later post  |  index  |  earlier post

Scrap metal for cash: the law

  Friday, 18 May 2018

Major changes were made to the Scrap Metal Dealers Act 1964 in 2013, with legislation revised to create a new criminal offence. Under the current law:

  • It is illegal to pay for scrap metal in cash.
  • Dealers are permitted to pay only by electronic transfer or cheque.

The aim of the change in regulations was to cut down metal theft – a low-risk, high reward enterprise for many criminals and less-than-scrupulous dealers.

The official law

Section 146 of the LASPO Act 2012 provides that:

  1. A scrap metal dealer must not pay for scrap metal except-
    • By a cheque which under section 81A of the Bills of Exchange Act 1882 is not transferable, or
    • By an electronic transfer of funds (authorised by credit or debit card or otherwise).
  2. The Secretary of State may by order amend subsection (1) to permit other methods of payment.
  3. In this section paying includes paying in kind (with goods or services).
  4. If a scrap metal dealer pays for scrap metal in breach of subsection (1), each of the following is guilty of an offence-
    • The scrap metal dealer
    • A person who makes the payment acting for the dealer;
    • A manager who fails to take reasonable steps to prevent the payment being made in breach of subsection (1).

Therefore from the commencement of this provision cash cannot be used to purchase scrap metal, only payment by cheque or an electronic transfer of funds will be acceptable.

Who does it apply to?

The requirement to purchase scrap metal without cash applies to all scrap metal dealers as defined by the Scrap Metal Dealers Act 1964, regardless of whether they are registered with their local authority.

Any business that buys or sells scrap metal also needs to register as a dealer under the same act.

Trading without registering is a criminal offence.

Are there any exceptions?

Some itinerant collections are exempt, and are defined in section 9 of the Scrap Metal Dealers Act 1964. To be considered exempt, collectors must both:

  • Be registered with their local authority under section 1 of the Scrap Metal Dealers Act 1964; and

  • Have obtained a separate order under section 3(1) of the Scrap Metal Dealers Act 1964 which excludes them from certain record keeping requirements. Local authorities must consult with the Chief Officer of the local police force prior to issuing every order.

Why not seek cash payment for scrap vehicles?

That the scrap car industry is regulated in this way is a good thing for customers. It helps to ensure that scrap vehicles are disposed of using the most effective and safest methods, in the process reducing the viability of car theft by linking every sale to some physical, written proof.

That is why – if no proof can be provided of both the money and vehicle changing hands – the transaction is incomplete in the eyes of the law and considered a criminal offence. There must always be a written record of the people, or parties, involved in the transaction.

If a trader is offering or making payments in cash, these transactions are untraceable, and you have to consider whether you are willing to work with someone who openly breaks the law. After all, cutting corners and avoiding regulations when it comes to road vehicles can be dangerous. Using a trusted trader that adheres to the law will ensure everything is above board and you are protected in any worst-case scenarios.

Please note this only applies to cars which are ‘scrap vehicles’, not roadworthy vehicles which are simply being sold on for salvage parts.

What are the preferred methods of payment?

As indicated above, the over-riding requirement is for payment methods to have traceability and a verifiable audit trail. As a result, a named cheque or written receipt for an electronic transfer of funds is preferable, linking payment to a readily identifiable account.

Which payment methods (aside from cash) are not permitted?

Any payment instructions which provide anonymous and near-cash alternatives are NOT permitted. This includes:

  • foreign currency
  • electronic vouchers
  • virtual currencies
  • supermarket gift cards
  • postal orders

Essentially, if a payment method allows the dealer to remain anonymous, it will not be permitted. Records must be kept.

Scrap metal dealers are currently required to record each transaction, and to provide details of the transaction as part of each record. This must be a copy of a named cheque or a print-out receipt of the electronic payment made.

Records which fail to show both the transaction and how the payment was made will be considered incomplete and will be deemed a criminal offence.

later post  |  index  |  earlier post