Rent-to-Own Centers Face Legislative Regulation to Protect Consumers
In the News….
Imagine paying an interest rate of 300% or higher on your bed, kitchen table, or TV. Sounds far-fetched, but that is exactly the kind of deal on offer at Rent-to-Own businesses. Due to a loophole in current law, their customers pay a huge premium on large ticket items that might not even be new, as many of the items rented have been repossessed from previous customers. Consumers aren’t shown the actual ultimate cost of the rent-to-own deal they are agreeing to, and fall prey to deceptive marketing practices. Most rent-to-own clientele are people with lower incomes—an estimated 72% of them earn less than $36,000/year. These consumers often don’t have the money to purchase products outright, and may not have good credit, so they have little option but to turn to rent-to-own dealers. And because of the high installment payments and quick repossessions if they fall behind, only about 25% of these customers ever end up actually owning the items they paid such an outrageously high price for.
SEVCA’s staff have seen the impact of rent-to-own deals on countless clients over the years. High installment payments are often a factor in creating a financial crisis for the household that impacts their ability to meet their basic food, housing, and fuel expenses. So SEVCA has joined with other advocates in support of bi-partisan legislation recently introduced in the state Senate to crack down on the industry’s deceptive and exploitative practices. The legislation would limit the effective interest rate charged on these installment purchases and require certain disclosures and consumer protections that it is hoped would make the industry operate on a much fairer, above-board basis. Vermont Businesses for Social Responsibility, of which SEVCA is a member, is just one of the many organizations that have endorsed the legislation. (Click HERE to read their statement.)
See the following news article for more information, or call Family Services Director Pat Burke at (802) 722-4575 with questions.
Posted March, 2015