NEWSLETTERS - APRO, industry respond to Schumer's new anti-RTO campaign

APRO, industry respond to Schumer's new anti-RTO campaign

A press release issued today by U.S. Sen. Charles E. Schumer suggests he is preparing to push forward with federal rent-to-own legislation that would cripple the industry, and APRO is prepared to meet the campaign head on.

In a vilifying statement, Schumer likens rent-to-own dealers to "highway bandits" and uses the current economic downturn as a springboard to rail against what he calls "deceitful lease agreements" and urges the Federal Trade Commission to investigate the rent-to-own industry.

The press release followed a conference call on Schumer's pending bill in the U.S. Senate, S. 1530 -- The Rent to Own Reform Act -- involving staff and selected media outlets.

Sen. Charles Schumer

The bill -- which would treat the RTO transaction as a credit sale and establish price controls -- currently has no co-sponsors and is in direct competition with industry supported legislation S. 1012, The Consumer Rental Purchase Agreement Act, which defines the transaction as a lease and established significant consumer protections.

S. 1012 has 21 co-sponsors and a House companion bill currently has 90 co-sponsors, indicating strong bipartisan support.

“We applaud Sen. Schumer for taking a look at the rent-to-own industry," said Richard May, APRO Public Affairs Director. "We just have a certain difference of opinion, because here’s the fundamental component to the rent-to-own transaction: The customer is in full control of the transaction, and they are never obligated to make that next payment."

However, Schumer's assertions are problematic, May said, because they rely heavily on a 1999 FTC study which found around 67 percent of RTO customers rent to term. That study relied on phone interviews with customers, often years after the transaction had taken place.

Schumer's report also relies on narrow "mystery shopper" data and questionable research.

Schumer fails to take in into account other studies, May said, such as a 2004 published and peer reviewed study by the University of Massachusetts that uses proprietary transactional data  -- rather than phone interviews -- as the basis of its analysis.

That study found only 17 percent of RTO customers rent-to-term and that ownership was not the primary reason for the transaction.

No representative of the rent-to-own industry was invited on the conference call.

"Fair and balanced regulation of the rent-to-own industry has the support of nearly a quarter of the U.S. Congress whereas Schumer's bill has zero co-sponsors," said Bill Keese, APRO executive director. "Which goes to show that when legislators do their homework, they understand that when rent-to-own is regulated properly and allowed to compete, its pricing and services will continue to improve and fill an important need in the market." 

By mid-afternoon Wednesday, May fielded over half a dozen calls from various media outlets and anticipates more inquiries. APRO will provide thorough and accurate analysis of those reports and continue to cover the story on the association's website and in RTO Today.

Click here to read recent coverage of this story in the media.

Click here to download the full press release.

mevans@rtohq.org