By Richard Weatheringon
There are all kinds of ways for customers to try to con a pawnbroker. When a scam is used by a pawnshop employee, the pain and sense of betrayal is far harder to swallow. But such trickery doesn’t always go unpunished, as a shop employee recently discovered.
A man, whose first name was Michael, worked for an Arizona pawnshop. While employed there, Michael pawned six guns at his employer’s shop.
Michael filled out the pawn tickets and established his own loan amounts on those tickets, which far exceeded the real value of the guns.
Michael was later fired for other reasons and failed to repay the loans on the pawned weapons. After the pawn requirements were met, his guns were forfeited to the shop.
The pawnshop owner was not aware that Michael had pawned the guns until after he had been fired.
Michael was arrested, charged and convicted after a jury trial of third degree burglary and fraudulent scheme and artifice or trickery and sentenced to concurrent, mitigated prison terms, the longer of which was three years. Michael was acquitted of an additional count of third degree burglary as well as seven counts of trafficking in stolen property.
Michael then appealed his conviction to the Court of Appeals of Arizona, claiming that there was insufficient evidence to support his conviction of fraudulent scheme and trickery.
The Appeals Court first noted that it views the evidence in the light most favorable to upholding the jury’s verdict and reviews claims of insufficient evidence only to determine whether substantial evidence supported the jury’s decision.
Substantial evidence, noted the court, has been described as more than a mere scintilla of evidence; but it nonetheless must be evidence that reasonable persons could accept as sufficient to support a guilty verdict beyond a reasonable doubt. Substantial evidence may be circumstantial or direct.
The court said it would reverse a conviction only if there was a complete absence of provable facts to support the jury’s conclusion.
According to Arizona Statute Section 13-2310, a person commits a fraudulent scheme if he or she, “pursuant to a scheme or artifice to defraud, knowingly obtains any benefit by means of false or fraudulent pretenses, representations, promises, or material omissions.”
“Reliance on the part of any person,” however, “shall not be a necessary element of the offense.”
Michael argued that he did not obtain a benefit — the loan — “by means of” a false pretense. He reasoned, pointing to the 1990 case of State v. Rios, that because he didn’t use the falsified pawn tickets “to convince the pawn shop owner or any other employee … to give him the money,” his pawning of the guns at an inflated value was instead “merely a tool to cover up” his theft of money from the pawn shop.
The defendants in the Rios case were department store employees, who had created false refund vouchers that they subsequently exchanged for cash. As a result, they were convicted of, among other things, “theft by deception.”
The Kansas Supreme Court determined that to convict the defendants of theft by deception, “the State would have to prove that the defendants obtained control over the store’s money by means of a false statement or representation, that the false statement or representation deceived the store, and that the store relied in whole or in part upon the false statement in giving up control of the money to the defendants.”
Thus, because the employees were “the highest ranking … employees in their respective stores” with access to the safes, cash rooms, and vouchers, the vouchers were used only “to cover up the thefts, not to cause the corporation to part with the monies represented by the vouchers.”
The Arizona Appeals Court noted, however, that the Rios case was plainly distinguishable, because unlike Arizona’s Section 13 2310, the Kansas fraud statute required reliance — that is, a successful deception.
Statement was Dicta
The Appeals Court said it recognized that, in the 1994 case of State v. Johnson, the Arizona Supreme Court stated in relation to a charge of fraud that, “the false pretense must actually cause the victim to rely and, as a result, give property or money to the defendant.”
But, noted the Appeals Court, as it had observed in the 1998 case of State v. Proctor, that statement was dicta. Dicta are observations or comments made by a court that were not necessary to the case outcome and may go beyond the facts present in the case.
The Appeals Court noted that the Johnson court did not intend to hold, in direct contravention of the language of Section 13 2310 and the basic rules of statutory construction, that reliance was required to prove a fraudulent scheme and trickery.
The fact that the pawnshop owner in this case was unaware of Michael’s deception was not material to his guilt or innocence of fraudulent scheme and trickery. And, said the Appeals Court, the evidence plainly supported the jury’s conclusion that Michael used the pawn tickets containing falsified values to engineer improper loans by which he obtained cash, which clearly constituted “obtaining any benefit by means of false or fraudulent … representations” under Section 13 2310.
Nor did the evidence compel a conclusion, said the Appeals Court, that Michael had used the tickets to conceal a theft, rather than as a means of committing it.
Michael acknowledged during his testimony at the trial that he had pawned the guns using inflated values, but asserted he had obtained permission from the store owner to do so.
And he stated another employee, who had entered the loans into the computer at Michael’s request based on documents Michael had completed, had given him the money for those loans.
The jury, said the Appeals Court, was free to accept or reject the trial testimony, including Michael’s, in whole or in part.
The court noted that no rule has been better established than that the credibility of the witnesses and that the weight and value to be given to their testimony are questions exclusively for the jury.
Therefore, the Appeals Court, in an unpublished opinion on Dec. 11, 2012, ruled that Michael’s conviction for fraudulent scheme and artifice was affirmed.
Readers who would like a free copy of this case sent electronically should send an E-mail to firstname.lastname@example.org with “Trickery” in the subject line.
By RIC BLUM
Those of us who watched Hill Street Blues in the 1980s remember Sgt. Phil Esterhaus (Michael Conrad) saying his trademark phrase, “Let’s be careful out there,” after morning roll call.
Did you ever think he may have been talking to you?
I don’t care who you are or where you are, the bad guys (and gals) are out there and you are their targets. It’s nothing personal, it’s just business.
Snatch and grab thieves (not to be confused with smash and grab) usually work by themselves, except for maybe a co-thief waiting in a nearby vehicle to help with the getaway.
Those with sticky fingers (distraction or sneak thieves) usually work in teams – one or two to distract the employee (you) and a limber party to take advantage of the situation. No one should be above suspicion. And keep in mind that children may often be used as part of the distraction.
Today we are going to concentrate on the “distraction thief.” This type of thief is an opportunist – unless you afford him the opportunity to steal something, he will seek an easier target to prey upon.
Your attentiveness to details, such as making sure all showcases doors are closed and locked, being aware of your surroundings, noting other customers in the store, not trying to take care of two customers at a time (kindly ask them to be patient or call another staff member), will usually prevent the distraction thief from having any success in your store.
I know you are supposed to give the customer(s) you are taking care of your full attention, but you still need to be aware of your surroundings.
Those working in teams will try to distract you in many ways to allow their companion to steal.
It may be a convincing act — they seem ready to make a large purchase, asking to see many items at once, or something “special” from the back room – but you still need to be aware of everything else going on in your store.
Asking you to run back and forth, or from showcase to showcase to see different items, may be a ploy to try to get you to leave a showcase door open or unlocked.
You also need to be wary of customers talking on their cellular telephone while asking to see jewelry, or even those not necessarily talking, but wearing wireless earpieces through which another party could be giving them instructions for a criminal action.
Cellular telephone use and lack of etiquette creates all kinds of issues in today’s businesses. Too many users feel their personal phone use takes priority over anything else. While we maintain a store policy to not wait on someone talking on a telephone, we are often met with hostility by the phone user.
I once witnessed an employee showing a young lady a gold chain from one end of a 6-foot showcase. While she was looking at the chain and had the employee’s full attention, her accomplice was sliding open the showcase door at the other end and reaching in to grab a handful of gold chains.
As I stopped him in the act, he dropped the chains and ran out the door, nearly knocking over a Dayton police detective who was entering the store (coincidentally, 20-some years later, this same detective became head of the city’s pawn detail). After he called for a cruiser, we questioned the lady looking at the chains.
She knew nothing about the man trying to grab a handful of chains (yeah, sure). When the uniform crew told her they were taking her in for further questioning (she also did not have any ID), all of a sudden she didn’t feel very well and requested that she be taken to the hospital (they know all the tricks). I never heard what happened in this case, but at least I still had my jewelry because I knew what to look for (and was very lucky).
Those of us who have been in business for a number of years have experienced some type of jewelry theft or have been very, very lucky. I also realize that there is often a difference in the attitude of awareness between owners and employees who may have the “it’s not my jewelry” attitude.
Many stores use a security buzzer/door lock system to allow people both in and out. The idea is here is to not be “overtaken” by a large number of customers all at once or to control access in and out.
Quite often, those perpetrating a distraction theft are well-dressed and above suspicion.
They are posing as real customers, ask serious questions and may possess some jewelry knowledge. They may also spend some time looking at all kinds of merchandise while setting the stage for their partner. They will also be gone before the theft is noticed.
For security reasons, your more expensive jewelry should be placed toward the front of your showcases and the less expensive items towards the rear. Any kind of loss is bad, but if someone did happen to reach into a showcase, chances are they would take something within easy reach – the items in the rear of the showcase.
As a subscriber to the Jewelers’ Security Alliance Crime Alert Network (Jeweler’s Security Alliance, email@example.com), from which I receive free weekly E-mail Crime Alert notification of reported (to JSA) thefts and robberies around the country (you may also view these online, http://www.jewelerssecurity.org), I am alerted to the most recent jewelry crimes including a short narrative and often video clips from the victim store’s surveillance system.
The following is an example of a recent JSA alert:
DISTRACTION CREW TAKE DIAMOND AND SAPPHIRE RING
Tampa, FL – September 30, 2013
Video surveillance available
At 5:00 p.m. a black male and female walked into a retail jewelry store in a mall as a couple and asked to see a watch from a front showcase. That showcase also contained a 6.048-carat diamond ring with pear shaped sapphires. The sales associate removed the watch but left the showcase unlocked. While the couple distracted the sales associate, a third black male suspect approached the showcase and removed the ring. He covered the ring with his jacket and left the store, and the couple followed shortly thereafter. The suspect who took the ring is described as 5’6”, 170 lbs. and 38-45-years-old. The male suspect in the couple is described as 5’8” and 170 lbs. The female suspect is described as 6’ and 260 lbs. If you have information, contact the Tampa Police Department at 813-276-3200.
RECOMMENDATION: All showcases must be kept locked except when actually taking merchandise out or returning merchandise to the showcase.
The complete scenario can be found on YouTube. These same distraction thieves were back on the job on Oct. 2, 2013, in Annapolis, Md. Confirmed afterwards by video surveillance
On October 2, 2013 at approximately 1700 hours, 3 unknown suspects entered a small retail jewelry store in Annapolis, MD and stole two gold bracelets and three watches. Suspect #1 and Suspect #2 were able to distract the sales employee while Suspect #3 entered the back room where a safe was located. The safe was locked and nothing is believed to have been stolen from the back room. Suspects #1 & #2 stole two gold bracelets by repeatedly asking to see different items on display. Suspect #3 stole 3 watches from a freestanding unlocked display case while the sales employee was distracted. Surveillance video shows Suspects #2 & #3 attempting to open several display cases while the sales employee was distracted.
Through another jewelry-related business network to which I belong, Polygon, I am alerted to problems being encountered by jewelers, pawnbrokers and related tradesman around the country.
I also subscribe to the National Pawnbrokers Association’s Members Forum from which I also learn of recent issues pertaining to theft and fraud perpetrated on pawnshops throughout the country.
If you add to that a half-dozen or more trade publications which I peruse each month, I am keenly aware there are jewelry thefts happening every day.
The worst part is that most of these thefts could have been prevented if store personnel were more diligent. For example, they need to make sure not to work alone or leave only one person on the sales floor.
I’m not trying to be an armchair quarterback. I too have experienced a couple of jewelry losses. (OK, more than a couple.)
Whether it is a showcase left unlocked (or even open), sleight of hand, an employee showing too many items at once, or complacent employees who would rather be texting on their cellular phones instead of being mindful of customers, it almost always boils down to situations which may have been preventable if someone exercised a little more caution.
The Internet is a great educational tool. I’ve just watched a few videos on YouTube showing incidents where jewelry was removed from showcases while the salesperson was being distracted. Don’t think this can’t happen to you, because it has happened to the best.
The perpetrators of these thefts are not usually amateurs. They have done this before and have honed their skills. They have usually cased (no pun intended) your store and have a target in sight; although there are so-called “crimes of opportunity.”
You can find quite a few YouTube videos you should watch. Just search for pawnshop and jewelry store robberies. There is nothing wrong with learning from someone else’s misfortune.
Management and staff need to constantly be reminded about store security. There is always someone waiting for you to let your guard down to take advantage of the situation.
Jewelers Mutual Insurance Company can provide you with two tent-like sign cards to place in your showcases. They read:
If and when you require identification (you can be selective), place the identification in the showcase. And if you ever have suspicions, signal a second employee to stand between your customer and the exit.
You can never be too cautious. If a customer can’t wait a moment, chances are they are not a true customer. You know that old saying, “The squeaky wheel gets the grease”? Well, in some cases, the squeaky (loud, rude, abusive) customer may actually be the distraction.
Ric Blum is a vice-president of Ohio Loan Co. in Dayton, Ohio. He has served as president of the Ohio Pawnbrokers Association, secretary/treasurer of the National Pawnbrokers Association and as a member of the board of directors and the board of governors of the National Pawnbrokers Association. Please feel free to e-mail your comments or tips that you would like to see included in this column to RicBlum@att.net or mail them to Ric Blum, Ohio Loan Co., 3028 Salem Ave., Dayton, OH 45406.
Jewelers Security Alliance
RECOMMENDATION: All showcases must be kept locked except when actually removing or returning merchandise. While a store is open, the selling floor should never be left without store personnel present.
CRIME PREVENTION ADVICE FOR JEWELERS: HOW TO SPOT A POTENTIAL JEWELRY THIEF, AND WHAT SHOULD A JEWELER DO?
Listed below are the top ten “red flags” or warning signs that a criminal is in your store, including robbers, distraction thieves and grab and run artists. None of the red flags below prove a crime is about to happen, but jewelers should be aware that the red flags below are how many of today’s jewelry criminals commonly behave. While genuine customers can also have habits like these, a jeweler should take special precautions when he or she sees the following red flags. Remember, no red flag is conclusive, but each additional red flag should raise the level of security.
TOP TEN RED FLAGS
1. Is the person talking on a cell phone? Inform the person that you will be happy to serve them as soon as they finish their call.
2. Is the person wearing sunglasses? Suggest that the person remove the sunglasses to get a better view of the beautiful merchandise.
3. Is the person wearing a hat pulled low or a hoodie to conceal his or her identity?
4. Is the person wearing inappropriate clothing for the season, like a wool cap when the weather is in the 80s, or a raincoat on a sunny day?
5. Are large numbers of people entering together, for example, three or more people? Will you be able to adequately protect your merchandise with a large number of people inside your store?
6. Is the person putting large or bulky items, including coats, on the showcase, or moving pads, mirrors or other items on the showcase in order to block the jeweler’s view?
7. Is the person asking unusual questions, particularly about security, hours or schedules, or looking with unusual interest at your cameras or security equipment?
8. Is the person asking to see the “most expensive” watch or jewelry item in the store?
9. Is the person making hand signals or other gestures that appear to be communicating with other people?
10. Is the person walking around the store with their hands in their pockets in order to avoid touching anything in the store that would leave fingerprints.
WHAT CAN A JEWELER DO WHEN RED FLAGS APPEAR?
1. Look at and greet the person who enters your store.
2. Use a pre-established code word to put all staff members on high alert.
3. Have an employee pick up the store phone in an obvious manner, dial someone and talk.
4. Have more than one person wait on the suspicious person or persons, on both sides of the showcase.
5. Keep the showcases locked and show only one item at a time.
6. Tell the person that your insurance company requires you to see photo identification to show high value items.
7. Have visible cameras at eye level.
8. Call the police if you feel there is a criminal risk.
BASIC PROCEDURES TO PREVENT THEFT
1. Have buzzers or chimes on your doors so that you are alerted when someone enters your premises.
2. Make eye contact with each customer who enters your store, greet the customer, and note his or her appearance.
3. Have at least two people on the sales floor at all times.
4. Wait on only one customer at a time.
5. Never turn your back on a customer.
6. Never leave a customer alone with merchandise.
7. Never leave the showroom unattended, even “just for a minute.” You can be distracted or tempted to go to the rear of the store if someone asks for gift wrap or when answering the phone.
8. Show only one item at a time. If a second item is requested, show it on your own wrist or finger. Some highly successful jewelry retailers display a sign saying that their insurance company only permits them to show one item at a time.
9. When showing high-end goods to unfamiliar customers, tell them that your insurance requires you to ask for identification before displaying the items.
10. Do not bring entire trays of merchandise or a diamond wallet to the counter when waiting on a customer. Too much value will be exposed to a grab-and-run theft.
11. All wall cases, show windows, display cases and showcases must have locks, and be kept in a locked position except when actually removing or returning goods. It is best to have locks that do not permit the key to be removed unless the case lock is in a “locked” position.
12. Keep the keys to the showcases on your person, never on a hook or shelf in plain view. Keep the keys on a wrist or other holder so that it is less likely for you to put them down and forget them.
13. Be warned that many showcases have generic keys, that is, keys that fit all showcases of that type. Anyone with a key to that type of showcase may be able to unlock your showcase and steal your goods. If a generic lock will open your showcases, consider installing unique locks.
14. Showcase tops sealed with adhesive can be slit by thieves and lifted to remove goods. Make sure your showcases have secure metal edges or other means to secure the top even if the seal is cut. Inspect the tops and sides of showcases several times a day for evidence of tampering or attempts to lift the top.
15. After a customer has handled an item, re-examine it to make sure it is the same item before returning it to the showcase. Do not allow a customer to return an item to a tray.
16. Keep all jewelry trays completely filled, either with goods or with markers.
17. The most difficult showcases for a thief to get into are the cases in which the back flips up. It is easier for thieves to reach into cases that slide open from either side.
18. Do not let non-employees into work areas, your safe area, your rest room or behind your showcases. This can be a trick to gain access to your merchandise, or to case your premises for a future crime.
19. Your counter display cases should be built in a way that does not permit someone to crawl under them.
20. Make sure there are no blind spots in your store in which visibility from another part of the selling floor is obstructed.
21. Have an alert system in place in your store. If a suspicious person or situation is spotted, a code word or phrase can be used to alert the other employees that a crime may be underway.
22. If a customer is causing a commotion or engages in a loud disagreement, be alert for a distraction theft by an accomplice, and call another employee to assist you. Whenever you are suspicious of customer, request assistance from the manager or another employee.
23. Be particularly careful when customers are wearing or carrying inappropriate clothing, bags or items that could be used to hide goods or block your view while accomplices steal goods. Be especially careful if these items are placed on the showcase counter. In some stores sales associates immediately offer to take customers’ coats and bags and put them in a safe place while the customers shop.
Reprinted from http://www.jewelerssecurity.org/
By Glenn Lovelady
Technology is a wonderful thing that has changed the way we live our lives. Yet when it comes to diamond testing, it has its limitations.
There are a number of testers to choose from today, using different methods of identification and verification. This will tell you if it is diamond or a diamond stimulant.
That’s where it ends. To be competitive in this trade you’ll have to go a lot further to determine value.
We’ve all heard of the 4 Cs. If you can identify those in a diamond, a tester will be of secondary importance. Stick with the information I give you in this and future columns and surprise yourself with how little mystery is involved in diamond identification.
By KENT MARTIN
Selling electronics today is not for the faint of heart. “Electronics change very quickly anymore,” said Mike Rechtman, owner and manager of Big Chicken Pawn, in Marietta, Ga.
And the secret to success? Speed. “You have to get in and get out! We get in, we get out. We want to sell stuff quick. We loan a fair amount of it but then we sell it cheap. We don’t sit on it, we don’t bleed it.”
But even though electronics remain one of the most in-demand product areas, Rechtman said it’s not necessarily where his big profits are made.
“We don’t double our money on electronics. We have to move it because every day you keep it, it’s worth less money. You have to get rid of it. Bam! See ya!”
Rechtman’s comments tend to reflect much of what’s happening in electronics sales in pawn shops across the country. With few exceptions, electronics gear must be fairly late-model: The older the model, the less demand for it.
“We have some members who are very cautious about making loans on any kind of electronics just because the prices drop so very quickly,” said Emmett Murphy, spokesperson for the National Pawnbrokers Association. “This can affect the actual return on the loan, so they’re often very cautious and are more comfortable with higher-end electronics.
“As an example, Apple products, such as Mac, iPads, iPhones, are things which retain their value, and also high-end laptops,” Murphy said.
“The more expensive laptops that cost $2,000 or more do retain their value. More pawnbrokers are making loans on those products because if they need to, they can sell them on eBay more quickly.”
Murphy said the turnaround time for electronics has accelerated. “I can speculate on the electronics issue just because the price point on electronics has dropped significantly and they are being produced much more quickly,” he said.
“There used to be maybe an 18-month turnaround between different product lines, and in the last year, we’ve seen new products being released much more quickly, maybe every six months or so. This has really changed things for pawnbrokers.”
Take televisions, for example. New trends in televisions still have to be validated in the marketplace before they’ll gain acceptance by shop owners. For Don Anderson, vice president at Ed’s Pawn Shop in Stockbridge, Ga., the jury’s still out on 3-D TVs. He prefers newer model flat screens.
“If it’s not a flat screen TV, we don’t even fool with it,” he said. “Even if it’s a nice, older, large screen TV, we don’t fool with it.”
Another pawnbroker agreed. “It doesn’t impress us if it’s 3D,” he said. “We don’t know where 3D is going, we don’t trust it.”
Murphy said smart TVs, on the other hand, are quickly finding a market. “Our members report that smart TVs that have high-end features like streaming have additional value. But they don’t see any additional value in features like 3D. It seems that the flat screen TVs are most in demand.”
Television accessories, such as video players, are also caught up in these trends. The more recent surge among consumers toward streaming services such as Netflix has dampened sales for video players.
Location, Location, Location
When it comes to DVDs and Blu-ray discs, it seems to depend upon your location. “Blu-rays are selling but DVDs, when we do sell them, they’re a dollar each,” a Miami pawnbroker said. But in Littleton, Colo., a pawnbroker reported that DVDs remain a steady seller in his store.
Video games are still strong. “The exception would be the Wii U, which was a big flop,” said Murphy. “Gaming systems still remain strong but again, people are careful to make sure they don’t get stuck with them for too long.”
Other business owners agree. “If you’re looking for a Nintendo game, like from the 80s, we’re not the place to shop,” the Littleton pawnbroker said. “But anything that’s current, like the newer systems, are really popular out here, too.”
In some areas, however, even vintage game systems find a market. “Pretty much any video games are good, even vintage stuff, like Atari,” said Anderson. “If it’s in good shape, there’s a market for that, too.”
The popularity of smartphones and iPhones, in particular, has driven sales in pawn shops nationwide. For younger consumers, especially college students, a smartphone has replaced a laptop for their computer needs. The newer iPhones sell the best, though older models still retain value.
Pawnbrokers will offer short-term loans for iPhones because they remain strong in the secondary market. But here again, changing technology in iPhones, especially new security features, may eventually dampen demand.
“iPhones are great, but the new generation of iPhones is getting to where they’re going to be very difficult to resell because they’re putting in tracking stuff and locking them up,” said Rechtman.
“We’ve done a really good business with cell phones but it looks like that era’s coming to an end because they’re starting to lock ‘em up and make them very, very difficult to resell.”
But perhaps the most dramatic trend is in computers. For decades, if consumers wanted a PC, they bought a desktop. Desktops were in virtually every business and in many homes. They dominated the marketplace for decades. No longer.
The move toward portable computers has shifted into hyperdrive with the advent of the laptop in the 1980s and, more recently, the tablet. Today, mobility is king and the desktop is quickly going the way of the typewriter.
“Our members are not making loans for or buying desktop computers any longer,” Murphy said. “It’s really laptops and tablets. We have members who cater specifically to students, they’re located near colleges, and they think laptops have better resale value than iPads or tablets, but definitely desktops are out the door.”
Indeed, pawnshops may be the best place to find low-priced laptops today. Typically, in many stores, laptops may be priced at half of their original retail price.
“iPads and Mac laptops are probably No. 1,” said Rechtman with Big Chicken Pawn. “Laptops sell a little bit, tablets sell some. We wholesale a lot of laptops because we’re a big laptop business; we take in a lot of laptops.”
But even laptops’ price point has deteriorated. “So we wholesale a lot of ‘em and we sell about 75 percent to a few different people that resell ‘em on their own, and then we retail a few, but we keep the flow going with our wholesale customers,” said Rechtman.
Interestingly, Murphy said a few NPA members have found a niche market for desktops: Themselves.
“Some members feel that desktops still have value in their business,” he said. “We have one gentleman who, when a high-end desktop comes in, may make a loan on it with the intention of acquiring it if it defaults because pawnbrokers still use desktops and towers for their own business.”
And then again, no matter which latest, hottest iPhone or TV may be dominating the market or how outdated a video player may be, the old adage often holds true: Anything will sell for the right price.
As Anderson noted, “It’s really all about price. Anything will move at the right price, even if it’s not a particularly popular item, if it’s at the right price, if you set a low enough price for it.”
By RIC BLUM
The world is not coming to an end, but maybe DVD discs sales are starting to wind down.
DVD sales are dying around the country. I caution those of you with tons of used DVDs to be careful. Yes, there might still be a small market for new releases, maybe some box sets and a few Blu-rays, but the old stuff may be better served as drink coasters.
I’ve spoken with other pawnbrokers around the country and many agree — the physical DVD disc is old school. When it comes to video entertainment it may be going the way of the video tape, Laser Disc, the 8mm and 16mm movie reel.
After two years and three surgeries, I’m finally getting back into the swing of things and once again exercising on a very regular schedule, treadmill every morning and free weights almost every evening. (OK, they weren’t free, I had to buy them.)
Now, I’m not bragging here, but I try to get up every morning at 6 a.m. (except Sunday and holidays – on those days, usually around 8 a.m. – 9 a.m.) and hit the treadmill for three miles before breakfast (usually a protein shake). Shower, shave and I head off to work or wherever I am going.
For many years, I would “borrow” a few DVDs from work to watch during my morning workouts. I’ve watched hundreds and hundreds of DVDs good, bad and ugly — that means scratched and needed to be resurfaced. A movie would have to be pretty bad for me to not watch it, but there have been a few. Luckily, I have never fallen asleep during a movie while on the treadmill.
However, everything changed last year when I received a one-year subscription to Netflix from my son. Of course, I had to upgrade my older, used DVD player to a newer, used DVD player with Blu-ray, Full HD and more importantly, a built-in LAN. Glad to report since I work in a pawnshop it was not too difficult a task.
Wireless access wasn’t a must for me because my home network — modem, wireless router and switch — is located only two feet away from my workout DVD player and TV.
Now there are only a few out-of-pawn DVDs for me to borrow. I line up a dozen movies or a TV series in Netflix’s queue and I’m ready for a few weeks of viewing. (I typically spend 45-50 minutes a morning on the treadmill.)
Netflix, which was a DVD post-and-rental business, has gradually transitioned to streaming films on demand online in return for a monthly subscription – although there is a constant debate about exactly when and at what price films should be available.
Nevertheless, the direction of the market is clear: Netflix has nearly 23 million subscribers in the U.S., putting it on a par with Comcast, the largest cable company.
Do you think our customers are any different? (Well, yes in some ways, I think more may be couch potatoes than treadmill addicts.) Why buy a new or used DVD when you can watch an infinite number (well, maybe a finite number) of streaming movies and TV episodes over the Internet almost instantly?
OK, there will always be a few people out there who do not have Internet access, but this select group is probably not a large purchaser of your used DVDs.
Before it’s too late, this should bring up another change in the items we take in pawn – the DVD player. More and more of my customers are looking for DVD players with Blu-ray, Full HD, 1080p and with Netflix, Pandora, YouTube, Hulu Plus, Blockbuster and Facebook capabilities. And they also want these features to be on a DVD player with built-in Wireless LAN capabilities.
Smart TVs and TVs with built-in Wi-Fi – no DVD player necessary
And just when you learned how to plug up your DVD player and find the proper input selection button on your remote control (and more important – how to change it back to TV or cable or satellite), there’s a new technology on the market.
A funny thing about televisions, the new models seem to do more and cost less than their predecessors, all things considered.
The latest TVs are Smart TVs. These TVs will allow you to access the Internet directly without the need for a DVD player or other device. They either have an Ethernet jack on the back or connect to the Internet with built-in wireless connectivity or both.
These digital media receivers access videos, audio, photos and other content from Internet-connected apps optimized for your TV. And for those who do not have a Smart TV, there are Smart Set-Top boxes which will accomplish the same thing.
Whether you have a Smart TV or a Smart Set-Top box, you can easily get instant access to streaming movies, TV shows, videos and music on your HDTV and home audio system.
Many of them also let you view personal photo albums, read news and sports info, use social networking sites and much more, right on your HDTV.
Advanced smart set-top boxes have web browsers and may access content from any connected device on your home network, like your computer, and then send the content to a connected HDTV or home theater.
While connecting your smart set-top box directly to your router (hardwired) will provide the best streaming experience, almost all boxes come with built-in wireless connectivity.
For set-top boxes, an economic alternative to the DVD player with streaming capabilities is already on the market.
For example, the Netgear NeoTV Streaming Player (NTV200) lets you enjoy online entertainment with Internet apps for your TV. You can instantly watch movies and TV shows in HD and access a variety of TV apps including movies, games, music, and more, with built-in wireless for an easy Internet connection.
Some product highlights include:
• Reliable 1080p HD streaming from the network experts
• Stream YouTube, Netflix, Vudu, Hulu Plus and hundreds more channels
• Free iPhone, iPad and Android phone remote control app for easy navigation
• New content delivered to you every month
Then there is D-Link MovieNite Streaming player (DSM-310), which allows you to stream new movie releases the same day they come out on DVD with VUDU. Easy to set up and use, MovieNite provides instant access to unlimited entertainment choices from VUDU, Netflix, Pandora and YouTube right on your TV in full HD (1080p) quality.
Yes, you can still sell a nice, used basic DVD player with a remote control for $20 (more for higher end units) and a Blu-ray DVD player for $40 (more for higher end units), but for how long? The world is evolving and so is our customers’ tastes. They now want it all in their used, DVD player purchases – Blu-ray capability, online video streaming, built-in WiFi, 1080p HD and more. They also consider this when deciding whether to pick up their loan and pay the finance charges. But how long will this last?
I remember just the other day when we took in televisions with large picture tubes. We first started cutting out the ones which did not have built-in digital tuners when broadcast signals changed to digital. Next, we went to flat panel televisions only (with digital tuners – some early models only had analog tuners). My pawning customers had a fit when we stopped taking their older televisions, but I can’t fill my shelves with obsolete merchandise.
Of course the set-top digital converter boxes extended the life of analog tuner TVs and most still operated fine with a cable or satellite signal. This also created a new pawnable item (digital converter boxes).
I see a similar trend with DVD players. Our customers have been bringing them in to pawn or sell because they now have a new TV which has built-in Smart TV capabilities or a Smart TV Set-Top box and no longer use their DVD player.
Customers are also attempting to sell their DVD collections because they take up too much space. If they want to watch Rocky V for the fiftieth time, they’ll do so through on-line video connectivity.
You keep lowering the prices of your used DVDs and the number available for sale still increases. And you wonder why.
What’s more, movies and TV shows/series are coming to DVD faster than ever. The prices are lower. New releases are all on sale. There is a marketing ploy now to produce a 2-Disc DVD and Blu-ray combo pack. If retailers can’t make any money on individual sales, they’ll make it on volume.
Like so many other items in the past, pawnbrokers have been too slow in getting on board with the latest trends in technology. This is just another case where we need to be diligent and be ready to exit the market at the right time.
It might be time to re-evaluate your position on DVDs and DVD players. Cut back on loans, reduce the retail price, package them – 5 for $10, for example, dump them in lots on eBay.
The same considerations need to be considered with DVD players. How many do you have in stock (pawn)? Are they still selling (being redeemed)? Are they full-featured (internet ready) which may expand their life and salability for a while?
Are you seeing new set-top boxes being pawned? Or how about those Smart TVs? This may be the wave of the future.
We don’t always have to lead, but we really don’t want to be in last place either.
Ric Blum is a vice president of Ohio Loan Co.in Dayton, Ohio. He has served as president of the Ohio Pawnbrokers Association, secretary/treasurer of the National Pawnbrokers Association and as a member of the board of directors and the board of governors of the National Pawnbrokers Association. Please feel free to e-mail your to RicBlum@att.net or mail them to Ric Blum, Ohio Loan Co., Inc., 3028 Salem Ave., Dayton, OH 45406.