WASHINGTON,
D.C. – U.S. Representative Jan Schakowsky (D-IL) today opposed the Consumer
Rental Purchase Agreement Act, a bill that fails to increase consumer safeguards
in the rent-to-own industry. The bill does not provide adequate ownership
rights for consumers, does nothing to limit the exorbitant costs that some
consumers must pay over time to acquire rental-purchase merchandise, and
it continues to pre-empt states from applying the legal principles and
cost standards appropriate for rent-to-own transactions.
Below
is Schakowsky’s Congressional Record statement:
The
Consumer Rental Purchase Agreement Act, H.R 1701, is an anti-consumer bill
that is opposed by every national consumer rights organizations and 52
state and extraterritorial Attorneys General. I should also note
that there is bipartisan opposition to this bill. The Judiciary Committees
Chairman Sensenbrenner opposes this legislation because in his own words
“HR 1701 is a misguided attempt to preempt the existing laws of virtually
every state.” I could not agree more.
This
legislation sacrifices consumer protections for the sake of a politically
connected industry that is notorious for exploiting consumers. We
should not preempt strong consumer protection laws in Minnesota, New Jersey,
Wisconsin, and Vermont. This bill would also effectively stop states
from passing strong consumer protections in the future.
The
$5 billion a year rent to own industry offers goods and services to people
who do not have the credit or money to buy goods at the regular sales price.
I should note that this industry that already receives special treatment
by the IRS. The IRS grants the Rent to Own Industry a three-year
depreciation schedule. The race horsing business is the only other
industry that has a three-year depreciation schedule. This legislation
will give this industry even more “special treatment.”
H.R.
1701 effectively allows the rent to own industry to hide the true costs
of its transactions by hiding interest rates. Consumers should
know the final cost of a deal they have agreed to. This legislation
defines Rent-to own transactions as separate title under the Truth in Lending
act. There are not treated as credit and installments sales
transactions even though that is exactly what they are.
This
industry provides goods to those who are unable to conventionally purchase
goods. We in Congress should work to strengthen and not weaken protections
for families that are struggling to make ends meet. Low-income people
predominately use this market. It is estimated that over 30% receive some
form of public assistance, 59% earn less than $25,000 and 73% have a high
school degree or less. These consumers frequently end up paying 10
to 15 times of the sales price. On average it takes a consumer 77
weeks to own the good.
Worse
yet according to the industry only twenty five percent of rent to own transactions
are completed. Therefore consumer rarely end up owning the items that they
are purchasing.
Consumers
are deceived by low monthly installment rates. People should absolutely
know what they are getting into when they agree to buy an item over a long
period of time. This legislation will make it even harder for consumers
to get a fair and accurate information about their obligations. We in Congress
should work to strengthen, not weaken protections for working families.
This legislation will effectively increase low-income people’s debt.
Join me in voting to against this legislation in its current form. |