Are You Going to Pawn? Don't Be Fooled: Use These Tips to Spot Fraudulent Shops

The items that Mexicans pawn to get out of their debts are: jewelry (32.2%), televisions (20.2%), computers or tablets (16.6%), cell phones (14.4%), watches (12.6%) and others (4%) . Find the right place to do it with these recommendations.
Are You Going to Pawn? Don't Be Fooled: Use These Tips to Spot Fraudulent Shops
Image credit:

Free Book Preview Money-Smart Solopreneur

This book gives you the essential guide for easy-to-follow tips and strategies to create more financial success.
This article was translated from our Spanish edition using AI technologies. Errors may exist due to this process.
Opinions expressed by Entrepreneur contributors are their own.

The commitment is one of the three main solutions that Mexicans use to face the debts at the beginning of the year, only after looking for an extra income and using an emergency or savings fund, according to a survey carried out by the financial services platform and market research firm Brad Engagment.

Among the items that Mexicans pawn to get out of their debts are: jewelry (32.2%), televisions (20.2%), computers or tablets (16.6%), cell phones (14.4%), watches (12.6%) and others (4% ), according to the same survey.

Meanwhile, the amount they expect to receive for the pawn of their assets ranges from 1,000 to 3,000 pesos (41.5%), 3 to 5,000 pesos (35.9%), from 5 to 10,000 pesos (8.8%), while only 9.7% expect to receive less than one thousand pesos and 4.1% for more than 10 thousand pesos.

"Although there are currently many pawn shops, not all of them are fair with their clients or are not aligned with the requirements of the Federal Consumer Prosecutor's Office (Profeco)" , warns Luis Madrigal, director of

According to INEGI, more than 9,000 Montepíos and pawn shops operate under the pawn scheme in the country. Two are non-profit private assistance institutions ( Nacional Monte de Piedad and Rafael Dondé Foundation ) and private companies.

In order to go to a reliable and regulated institution, you have to identify the elements that may be fraud and avoid these dependencies. Among the suspicious signals to detect are:

1. Too high amounts are promised for the pledge as collateral

Attention: when pawning, there must be a valuation process, and generally the appraisers award half the real cost of the object, at most. That's not counting storage and interest costs.

2. They do not explain the rights of the client who pawns something

Remember that it is not a sale, but rather a pledge is left as 'insurance' to obtain the loan. In theory it can be recovered by paying the amount they lend, plus the interest generated. But if the client could not pay in a timely manner and his garment was put up for sale, he has the right to too much: to know the amount of the sale, and if it was higher, find out if it is worthy of compensation.

In addition, if the client loses the intention to return for his object as a pledge, he must notify it to avoid paying the monthly interest fee.

The basic elements to identify a legal pawn shop are:

  • Registry number

The adhesion contract granted by the pawnbroker must include the Public Registry number of Pawnbrokers granted by Profeco , as well as the date on which this registry was authorized. On the page of the Commercial Bureau of the Attorney General's Office you can verify if the registration number presented by the pawn shop is valid.

The pawn shop should also have a document on hand that proves your registration number is valid. You can also visit the list of Registered Houses and consult additional information. The registration must be renewed every year, so even if the pawn shop exhibits one, it may be expired.

  • Public and visible information

All information related to the service they provide must be visible and available in a brochure or on the internet. This segment includes the hours and days of service, loan limits, accepted pledges, the Total Annual Cost (CAT) (this must also be presented in months and days), payment terms, procedure for pawning an asset and for market it, and the expenses for storing the garment.

  • Contract

It is proof that the operation was actually carried out. It should include the description of the pledge, the amount loaned and its percentage of the appraisal, payment terms, forms of payments, endorsement options, guarantees and their coverage, and the consequences in case one of the parties breaches the contract.

  • Additional validation measures

Scales for weighing objects such as jewelry must have a recent calibration hologram. This ensures that the weight shown is the real one and that they are not giving less money for the garment.

Recommendations when going to a pawn shop

  • Before pawning an item, the consumer has the right to know the terms and conditions of the provision of the service, as well as the amount of the loan to be granted prior to signing the contract, among other measures. For any questions or clarification, check the Register of Pawnbrokers registered with Profeco.

  • Always keep the ballot of the article already pawned, and for no reason endorse or transfer it. Since even if the object cannot be recovered and is sold, this is the proof to demand a compensation amount.

  • Check if you have too much right. It is a clause of the pawnshops that establishes a period of up to 12 months to recover a percentage of the article, in the case of expired tickets whose articles were sold.

  • Assess other options such as personal or payroll loans, even assess whether it is better to sell rather than pawn; according to the total cost that includes taxes (CAT) and if it is garments with high personal value.

More from Entrepreneur
Our Franchise Advisors are here to help you throughout the entire process of building your franchise organization!
  1. Schedule a FREE one-on-one session with a Franchise Advisor
  2. Choose one of our programs that matches your needs, budget, and timeline
  3. Launch your new franchise organization
Discover the franchise that’s right for you by answering some quick questions about
  • Which industry you’re interested in
  • Why you want to buy a franchise
  • What your financial needs are
  • Where you’re located
  • And more
Make sure you’re covered for physical injuries or property damage at work by
  • Providing us with basic information about your business
  • Verifying details about your business with one of our specialists
  • Speaking with an agent who is specifically suited to insure your business

Latest on Entrepreneur