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City Clerk  | Photo Credit: Archie Nicolette

SECONDHAND DEALER: ORDINANCE, APPLICATIONS, FAQs

ORDINANCE CHANGES

Madison's new Secondhand Ordinance took effect on February 1, 2012. This new law requires that secondhand dealers, including secondhand jewelry dealers and pawnbrokers report the purchase of secondhand goods, on a daily basis, through the use of a web-based software called Leads Online. This electronic reporting system will replace the paper records that are currently used to report transactions to the Madison Police Department and will be available at no cost the individual retailer, other than internet access.

Some of the other changes in the new Ordinance are:
  • Prohibiting purchases by secondhand dealers from those intoxicated, impaired or under the age of 18.
  • Creating a new license for dealers who buy and sell gold, silver and other precious metals.
  • Creating additional penalties for customers who sell property not owned by them.
  • Simplified reporting of compact disks, digital video disks and other audio visual media.
  • Increased license fees for pawnshops, secondhand jewelry dealers and secondhand article dealers.
  • A seven day holding period for video or computer games that are subject to electronic record keeping.
  • Textbooks are exempt from electronic recordkeeping requirements.

APPLICATIONS

NOTICE: For all license applications we now require a copy of your State Seller's Permit ID certificate.

Are you unsure if you need a license?

Check this guide/ordinance summary to start: Guide

Read the Frequently Asked Questions section which highlights some of the changes in this new Ordinance. If you have questions, you may contact the City Clerk's Office at: (608) 266-4601 or at licensing@cityofmadison.com.

FREQUENTLY ASKED QUESTIONS

Last Updated: January 18, 2012

Q: What is required for the license?

A: The following:

1. Fill out the Second Hand Dealer application
2. Pay the fee*
3. Managers go through a police background check which includes fingerprinting.
      a. Fingerprinting fee is included in the license fee.
      b. Have your managers come to the Clerk’s Office – we will give them a pass to

          take to Fingerprinting so they are not charged a second time.
      c. Fingerprinting is M-W-Th-F (NOT Tuesdays) 8:00 am – 3:30 pm in the City

          County Building.
4. Once the police have approved your managers, we will process your application and submit it to the Common Council.
5. Once the Council has approved your application, we will mail your license to you.
6. You are required to report the purchase of secondhand goods, on a daily basis, through the use of web-based software called Leads Online.

*A holder of a valid secondhand article dealer's license or a secondhand jewelry dealer's license issued by another Wisconsin municipality who does not obtain those licenses from the City of Madison, following Wisconsin State statute 134.71 3(a) and 134.71 4, must still comply with Madison's reporting ordinances and background investigation requirements. A licensee from another Wisconsin municipality must also file a disclosure of information form with the City Clerk and must post a $2,000 bond which shall be for the observation of all City ordinances relating to secondhand article dealers and secondhand jewelry dealers.

Q: What transactions are required to be electronically reported?
A: Every transaction conducted by a secondhand dealer in which an article or jewelry is received through a pawn, purchase consignment or trade must be electronically reported, subject to certain exceptions. Some of the transactions that do not need to be reported are: secondhand textbooks, bulk purchases or consignments from another merchant or a manufacturer or wholesaler and retail and wholesale sales of articles originally received by pawn or purchase for which all applicable redemption periods have expired.

Q: How will electronic reporting be done?
A: Daily reporting will be done through an online website called "LeadsOnline". There is no fee to the merchant for the use of LeadsOnline. Merchants who are known to the City will be contacted directly by LeadsOnline to set up their account.

Q: How are audio visual recording media reported?
A: The title, artist or author of audio tapes, compact disks, laser discs, records, videotapes, digital video disks or other similar audio or audio visual recording media need not be described on the online reporting of transactions.


Q: What increases in license fees are contained in the new Ordinance?
A: In order to pay for additional city costs for compliance software and the hiring of a police analyst, secondhand license fees have been increased effective February 1, 2012.

  • Secondhand Article Dealer from $75 to $500 per year
  • Pawnbroker from $300 to $5,000 per year
  • Secondhand jewelry dealer from $74 to $2,000 per year
  • Secondhand mall or flea market from $200 to $500 per year
  • Secondhand textbook dealer licenses remains $75 per year

A new Precious Metals Dealer license is created and the fee is $2,000 per year

Each individual premise requires a license. There are no temporary licenses and a temporary operation must pay the full license fee for the activity. Those businesses that currently hold licenses will see the increases for new licenses issued after June 30, 2012. Businesses without a license, who apply for a new license after February 1, will pay the new, higher license fees. The Precious Metals Dealer license takes effect on February 1, 2012. All of the license fee increases are subject to a "sunset" provision, under which the Common Council must review the increases before June 30, 2013. If the Council does not again approve the new fees, the fees will revert to the levels that existed before February 1, 2012.

Bond requirements are increased to $5,000 for pawnshops. There are no "transaction fees" under the new ordinance.

Q:What are some of the Bail Amounts for Citations under the new Ordinance?
A:
  • Failure to report transactions: $240
  • Serial Number required: $240
  • Failure to record transactions: $240
  • Failure of licensee from other City to comply with requirements: $681
  • False identification by seller: $240
  • Seller must own property sold by seller: $240
  • Secondhand dealer license required: $240

Q: What is the new precious metal dealer license?

A: A precious metal dealers license covers any transaction in purchasing, selling receiving or exchanging secondhand, jewelry, sterling silverware, gold or silver coins, gems, bullion or other items made in whole or in part from gold silver, platinum or any other metal, mineral or gem customarily regarded as precious or semiprecious. A holder of a Madison precious metal license does not need a separate license to buy and sell secondhand jewelry, but a secondhand jewelry dealer will need a precious metal license to buy and sell precious metals other than secondhand jewelry.

Q: What photographs of sellers are required? What photograph requirements apply when serial numbers are not available for an item?
A: Each pawn, precious metal or secondhand jewelry transactions shall include a color photo or a color video recording of each customer pawning, pledging, consigning, exchanging or selling an item or property. Every item pawned, pledged or sold without a unique serial number, must be photographed. Photographs and video recordings must be made available to the Madison Police Department upon request.

Q: How do Madison's new rules apply to Secondhand Dealers licensed in other Wisconsin Communities?
A: Any merchant buying or selling precious metals must have a license issued by the City of Madison. A Secondhand Jewelry License issued by another City is not valid in Madison for the purchase or sale of precious metals.

A holder of a valid secondhand article dealer's license or a secondhand jewelry dealer's license issued by another Wisconsin municipality does not need to obtain those licenses from the City of Madison, but must still comply with Madison's reporting ordinances and background investigation requirements. A licensee from another Wisconsin municipality must also file a disclosure of information form with the City Clerk and must post a $2,000 bond which shall be for the observation of all City ordinances relating to secondhand article dealers and secondhand jewelry dealers.

Q: What are the holding periods under the new ordinance before secondhand goods can be resold?
A:
  • Articles or jewelry purchased by pawnbroker: 30 days
  • Articles purchased by secondhand jewelry dealer: 15 days
  • Articles purchased by precious metal dealers: 15 days
  • Articles purchased by secondhand article dealers (other than video games reported electronically): 10 days
  • Video games electronically reported and purchased by secondhand article dealer: 7 days

There is no holding period for consignment sales, coins or bullion or audio-visual media.

Q: What are the record keeping and receipt requirements?
A: Every license holder must keep a record of all articles and jewelry purchased, with a detailed description. The description shall include the type of property, serial number, model number, color, description and purchase price, the date time a place the property was received and the unique alpha or numeric transaction identifier that distinguishes it from all other transactions in the dealer's records. To the extent that it is not provided as a record of the customer's identification retained by the dealer, the full name address telephone number, date of birth and accurate description of the person including sex, color of eyes and color of hair must be retained by the dealer. The identification number of the driver's license (or other identification) and state of issue must be retained. All such records must be retained for one year and must be made available at reasonable times to the Madison Police Department. In addition to the recordkeeping requirements, every secondhand dealer must provide a receipt to the customer and maintain a duplicate for one year. The receipt must include the business name, the date and time the item was received, the nature of the transaction, an accurate description of the item including any serial number, the signature of the dealer or employee, the amount paid, any interest rates if a pawn transaction, the last redemption date for pawn transactions, the full name, address, telephone number and date of birth of the customer, and the customer's signature and identification number. An identifying label must be attached to the item containing the identifier that identifies the transaction in the dealer's records.