Joe Brennan: Time to Regulate Rent-A-Centers

State Rep. Joe Brennan, D-Lehigh/Northampton, whose legislative district includes some of the poorest residents in the Lehigh Valley, has introduced legislation to regulate interest rates at rent-to-own centers.

Retailers suffer in this recession, but places like Rent-A-Center have seized on what they call "a window of opportunity," and are cleaning up with financially-distressed customers unable to get credit anywhere else.

Here's how it works, as recently explained in Toward Freedom: "A TV that sells for about $700 at a regular store is priced by Rent-A-Center at over $1500. By paying $39.99 a week for 77 weeks the TV is yours – at a final cost of almost $3100. That amounts to a 68 percent annual interest rate, or much higher if you compare it to financing the same TV you can buy for $700 at another retail store. (There may also be other fees involved at a rent-to-buy store, like a 'loss/damage waiver fee.')" Instead of paying interest, you're paying "rent."

"Since the rent-to-own industry began in the 1960s, their sales tactics and interest rates have come under scrutiny at both the state and local level," Brennan said. "Many centers charge interest rates that average 100 percent, and they often fail to disclose those rates."

Brennan's bill, H.B. 2247, would toughen rental disclosure guidelines to benefit consumers. Under the legislation, rent-to-own centers would be required to:

· Reveal all fees in the original rental/purchase agreement;
· Provide statements outlining a consumer's right to terminate an agreement without charging additional fees not previously outlined in the original rental contract as long as the property is returned in good condition;
· Provide account statements to a customer upon request without an extra charge; and
· Follow the interest rate cap in Pennsylvania's criminal usury statute that prohibits charging more than 25 percent interest.

Locally, state reps. Rich Grucela and Karen Beyer have signed on as co-sponsors.

"Most customers of rent-to-own centers are working Americans earning weekly paychecks who rent household items like televisions, major appliances and computers," Brennan said. "The rent-to-own industry often markets to the poorest 40 percent of the United States population, the segment of the population with the fewest purchasing options and who may have the greatest difficulty understanding the complicated terms of their rent-to-own agreement."

Brennan said his legislation will help protect consumers who utilize rent-to-own centers from unknowingly entering into contracts which they cannot meet.