand dollars or imprisonment not more than three years, or both. A dealer convicted of a second offense shall be ineligible for a permit to conduct business in precious metals in this State for at least two years and a dealer convicted of a third or subsequent offense shall not be eligible for a permit for at least five years.

Section 40-54-90. The provisions of this chapter shall regulate the business of purchasing precious metals in this State and shall preempt any ordinances passed by political subdivisions purporting to regulate such business.

Section 40-54-100. This chapter shall not apply to the following specific transactions:

(1) a transaction between dealers of precious metals where the selling dealer has already complied with the seven day holding period, nor shall they apply to transactions between coin dealers and coin collectors occurring at regularly scheduled numismatic conventions.

(2) the purchase of manufactured items bought directly from the manufacturer or his authorized representatives.

(3) the purchase of bulk precious metals brought directly from the commodity exchanges, banks, dealers or licensed brokers."

Time effective

SECTION 2. This act shall take effect sixty days following approval by the Governor, during which time period the process of issuing permits shall take place.