Pawn Shop Firearms Compliance: The Complete 4473 & FFL Guide for Pawnbrokers

Why Pawn Shops Have Different Compliance Requirements

A standard gun store has a simple transaction model: firearms come in from distributors and go out to customers. A pawn shop has that model plus pawn loans, redemptions, forfeitures, customer trade-ins, and layaways — each of which creates different compliance obligations.

The core challenge is that pawn transactions involve the same firearm moving in and out of your inventory multiple times, sometimes returning to the same customer who brought it in. Every one of those movements has a federal record-keeping or reporting requirement. Miss one, and it shows up as a discrepancy during your next ATF inspection.

Type 02 FFL: The Pawnbroker License

If your pawn shop accepts firearms as collateral for pawn loans, you need a Type 02 FFL — Pawnbroker in Firearms Other Than Destructive Devices. This is functionally identical to a Type 01 (standard dealer) with one addition: it authorizes you to accept firearms as collateral for loans.

If your shop only buys and sells firearms outright — no pawn loans — a Type 01 is sufficient. But the moment you accept a firearm on pawn, you need the Type 02.

What the Type 02 Authorizes

• Buying and selling firearms (same as Type 01)
• Accepting firearms as collateral for pawn loans
• Basic gunsmithing incidental to dealing

What It Does NOT Authorize

• Manufacturing firearms
• Importing firearms
• Dealing in NFA items (requires an additional SOT)
• Dealing in destructive devices

The Pawn Lifecycle: Every Step Has a Compliance Requirement

Understanding the compliance requirements means understanding the lifecycle of a pawned firearm. Each stage triggers specific record-keeping and reporting obligations.

Stage 1: Customer Pawns a Firearm (Acquisition)

When a customer brings in a firearm as collateral for a pawn loan, you are taking that firearm into your licensed inventory. This is an acquisition.

• A&D book: Log the firearm as an acquisition — manufacturer, model, serial number, type, caliber, date, and the customer's name, address, and date of birth.
• 4473: Not required at this stage. You are receiving the firearm, not transferring it.
• Verify the firearm: Check the serial number. Confirm it matches what the customer represents. Some states require a law enforcement hold period before a pawned firearm can be sold or returned.

Stage 2: Customer Redeems the Firearm (Disposition)

This is where most pawn shop compliance errors occur. When the customer returns to reclaim their firearm, it is a disposition — a transfer from your licensed inventory to a non-licensee.

• Form 4473: The customer must complete a new 4473. Full form — all sections.
• NICS check: A new background check must be initiated. If the result is Denied, you cannot return the firearm — even though it's theirs. This creates a difficult situation, but the law is clear.
• A&D book: Log the disposition — date, customer name and address, NICS transaction number, and 4473 reference.

Stage 3: Pawn Expires — Forfeiture (Inventory Change)

If the customer doesn't redeem the firearm within the loan period, it becomes your property through forfeiture. At this point, the firearm transitions from "held as collateral" to "inventory available for sale."

• A&D book: Some FFLs log this as a separate transaction — recording the forfeiture as a new acquisition from the customer. Others treat the original pawn acquisition as the controlling entry. The ATF prefers clear documentation either way. The key is that the firearm's status in your records reflects reality.
• State law: Many states have mandatory hold periods, notification requirements, or redemption grace periods that extend beyond the loan term. Comply with state law before selling a forfeited firearm.

Stage 4: Forfeited Firearm Sold to New Customer (Disposition)

Selling a forfeited firearm is identical to any other retail sale: new 4473, new NICS check, disposition logged in the A&D book.

Multiple Redemptions and Form 3310.4

This catches pawn shops more than any other type of FFL. When a customer redeems two or more handguns within five consecutive business days, the multiple sale reporting requirement is triggered.

It doesn't matter that these were the customer's own firearms. The legal framework treats each redemption as a disposition. Two handgun dispositions to the same buyer within five business days = Form 3310.4.

Common Pawn Shop Scenarios That Trigger 3310.4

• Customer redeems two pawned handguns on the same day
• Customer redeems one handgun Monday, another on Wednesday
• Customer redeems one handgun and buys another from your retail inventory within the same five-day window
• Customer redeems three rifles and two handguns — only the handguns count toward the threshold (unless you're in a border state)

What Happens When a Redemption Is Denied

This is one of the most difficult compliance situations in the pawn industry. A customer pawns a handgun, returns to redeem it, and NICS comes back Denied. You now possess their property but cannot legally return it to them.

What You Must Do

• Do not transfer the firearm. A denied NICS check means the transfer cannot be completed — period.
• Retain the 4473. The denied form is kept just like any other — filed and retained.
• Inform the customer. Explain that the background check was denied and you cannot complete the transfer. You don't know the reason — NICS doesn't share that with the FFL.
• The customer can appeal. Direct them to the FBI NICS Section or their state POC to challenge the denial.
• The firearm stays with you. Until the denial is overturned, the customer designates another eligible person to receive it, or the matter is resolved through legal channels.

Can the Customer Designate Someone Else to Pick It Up?

Potentially — but this gets complicated. The original pawn ticket is between you and the customer. Transferring the firearm to a third party may require a new transaction (sale or transfer), a new 4473 for the third party, and resolution of the pawn loan. Consult your legal counsel on your state's specific requirements.

A&D Record Keeping for Pawn Transactions

Your bound book needs to accurately reflect the status of every firearm — including those held as pawn collateral. Here's how each transaction type should be recorded:

Firearm Received on Pawn

• Acquisition entry: Date received, customer name and address, firearm description (manufacturer, model, serial number, type, caliber)
• Source notation: Indicate it's a pawn receipt — "Pawn" or "Collateral" in the source/notes field

Firearm Redeemed by Customer

• Disposition entry: Date of redemption, customer name and address, NICS transaction number, 4473 reference
• Must match the 4473: Serial number, buyer info, and date should be consistent across both records

Firearm Forfeited

• Update the record: Note the forfeiture date and that the firearm is now available for sale
• No disposition entry yet: The firearm hasn't left your inventory — it's changed status, not ownership (from your perspective)

Forfeited Firearm Sold

• Standard disposition entry: Treated exactly like any retail sale — date, buyer, NICS, 4473 reference

The Most Common Pawn Shop Compliance Violations

Based on ATF inspection data and industry experience, these are the findings that appear most frequently in pawn operations:

• No 4473 for pawn redemptions. The #1 pawn-specific violation. The FFL returned the firearm without completing a new 4473 and NICS check.
• Missing A&D entries for pawned firearms. The firearm was received on pawn but never logged as an acquisition.
• No Form 3310.4 for multiple handgun redemptions. Customer redeemed two or more handguns within five days and no report was filed.
• Incomplete disposition entries on redemptions. Missing NICS transaction number, missing date, or no 4473 cross-reference.
• Returning a firearm on a denied NICS check. The FFL processed the redemption despite a denial — a serious violation.
• Inventory discrepancies. Firearms held as collateral not accounted for in the A&D book, or recorded but not physically present.
• Selling forfeited firearms before the state-required hold period expires. A state law violation that shows up during ATF inspections.

State-Specific Pawn Requirements

Federal requirements are the floor — many states add additional obligations for pawn shops dealing in firearms:

• Hold periods. Many states require pawned firearms to be held for a specified period (often 30 days) before they can be sold, to allow time for stolen property identification.
• Law enforcement reporting. Some states require pawn shops to report all firearms received to local law enforcement, often within 24–48 hours.
• Stolen property checks. Some jurisdictions require you to check serial numbers against stolen property databases before accepting a firearm on pawn.
• Redemption grace periods. Some states extend the redemption window beyond what your loan contract specifies.
• Additional state licensing. Many states require a separate state pawnbroker license in addition to your federal FFL.

Check your state's requirements using our state-specific FFL guides. Federal compliance is necessary but not sufficient — you need to meet both.

Building a Pawn Firearms Compliance System

At Intake (Firearm Received on Pawn)

• Log acquisition in A&D book — same day
• Verify serial number against the physical firearm
• Record customer identification
• Initiate any required law enforcement reporting
• Tag the firearm with the pawn ticket number for easy cross-referencing

At Redemption

• Complete a new Form 4473 — full form, all sections
• Initiate NICS check
• If Proceed: complete the transfer, log disposition in A&D book
• If Delayed: follow your 3-business-day policy
• If Denied: do not transfer — document the denial, inform the customer, retain the 4473
• Check for multiple handgun sale threshold — file 3310.4 if triggered

At Forfeiture

• Verify state hold period has expired
• Update A&D records to reflect forfeiture
• Move firearm to retail inventory

Monthly Self-Audit for Pawn

• Count all firearms held as collateral — reconcile against A&D book
• Verify every redemption in the past 30 days has a corresponding 4473 and disposition entry
• Check for unreported multiple handgun redemptions
• Review denied redemptions — confirm firearms are still on premises