NY Bronx: Pawnbrokers can’t be compelled to upload all their acquisition information; becomes a general search without restraint

While pawnbrokers are regulated, they can’t be compelled to upload all their information about acquisitions into a database to make the NYPD’s job easier. What is to be uploaded is too broad, and that’s a general search. Collateral Loanbrokers Assn. of N.Y., Inc. v City of New York, 2015 N.Y. Misc. LEXIS 1903, 2015 NY Slip Op 50847(U) (Bronx Co. June 3, 2015):

NYCAC § 20-277, promulgated after the enactment of Local Law No. 149 in 2013 requires that dealers of second-hand articles and pawnbrokers maintain the records required by NYCAC § 20-273 in electronic form and in a manner allowing real-time sharing via a website designated by the police commissioner. Because of Local Law No. 149, NYCAC § 20-273 and § 20-277 now have an electronic records retention component mandating that the foregoing electronic records (previously only required to be maintained in non-electronic form and subject only to an on premises inspection) shall be open to the inspection of any police officer, the commissioner or any departmental inspector, judge of the criminal court, or person duly authorized in writing for such purposes by the commissioner or by any judge of the criminal court, who shall exhibit such written authority to the dealer and such records shall also be open to the inspection of any official or other person identified in, or duly authorized in writing pursuant to, any other applicable state or local law. Thus, neither NYCAC § 20-273 nor § 20-277 prescribe limits on the inspection of records they authorize nor do they promulgate the frequency of inspections and how the same should be performed.

New York City Charter (NYCC) § 435 grants the police the authority to inspect and observe any businesses required to have licences, which pursuant to NYCC § 436, includes pawn brokers and dealers of second-hand merchandise. NYCC § 436 also grants the police the power to inspect the owners of such establishments, their clerks, employees, books, premises, and merchandise in their possession. Neither of the foregoing two statutes, however, prescribe limits on the inspection of records they authorize nor do they promulgate the frequency of inspections and how the same should be performed.

Lastly, RCNY §21-03(a) and (b), §21-04(a) and (c), §21-07(a)-(f), and § 21-08, promulgated as a result of Local Law No. 149 require pawnbrokers and dealers in second-hand merchandise to create electronic transaction records and upload the same to a web-based electronic transfer service designated by the NYPD known as Leads Online, who then makes those records available to the NYPD. Again, the foregoing statutes fail to prescribe limits for the review of the records required to be disclosed and, in fact, in requiring the daily disclosure of those records seem to vest with the NYPD the unbridled discretion which even the court in Glenwood TV, Inc., would invalidate a statute authorizing warrantless searches(103 AD2d, 322, 330).

Based on the foregoing, plaintiffs have established entitlement to a preliminary injunction, enjoining defendants from enforcing any of the statutes challenged herein.

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