This week Congressman John K. Delaney introduced legislation to provide rent-to-own customers, who are typically low and middle-income Americans and often military families, with additional consumer protections. The new legislation is part of Delaney’s Consumer Protection and Community Investment Agenda.
Studies have found that rent-to-own customers frequently pay exorbitant interest rates and excessive fees which can lead to a television or computer costing considerably more than it would at a traditional retailer. Which is why Consumer Reports has cautioned readers against using this model, writing:
“Would you buy a $700 computer knowing that it would cost you over $1,700 after a year’s worth of payments? How about a $1,800 clothes washer and dryer combination that would total $3,431 after two years? Those are the types of deals you could end up with if you get your electronics, furniture, appliances, or other items from a rent-to-own store.”
The Baltimore Sun has written that the rent-to-own model often “push inflated prices and high interest rates on those least able to afford them.”
Rent-to-own retailers have also been criticized for targeting members of the military with predatory practices. Unfortunately, rent-to-own products are not covered by many existing state and federal consumer protection standards.
Delaney’s Expanding Rent-to-Own Protections Act addresses this problem, requiring the federal Consumer Financial Protection Bureau (CFPB) to act on behalf of rent-to-own consumers. Under Delaney’s legislation the CFPB would have the authority to establish new interest and fee disclosure standards, limit egregious charges and ensure that customers have reinstatement rights.
The Expanding Rent-to-Own Protections Act requires that the CFPB act within one year.
Delaney’s Expanding Rent-to-Own Protections Act is supported by the National Consumer Law Center.