Bill would cap max rent-to-own interest
This is the kind of bullshit that is taking America business down. The people are being made into such complete idiots who can't make any decisions on their own. This is only in Vermont, but still is a pathetic attempt to kill a legimate business practice. The State Senator clearly has zero understanding of what risk, is all about and why rent to own stores are the only way the poor can get the stuff this idiot says they are somehow entitled to have access to. This bill would quickly make sure they don't have access to it. Why not go to Best Buy and purchase the same stuff with a Best Buy credit card you ask? Because their credit is shot and nobody execpt rent to owns give them the ability to have the merchandise and such favorable terms. Oh, well, hopefully crap like this gets killed before it becomes law.
By BRUCE EDWARDS STAFF WRITER - Published: January 17, 2010
Jeanette White doesn't dispute the need for a business that serves Vermonters who can't afford to buy that flat-screen television, washer or sofa. But what White, a state senator from Windham County, objects to is what she regards as the questionable business practices of rent-to-own stores in the state.
White has introduced S.270, a bill that aims "to strengthen state regulation of the rent-to-own industry."
"What is important is that poor people have the access to the furniture, etc., but that they not be gouged with outrageous interest rates and unfair business practices," White said in an e-mail.
The bill requires that the rent-to-own installments cannot exceed the retail cash price, which is what that item would sell for on the date the consumer enters into the rent-to-own transaction. If the item is not offered for sale, then the price would be based on the estimated cash retail price.
The bill caps the maximum annual interest rate at 25 percent a year.
Rent-to-own stores would be prohibited from requiring periodic payments or fees totaling more than 150 percent of the retail cash price. If the merchandise is returned or repossessed, a consumer would be given at least 30 days to reinstate their rental agreement.
The rent-to-own industry is opposed to the bill and says rent-to-own stores have gotten a bad rap.
"We are always concerned when legislators want to come in and set price controls," said Richard May, public affairs director for the Association of Progressive Rental Organizations.
May took issue with White's bill which caps the annual interest rate at 25 percent. He said since stores rent merchandise there is no interest charged and the customer can return the merchandise at any time without penalty.
Critics like White, however, charge that exorbitant rental payments is the way rent-to-own companies get around existing laws that regulate interest rates that apply to other installment purchases.
May did acknowledge that rent-to-own is a more expensive way to acquire electronics, appliances or furniture but gain he said the customer is under no obligation to buy the merchandise.
"We make no bones about it, if you want to get the best deal, you go to Best Buy," he said. "If you want to make sure you're not obligated, you go to rent-to-own."
He said only a small percentage of customers that rent-to-own merchandise making weekly payments over a two-year period pay what amounts to double the retail price.
Low-income advocates support attempts to reign in rent-to-own business practices.
"This industry and the effective interest rates that they charge and people pay have a definite negative impact on low income people," said Erhard Mahnke, coordinator of the Vermont Affordable Housing Coalition.
Byron Stookey of Brattleboro Area Affordable Housing said while the Senate bill is well intentioned, a House bill that is expected to be introduced by Rep. Sarah Edwards, P-Brattleboro, would be more effective at regulating the industry.
According to the trade group, the rent-to-own industry is a $6.3-billion a year business with approximately 8,500 stores in the U.S. and Canada, serving 3.2 million households a year.
The two largest companies doing business in Vermont are Rent-A-Center and Aaron's.
The Vermont attorney general's office has received 15 complaints against Aaron's and 14 against Rent-A-Center over the last six years, said Jason Duquette-Hoffman, coordinator of the Consumer Assistance Program.
The most common complaints were defective merchandise, excessive estimate/charge and collection practices.
On a scale of A to F, the Better Business Bureau (www.bbb.org/us) gives Plano, Texas-based Rent-A-Center a nationwide rating of B. In explaining the grade, the BBB noted on its Web site that the company had "government action(s) against business."
Atlanta-based Aaron's received a C plus. The BBB noted that 653 complaints nationwide had been filed against the company. Neither company is accredited by the BBB. A company voluntarily applies for accreditation and met BBB standards.
White's bill mandates full and conspicuous disclosure of rent-to-own agreements, the amount and total number of periodic payments required for ownership, any additional fees. The bill also directs the attorney general's office to ensure that rent-to-own agreement are not predatory and adhere to existing laws including the federal Truth in Lending Act and Fair Credit Reporting Act.
Sandi Everett, director of the consumer assistance program, said while Vermont already has a rent-to-own disclosure rule on the books, White's bill appears to enhance the existing regulation by requiring more precise disclosure about the true cost of the merchandise.
Vermont Assistant Attorney General Elliot Burg said the attorney general's office has not taken a position on White's bill, which restricts the maximum effective annual interest rate to 25 percent and caps rent-to-own payments at 150 percent of the cash retail price of the merchandise.
White's bill has been referred to the Committee on Economic Development, Housing and General Affairs.
