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  • Writer's pictureSámano Abogados

Reform of the Federal Consumer Protection Law in Relation to Pawn Shops [20/01/2013].

On January 16, 2013 several amendments were published in the Official Federal Gazette of the Federal Consumer Protection Law (“Consumer Law”) relative to various requirements that Pawn Shops must comply with, as well as the sanctions that can be applied in case of violation.

With this reform Pawn Shops have been expressly included in the Consumer Law, since previously the provisions applicable to pawn shops were ambiguous and unclear. This situation generated legal loopholes that prevented effectively exercising the powers of inspection, verification and sanctioning of the Federal Consumer Protection Agency (know in Spanish as “Profeco”).

Thus, article 65 BIS of the Consumer Law was amended to define Pawn Shops as “individuals or commercial company suppliers not regulated by financial laws and authorities, that regularly or professionally make or offer to the public loan contracts or operations with interest and collateral”. Similarly, the articles indicate that Pawn Shops are prohibited from providing services or carrying out operations reserved to and regulated by the current laws applicable to the national financial system institutions.

Furthermore, articles 65 BIS 1 to 65 BIS 7 were added, which now establish with precision the requirements for obtaining by Profeco, and specifically of the Pawn Shop Registry, the mandatory registration to operate as such. The other obligations they must comply with while operating as Pawn Shops are also specified.

A relevant part of the reform is relative to the obligation of Pawn Shops to inform the corresponding State Delegation of Profeco, through a monthly report, of “suspicious activities or events” that they learn of as a result of their operations. This obligation is closely related to the definition and scope of the “vulnerable activities” regulated by the Money Laundering Prevention Law.

Finally, article 128 of the Consumer Law was amended, which article now establishes sanctions for violation of any of these new articles, which go from six hundred to two million and a half pesos.

This reform of the Consumer Law grants a term of 180 calendar days for the Pawn Shops to comply with the new provisions, above all in relation to their registration in the Pawn Shop Registry.

If you would like to learn more about this topic please contact Cristina Loera.

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