NEWSLETTERS - New Jersey rent-to-own bill gains momentum

New Jersey rent-to-own bill gains momentum

A New Jersey bill that would effectively define the rent-to-own transaction as a lease, not a credit sale, establish a number of consumer protections and set price controls was approved by the Assembly Consumer Affairs Committee yesterday.

The bill will now move to the Assembly Judiciary Committee. A hearing date could not be determined by press time.

New Jersey Assemblywoman Grace Spencer.

Dubbed the New Jersey Rental-Purchase Consumer Protection Act, the bill, sponsored by Assemblywoman L. Grace Spencer (D) is seen as a mixed blessing by the industry, according to APRO Legal Counsel Ed Winn III.

New Jersey is currently one of three states that characterize the RTO transaction as a credit sale. The bill would bring the state in line with 47 states that instead recognize the transaction as a lease.

At the same time, however, if passed, the legislation would imposes rigorous price controls on the industry that would make it difficult to conduct business profitably, Winn said.

“The New Jersey bill does recognize RTO transactions as leases," Winn said. "But the level of regulation is high and compliance would be difficult and expensive for rental dealers.”

If passed, the industry would no longer be governed by a 30 percent usury cap -- as determined by the New Jersey Supreme Court -- but by a price control multiple of the retail value of goods.

That gain however, would be undermined by burdensome price controls that would limit dealers' ability to provide the unique services offered by the rent-to-own transaction, according to APRO Public Affairs Director Richard May.

"The more limitations the rent-to-own transaction has in New Jersey, the fewer choices and less power consumers have as customers," May said. "We would prefer New Jersey allow good old fashioned competition in the market place to continue to lower prices, and improve quality like in all other states where rent-to-own is allowed to compete."

mevans@rtohq.org