RTO Legislative Activity - Rent-to-own Legislative Activity and Resources

A history of the rent-to-own industry's legislative efforts and its current strategies regarding state and federal legislation

Seeking federal legislation

The rent-to-own industry is an established part of the American economy. Since the industry’s inception in the 1960s and its rapid growth in the past 40 years, consumers, businesses, legislators and litigators have grappled with the inevitable growing pains of a maturing industry.

As a consequence, since 1983 rent-to-own businesses—using the collective resources of the Association of Progressive Rental Organizations—have approached state legislators and members of Congress asking for a legal definition and consumer protection regulation of the rent-to-own industry. Ethical rent-to-own operators in the 1980s realized that if their small business was to continue to thrive they had to be proactive in passing legislation mandating ethical treatment to customers and defining such a unique transaction.

Throughout the next two decades, rent-to-own dealers united, passing rent-to-own legislation that mandated rent-to-own pricing and advertising disclosures, reinstatement rights and rent-to-own lease definition. In every state where an RTO law passed, virtually all consumer complaints were eliminated and rent-to-own small business operators improved services, modernized their business and created a climate that is driving rent-to-own prices down throughout the country.

Forty-seven state legislatures, the Internal Revenue Service and the Federal Trade Commission have studied, debated and acted to define the transaction and pass comprehensive consumer protections. Congress partially addressed the lease defintion issue with passage of the Taxpayers Relief Act of 1997.

State rent-to-own legislation

Ninety-five percent of the U.S. population, living in 47 states, is subject to state laws that both define the rent-to-own transaction as a lease and also provide meaningful disclosures to consumers. Typical consumer protection legislation mandates that the rent-to-own business disclose in writing and verbally to the consumer every penny the customer may or may not pay when entering into a rent-to-own contract.

Clear communication between rent-to-own businesses and their customers is the key to a successful relationship for both. Listed below are the states currently without a working rent-to-own law:

• Minnesota: Although Minnesota does have a state RTO statute, the Minnesota Supreme Court ruled that RTO transactions are also credit sales in the state and are limited to a finance charge rate of eight percent per year. The result of the court's ruling was to do away with the RTO industry in that state.
• New Jersey: Its rent-to-own business climate has been severely restricted due to state court interpretations in the vacuum of a state rent-to-own statute.
• North Carolina
• Wisconsin: Its rent-to-own business climate has been severely restricted due to state court interpretations in the vacuum of a state rent-to-own statute.

Federal rent-to-own legislation

The RTO transaction is one of the most widely used consumer transactions undefined at the federal level. In 1983, APRO dealers successfully passed a federal RTO definition bill from the Senate, but that bill later died before being signed into law. In 1993, the U.S. House Banking Committee held a hearing on the rent-to-own industry. The hearing led to negative rent-to-own legislation threatening the existence of rent-to-own in America. The threat of extinction forced APRO dealers to focus on a federal legislative effort.

Since 1993, APRO dealers have been working with members of Congress on the necessity of federal RTO legislation and the value of the rent-to-own industry in America. Rent-to-own industry leaders have worked with Democrats and Republicans for the past decade crafting a bi-partisan supported bill that provides valuable consumer protections and disclosures while defining the RTO transaction as a lease.

In the past 16 years, APRO-supported federal legislation - The Consumer Rental Purchase Agreement Act - has generated hundreds of co-sponsors. In 2002, the Consumer Rental Purchase Agreement Act passed the House of Representatives after three congressional hearings and  mark ups in the Financial Services Committee and the Judiciary Committee. In 2004 and 2005, the Senate Banking Committee held hearings regarding the Consumer Rental Purchase Agreement Act . Currently, APRO dealers continue to support Senator Mary Landrieu (D-Louisiana) and Representative William Lacy Clay’s (D-Missouri) companion legislation.

For more information on APRO’s federal legislative effort, please contact APRO Public Affairs Director Richard May by e-mail or phone at 512/225-1051.

Monitoring state and federal legislation

An average of 25 bills that directly affect the rent-to-own industry are introduced per year at the state and federal levels of government. Many of these bills are designed to restrict rent-to-own or create unnecessary regulations. APRO monitors Congress and all state legislatures for rent-to-own industry regulations and legislation. APRO members are notified when bills are introduced in their state. A list of current legislative issues is available through APRO's E-Communities.

State-by-state rent-to-own rules and regulations

APRO maintains data listing the specific rules and regulations for the 47 states with RTO legislation. The data is compiled into an easy-to-reference set of charts organized by in-store price tag disclosures, rent-to-own contract disclosures, specifications on fees and payments, advertising disclosures and reinstatement rights. Click here to download a PDF of the rules and regulations charts.

Maintaining a grassroots network

APRO organizes and maintains a network of rent-to-own dealers to help defend and promote the industry in Congress and in state legislatures. For 20 years, APRO has led the rent-to-own industry in creating and developing a strong grassroots campaign. APRO members and industry leaders can join this valuable opportunity by attending APRO's annual Dave Egan Legislative Conference. Local elections also provide a valuable opportunity to participate in grassroots networking. As a small-business owner, the best introduction to politics is during elections. Rent-to-own dealers have been active in elections for years, helping candidates furnish their campaign offices, volunteering their stores for campaign signs, volunteering employees for voter phone banks and attending local political functions.

Rent-to-own Legislative Links: