Agenda Index City of Vancouver

POLICY REPORT
LICENSING

TO:

    Standing Committee on Planning and Environment

FROM:

    Chief License Inspector in consultation with the Director of Legal Services and the Chief Constable

SUBJECT:

    Amendments to Secondhand Dealers and Pawnbrokers By-Law No. 2807: Reporting and Holding Period Requirements and Miscellaneous Amendments

 

RECOMMENDATION

GENERAL MANAGER'S COMMENTS

COUNCIL POLICY

Council, by way of the Secondhand Dealers and Pawnbrokers By-Law No. 2807, regulates all secondhand dealer and pawnbroker businesses in the City of Vancouver.

PURPOSE AND SUMMARY

The purpose of this report is to propose amendments to the Secondhand Dealers and Pawnbrokers By-Law No. 2807 to specify means of delivering daily transaction reports to the Police, extend the required property holding period and generally revise the wording, format and numbering to improve the By-law's clarity and readability.

Presently, all licensed secondhand dealer and pawnbroker operations are required to submit a registry report, recording all transactions of goods/articles conducted during the immediately preceding 24 hour period, to the Chief Constable on a daily basis. Most businesses use a fax machine to transmit their reports. However, the facsimile method of transmission unnecessarily ties up valuable finite police resources required to follow-up on the large number of incomplete and illegible faxes received and to promptly input the data into a national stolen property database.

To increase police department efficiency, it is proposed that the facsimile option for report transmission be eliminated and replaced with a new, on-line internet reporting system called "X-Tract". In addition, the option of hand delivery submission should be retained for those secondhand dealers/pawnbrokers uncomfortable with or unwilling to use the new on-line internet reporting program. Furthermore, in an effort to better reflect the typical lag time between the occurrence of a property crime complaint and when the data is entered into the nation-wide police database, it is proposed that the property holding period for those operators who opt for on-line daily report transmission be extended from 30 to 35 business days, while those who hand deliver their registry reports be extended from 30 to 49 business days. The longer holding period for those who hand deliver their reports is necessary because extra time is required by the police to perform the data entry of the registers into the X-Tract system.

Two respective meetings were held with licensed secondhand dealers/pawnbrokers, representatives of the insurance industry and major retailers suffering substantial losses from property crime to obtain feedback/comments on the proposed by-law amendments. Overall, the feedback was quite positive with support for the amendments expressed by the majority of stakeholders.

It is anticipated that the proposed changes will substantially reduce daily data entry expenses incurred by the Police and consequently increase departmental efficiency by reallocating the freed-up funds into other critical anti-fencing tasks such as the investigation of stolen property offences and other property crime issues.

BACKGROUND

Property Crime

Property crime is a serious problem for the City of Vancouver and the Lower Mainland. It is estimated that the GVRD experiences an annual loss of approximately $150,000,000 dollars directly from property crime and that the City of Vancouver accounts for roughly $100,000,000 dollars of that annual loss (Vancouver Board of Trade Report: September 2001). Furthermore, Statistics Canada 1999 Criminal Reports estimate that property crime represents approximately 77 percent of the entire crime rate for the City of Vancouver. Property crime impacts all citizens of Vancouver, from the victims of such crime to all members of society faced with increased costs for insurance and other goods by businesses trying to recover significant losses.

Prior to February, 2001 the Vancouver Police Department had 37 plain clothed investigators assigned within the four city police districts to investigate property crime complaints. The investigators were augmented by a 4-member Anti Fencing Unit operating city-wide. This unit was established to serve as the primary enforcement arm for the Secondhand Dealers and Pawnbrokers By-Law, responsible for the day to day monitoring of these businesses and the investigation of property crime complaints. Redistributions in departmental strength back to uniform Patrol Divisions since February, 2001, however, has fluctuated the unit's strength and resulted in a substantially reduced number of personnel available in the investigation of property crime city-wide. These fluctuations have included a low of 1 investigator plus the 4-member Anti-Fencing Unit to the present complement of 6 investigators and the Anti-Fencing Unit.

Typical Property Crime Investigation

Patrol Division normally responds to the initial property crime complaint and conducts the investigation. When possible, a list of stolen property, including pertinent serial numbers, descriptions and markings, are included in the initial patrol division report. Unfortunately, most victims may not have this information readily available or the initial investigating officers are called away to respond to a more serious problem. In these instances, a "Mail-In Report" is left with the victims to be mailed back to the police department once completed.

The list of stolen property is subsequently forwarded to Central Records personnel who input the information into the Canadian Police Information Computer (C.P.I.C.) database where it is accessible to all police officers across the country. Ideally, the information is entered into CPIC within 15 to 21 days after the initial investigation. Unfortunately, because of the sheer volume of data, call loads, staffing issues and a typical 3-week delay with mail-in reports, the information may not actually be entered until one month after the initial investigation.

Secondhand Dealer/Pawnbroker Reporting Process

Currently, there are approximately 26 grandfathered combined Pawnbroker & Secondhand Dealers, 98 Secondhand Dealers and 43 Retail with Ancillary Secondhand Dealer operations in the City. Each secondhand dealer and pawnbroker operation is required to prepare, sign and deliver a Secondhand Dealers and Pawnbrokers Registry report (referred to in this Council report as a "registry report") to the Chief Constable daily before 9:30 am (with the exception of Sundays and public holidays) recording all transactions of goods/articles conducted during the previous business day or days. Presently, the method of delivery is left to the discretion of the operator and can include transmission by facsimile or other electronic means or delivery by hand. Some operators have also hand delivered the registry report to local Community Police offices and utilized Canada Post. Such methods further delay and impede the investigators' ability to adequately monitor purchases by significantly reducing the effectiveness of the existing 30 day holding period.

The data entry process is manned on an ad-hoc basis as there is no budget within the police department set up for this function. At times, data entry clerks are pulled from other areas on a temporary basis but often the data input task falls to the Constables and Detectives in the Anti-Fencing Unit. Unfortunately, when coupled with other duties of the officers, only a limited number of the entries can be checked against the CPIC stolen property database. Faxed reports may not be reviewed for completeness or processed, if at all, until a few days after submission and a certain percentage of record sheets each month are never reviewed. Costs expended by the police for data entry are considerable, running in the range of $7,600 (3 data entry clerks) to $12,060 (1 data entry clerk and 2 Police Constables) per month.

Information obtained from the registry reports is manually entered into the national police database (CPIC) which compares goods/items purchased, received or pawned by secondhand dealers/pawnbrokers with a record of all stolen goods/items reported by police nation-wide. Unfortunately, the system has very limited database search capabilities, alerting police only when an exact match has been made (ie. the identical serial number or model number).

Secondhand Dealer/Pawnbroker Property Holding Period

Presently, property received by a Secondhand Dealer is required to be held for "30 clear days" (ie. days when the business is open and operating to the public) from the date of purchase before the property can be displayed for sale. For example, if a store closes every Sunday, all property would have to be held for 34 days (i.e. 30 clear days plus the 4 Sundays the business was closed during this period). Any extended closures (vacation, business license suspension, etc..) would result in a similar extension to the holding period. This holding period does not apply to property received in pawn.

DISCUSSION

Presently, most secondhand dealer/pawnbroker operations submit their registry reports via facsimile on a standard form approved by the Chief Constable. However, many of these reports do not provide all the required information and are often of poor quality (either illegible hand-writing or degraded and unreadable facsimiles). These reports often require a substantial amount of police staff time to either decipher the information or follow-up with the store to clarify certain entries or obtain more legible copies of the report.

Due to the large volume of faxes received daily, a thorough review of each report for completeness is not possible, making the tracking of illegal fencing activities ineffective. In addition to incomplete forms, some secondhand dealer and pawnbroker operations fail to submit records on a regular basis. Manpower limitations with the Police means that it is not always possible to follow-up with these violations.

While facsimile transmission as the register reporting option of choice may be convenient for certain Secondhand Dealer and Pawnbroker operators, it clearly places a large data entry burden onto the police department resulting in less efficient use of finite police resources. Furthermore, the system is inefficient with respect to the recovery of stolen property.

To address this problem, staff, including the Police, recommend that the facsimile option for report transmission be eliminated. In its place, a new on-line reporting system called "X-Tract" should be introduced while the option of submitting reports by hand should be retained.

Hand delivery remains appropriate for those secondhand dealers/pawnbrokers uncomfortable with, or unwilling to use the new "X-Tract" on-line internet reporting program discussed in the next section below. Delivery by hand has a significant benefit over facsimile transmission as the report can be reviewed by an anti-fencing unit officer or a support staff person for completeness (ie. no missing names, ID's, legibility, etc.) at the time of submission. Although a review at this stage would likely be only cursory, it would allow for the potential of discovering more serious infractions, as well as obvious errors that could be flagged for charges.

Should Council approve the proposed changes, the existing license fees for Secondhand Dealer and Pawnbroker operations will be reviewed in the year 2002 once these changes have been implemented and the number of operators that have switched over to the new on-line internet reporting system versus those opting for hand delivery has been determined. Any increase in the license fees for the year 2002 will strictly represent an annual inflationary increase applied indiscriminately to all license fee categories.

"X-Tract" On-Line Reporting System

The "X-Tract" on-line reporting system requires secondhand dealers/pawnbrokers to use a personal computer to manually input all daily goods/item transactions and electronically send each entry to the police via the internet. Unlike facsimile transmission, information entered into the "X-Tract" program cannot be transmitted on-line unless it is complete. Information received electronically by the police is instantly compared with existing information on all stolen goods/items inputted by the police on a regular basis and all matches are immediately brought to the attention of the Police Department.

The "X-Tract" on-line reporting system expected to be in use in the City of Vancouver since the summer of 2000 with approximately 13 businesses having voluntarily implemented the system (9 Pawnshop/Secondhand Dealers & 4 Secondhand Dealers) thus far. Since the spring of 2000, Permits & Licenses staff have advised new licensees of Secondhand and Pawnbroker stores (approximately 20 licenses) that changes to the bylaw will be brought forward likely resulting in the elimination of the "facsimile" reporting option. Over the past 6 to 9 months, the Anti-Fencing Unit has been encouraging operators to convert to the on-line reporting system and now believe that the number of operations willing to convert voluntarily has been exhausted. A significant number of operations are still faxing their reports into the police. Some 17 other operations currently have their forms entered manually into the Internet Database. There is little incentive for operators to use the new system as they would lose money as stolen goods are confiscated and returned to owners.

The effectiveness of the "X-Tract" system is expected to substantially reduce daily data entry expenses incurred by the police and consequently increase departmental efficiency by reallocating freed-up funds into other anti-fencing tasks such as the investigation of stolen property offences and other property crime issues. Furthermore, it is anticipated that the convenience of the internet delivery system will substantially reduce the number of reports hand delivered to the police on a daily basis, consequently reducing police labour costs expended on daily data entry.

The "X-Tract" software program has been fully endorsed by the BC Municipal Chiefs of Police and the BC Association of Chiefs of Police (RCMP included) and steps are presently being taken to implement the program at the Provincial level.

The benefits of the "X-Tract" on-line reporting system are as follows:

1. Full implementation of the on-line program will allow the police to reallocate between $5,000 to $9,500 a month in data entry expenses to other police-related duties.

2. Rather than devoting a considerable amount of time keeping track of daily entries, police officers in the anti-fencing unit will have more time to investigate stolen property offences and bylaw infractions

3. It will be easier and more convenient for secondhand dealers/pawnbrokers to input transaction information on-line. The system will provide access to the slips for both the shops and police and record keeping will take place in real time.

4. All secondhand/pawnbroker licenses will be able to systematically report, providing the police will a better picture of all activities/transactions taking place. Due to manpower limitations, the anti-fencing unit is presently unable to keep track of all the auctions, rental agencies, and computer and jewelry stores in the City.

5. Once more jurisdictions come on-line, the ability to track and find stolen property will be desired by other jurisdictions in North America. It is also likely that the Province will purchase the system and interest has been shown from Alberta. The intention is to eventually go Canada-wide.

6. As more and more stores convert to the on-line recording system, the legibility of the "registers" will be vastly improved. Presently, some of the existing handwritten register sheets are very difficult to read.

7. The anti-fencing unit returns some $1,000,000 in property per year. It is estimated that this amount will triple as a result of the new internet reporting program.

Costs attributed to the "X-Tract" internet reporting system are as follows:

1. Secondhand dealers/pawnbrokers would be required to buy a basic internet-capable computer system (estimated at $500-$600 per computer) and provide their own internet access (eg. shaw@home, ADSL connection or a basic dial-up connection through any Internet Provider service).

2. During the time period within which secondhand dealers/pawnbrokers will be given to set up their on-line systems, the anti-fencing unit will be responsible for temporarily inputting the information. It is estimated that this would require one dataentry clerk job for the length of the interim period at an approximate cost of $30,000 per year including benefits.

3. It is anticipated that some businesses will not convert to the on-line system, and therefore, one data entry clerk will be required on a permanent full-time basis with the anti-fencing unit to manually enter the Register onto the database. It is recommended that an allowance in budgeting be made to provide for temporary help to be brought in for planned time off.

4. At present, the Police Department is taking part in a pilot project in which the software developer is picking up the bandwidth subscription cost and the monitoring costs for X-Tract. However, it is expected that next year, the Police will be billed for the entire cost for the City of Vancouver which is approximately $117,000 per annum. The Police have recently presented the benefits of the X-Tract system to the Solicitor General, advising that the system has more merit if implemented throughout the Province. However, as the Solicitor General has not yet decided to cover the costs for this system, the Police Department has included the $117,000 cost of the year 2002 license fee in their 2002 budget as a cautionary measure. The Police Department would then expect to be compensated for this expense, possibly, through a specific business license fee increase. The cost and number of data entry support personnel would be included as part of the follow-up to report to Council reviewing the success of the program and a possible new fee schedule.

Property Holding Period Extension

The present 30 day property holding period provides an inadequate amount of time for the typical lag between the occurrence of a property crime complaint and when the data is entered into the CPIC database. If the present registry reporting methods were to remain unchanged, a substantial increase to the required property holding period would be recommended. However, should Council support the proposed two option registry reporting system, a modest increase in the property holding period is required.

Staff recommend that for logistical reasons, distinct property holding period durations be specified for each registry reporting method, online versus hand-delivery. Operators who report transactions on-line should be required to hold property received for a period of "35 business days". A business day means any calendar day, including any holiday, during which a secondhand dealer or pawnbroker is open for business to one or more members of the public. This change gives the members of the Anti Fencing Unit and Property Crime Investigations typically from 5 to 14 days to investigate possible stolen property received by Secondhand Dealer and Pawnbroker businesses. This time period is reasonable given manpower limitations within the unit and the sometime lengthy delays in entering stolen property lists into the CPIC database.

On the other hand, operators who hand deliver their registry reports should be required to hold property received for a period of 49 business days. The additional two weeks is to allow for the data entry of these reports by police staff. The 14 days should be sufficient to accommodate the anticipated volume of hand delivered reports.

PROPOSED AMENDMENT

It is proposed that the Secondhand Dealers and Pawnbrokers By-Law No. 2807 be amended substantially in the form set out in Appendix A to this report.

CONSULTATION WITH AFFECTED BUSINESSES

A meeting with staff and licensed secondhand dealers and pawnbrokers in the City was held on October 2nd, 2001 to discuss the proposed by-law amendments. The approximate 25 secondhand dealers and pawnbrokers who attended the meeting generally concurred with the proposed by-law amendments and believed that the new on-line X-Tract reporting system would ultimately improve the efficiency of their business.

Two concerns of note raised during the meeting included the required on-line entry of goods transactions as they occur and the proposed extension of the current property holding period. The Police confirmed that the by-law stipulates immediate on-line reporting of alltransactions of goods, however normally a certain amount of discretion would be used before non-compliance charges would be laid. As many secondhand dealers and pawnshops are often busy with customers demanding immediate attention, entering all transactions as soon as possible after the transaction has concluded was deemed to be acceptable. However, it was stressed that the expectation is that transactions would be entered as they occurred, as this would be no more difficult than writing all the information down and completing the data entry at a later time.

The extension of the current 30-day property holding period was also questioned, particularly as the new on-line reporting system was expected to increase administrative efficiency by shifting data entry responsibilities from the Police to the individual owners/operators. It was noted that the proposed extension to the current holding period simply reflects the present lag between the time a property crime has occurred and when the stolen property is actually reported to the Police. This extension would be required regardless of the proposed changes in reporting.

A few other concerns outside the scope of the proposed amendments were also raised at the meeting. In particular, the need for dealers of secondhand clothing or other non-traditional fenced goods to report all transactions to the Police on a daily basis was questioned and the application of secondhand dealer/pawnbroker by-law provisions, as well as any potential future license fee increases, to record shops with ancillary secondhand activities was deemed to be unfair. These concerns were acknowledged and will be addressed during a more comprehensive overall review of the Secondhand Dealer and Pawnbroker By-law to be undertaken in the future.

A focus group meeting was also conducted on October 5th, 2001 to discuss the proposed changes with representatives of the insurance industry and major retailers suffering losses as a result of property crime. It was apparent that the attendees supported the proposed by-law amendments.

CONCLUSION

The proposed amendments to the Secondhand Dealers and Pawnbrokers By-Law No. 2807
are proposed to specify means of delivering daily transaction reports to the Police, extend the required property holding period and generally revise the wording, format and numbering to improve the By-law's clarity and readability. The facsimile option for report transmission is to be replaced by the introduction of a new on-line reporting system called "X-Tract" and the option of submitting reports by hand is to be retained. It is anticipated that the proposed changes will substantially reduce daily data entry expenses incurred by the Police and consequently increase departmental efficiency by reallocating the freed-up funds into otheranti-fencing tasks such as the investigation of stolen property offences and other property crime issues.

ATTACHMENTS THAT DO NOT HAVE ELECTRONIC COPY ARE AVAILABLE ON FILE IN THE CITY CLERK'S OFFICE

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