A Medford pawn shop has been fined for improperly holding a woman's car as collateral and selling it without her permission.

A Medford pawn shop has been fined for improperly holding a woman's car as collateral and selling it without her permission.

The Oregon Department of Consumer and Business Services has ordered Valley Pawn and Trading, at 123 S. Riverside Ave., to forfeit the car, return it to the owner, and pay a $500 fine to the Jackson County School Fund. The department also levied a $20,000 civil penalty, which was suspended as long as Valley Pawn complies with the Oregon Pawnbrokers Act.

According to a press release, DCBS investigators received a call from a woman who said she put her car up as collateral for a loan. The car was then sold without her knowledge by Valley Pawn and Trading employees.

DCBS investigators determined the pawn shop charged excessive interest rates of 15.6 percent per month on the loan. Oregon law limits the rate a pawnbroker may charge to 3 percent per month.

The investigation also found the pawn shop was not licensed to accept a titled motor vehicle as collateral.

Businesses must hold a consumer finance license to provide short-term car title loans.

DCBS has ordered Valley Pawn owner Stephen Ray and manager Keith Barnes to forfeit the vehicle and return it to the owner, resulting in an $8,700 loss for the business.

The payment to the Jackson County school fund is required by law when a pawnbroker charges excessive interest rates. The payment to the school fund is the interest collected on the illegal loan.

Any future violations will result in the imposition of the suspended civil penalty and the revocation of Valley Pawn and Trading's license.

"In these difficult economic times, licensed pawnbrokers can provide a valuable service to Oregonians, however, they must comply with the law," said David Tatman, DCBS administrator in a news release. "As this case demonstrates, a failure to do so can result in a significant financial loss to the pawnbroker, as well as harm the consumer."

Reach reporter Chris Conrad at 776-4471, or e-mail cconrad@mailtribune.com