RTOHQ: The Magazine June - July 2008
 Complete issue of RTOHQ: The Magazine by APRO
The Connectors by Bill Keese (profiles by Kristen Card)
Identity Theft in the Rent-to-Own World by Ed Winn III
APRO’s 2008 Convention Education: Your Gateway to New Ideas by APRO
The Connectors
by Bill Keese (Profiles by Kristen Card)
Over the past few years, an army of rental dealers has converged on Washington, D.C. They’ve gone to Capitol Hill—as representatives of every rent-to-own dealer, employee, customer and vendor— to ensure the future of an industry that offers a terminable consumer rental agreement with an ownership option. These men and women have gone to tell their story in their own words to members of Congress—and they have done so at their own expense. Their request to our nation’s lawmakers is simple and clear: pass fair and just rent-to-own legislation.
Spearheaded by APRO, these dedicated rent-to-own professionals have forged a powerful grassroots campaign to enlighten elected officials on the need for industry regulation. What makes this mission unique? The notion that the rent-to-own industry is seeking regulation at all sets us apart from practically everyone else. That we want strong and meaningful consumer protection and, at the same time, legislative safeguards for a growing and maturing industry demonstrates the progressive nature of our industry. Of course, we would like to highlight every rental dealer, associate and vendor who has joined in this battle. Each has a story to tell about his or her motivations for participating.
Each has a special talent to offer. But time and space prohibit us from sharing all the wonderful stories about the participants in this movement. So instead, we have selected a few individuals to spotlight in this inaugural issue of RTOHQ: The Magazine. Each has a unique background and special talents that have prompted him or her to get involved, unselfishly and for the greater good of rent-to-own. We have asked them to share their motivations and insights in the hope that those who have not yet joined the cause will reconsider their inaction. These are exciting times for APRO and the rent-to-own industry. The individuals profiled herein are but a sampling of the many strong people who use their insights about rent-to-own and their abilities of persuasion to connect with members of Congress. They are “The Connectors.”
—Bill Keese
Congressman William Lacy Clay
If the rent-to-own dealers and vendors profiled herein are anointed “The Connectors,” then certainly Democrat Congressman William Lacy Clay should be deemed “The Connected.” He is the lead sponsor of HR 1767, the Consumer Rental Purchase Agreement Act, which is under consideration in the House of Representatives. Clay, who sees the bill as a way to help consumers as well as the rent-to-own industry, has been as effective a sponsor of federal RTO legislation as the industry has ever seen. Ironic, coming from a second-generation legislator whose father was one of rent-to-own’s harshest critics. Clay’s father, Congressman Bill Clay, co-sponsored Congressman Henry Gonzalez’s efforts in the early 1990s to wipe rent-to-own off the freeenterprise map. Stranger still, Gonzalez’s son Charlie, likewise a current member of Congress, has supported legislation favorable to rent-to-own in the past few years. Ah, the times, they do change—clearly, this isn’t our fathers’ Capitol Hill.
As Congress changes, so does the rentto- own industry. Where previous legislative strategy suggested that lead sponsors of RTO legislation be determined by industry lobbyists, for the 110th House session, a different plan of action was adopted. Clay was approached, and accepted the invitation, to sponsor HR 1767 through grassroots efforts in Missouri, where he represents the state’s 1st district (the St. Louis area). Missouri rental dealers Larry Carrico, “Tiger” John Cleek and Dan Cole, among others, figured that they had nothing to lose by approaching Clay to be our sponsor—and it paid off (see related story on page 24). “Through spending almost two decades on Capitol Hill, APRO members have built relationships with Congress,” says Richard May, APRO’s public affairs director.
“They’re more savvy than they used to be.” And so APRO’s three Cs—Carrico, Cleek and Cole—used their savvy to bring a fourth C—Clay—on board. Clay, who was first elected to Congress in 2000 and was a co-sponsor of RTO legislation in the previous session, feels that, “the [rent-to-own] industry deserves to be regulated. I’m urging my colleagues to take a look at HR 1767 and realize that we have bipartisan support on this measure,” he says. “We think we have improved the bill since 2002.” “It’s amazing how effective and engaged an active sponsor can be,” May says. “In Clay’s first session as our primary sponsor, a committee chair and subcommittee chair have had to look at this legislation; that’s the most attention paid to our bill since it passed the House in 2002. This kind of activity is unprecedented in rent-to-own’s legislative history.” Indeed, especially when you consider that the bill is under review from the Financial Services Committee—a pro-consumer committee that, in times past, would have been very much opposed to RTO-supported legislation. “That Clay can maneuver through this committee is remarkable and it speaks to his commitment to our industry,” May says.
Currently, the bill is poised to have a hearing and markup— then on to the House floor for a vote. Typically, a grade of “C” denotes the average. But in Missouri, when it comes to making connections, these four Cs are definitely above average.
—Neil Ferguson
Steve Kruse
It’s the stuff of APRO Legislative Conference lore: compiling comparative data that might prove to federal lawmakers that rent-to-own companies aren’t gouging their customers, but instead are earning a far lower percentage profit than many other businesses. Only it wasn’t just a legislative legend; it was real, and real effective. Just ask Steve Kruse. “One of the negative claims against our industry is how much we charge and how much we make,” Kruse says. “Well, the chart we took to our congressmen showed that our biggest companies make 4 percent or 5 percent profit, compared with some other major retailers netting 10, 15, 25 percent. Some of the numbers were ridiculous. That hit a chord with a lot of the legislators up in Washington.”
Kruse should know, since he was the pointperson for putting all the information together prior to an APRO Legislative Conference a few years back. What he compiled—hard data in printed form—was distributed to legislative offices on Capitol Hill during the conference and has been used ever since to make the case for rent-to-own. Kruse, an operations analyst with the Southeast-based BestWay Rent to Own (www.bestwayrto.com), has been with the company for 18 years, and although he had previous legislative experience, he’s become involved in the governmental side of the rent-to-own industry again only over the past three years. Still, it was almost immediately evident how valuable Kruse’s natural tendencies toward organization and documentation would be in the uphill climb to gain congressional support for the industry. “I’m able to put a lot of information together in a format that makes it easy to use,” Kruse says.
“Last year, we created a single sheet for every state that, when presented to a legislator, declared, ‘Here’s the impact our industry has in your state: the number of employees, the number of customers, the income, the taxes’—these are the things they [legislators] care about.” But Kruse confesses that just getting an audience with a U.S. representative or senator can be the primary test of patience. “Many of them meet only with people from their district, so you’re stopped before you can get started,” he says. With 73 stores across seven states, identifying exactly the right people to send to D.C. is a challenge for BestWay. “Contrary to popular belief, the voice of the voter has a lot of weight; those are the voices lawmakers listen to. We might pay taxes in a particular district, but we don’t necessarily vote there; however, our store employees do. Sometimes, we need a letter or call from one of them to open up the door.”
Once a meeting is secured and held, Kruse says it might seem like the end, but it’s really only the beginning. “Continuous success has lots to do with the follow-up process,” Kruse advises. “It’s easy to let it die down inbetween visits, but it’s a matter of staying on their minds, in their thoughts and looking for the opportunities when they’re going to listen. And sometimes, you hit a homerun. But many times, it’s ‘OK, today, I got a base hit; it might take a month or two to round second.’ One staffer told me, ‘Just because we’re saying no today doesn’t mean we’re enemies.’ As long as you’re welcome back in the office, then you’ve got to take the time and trouble to go.” Far removed for the moment from congressional commotion, Kruse keeps striving toward the next trip; every other week or so, he makes calls and sends e-mails to key legislative staff he’s still working to win over. So how did he develop this unwavering dedication and relentless sense of diligence, anyway? “Thirty-three years in rent-to-own and collecting out in the field,” Kruse laughs. “This entire business is based on persistence.”
RSSS' Ellison Crider
Ellison Crider isn’t just a vendor for the rent-to-own industry. In fact, he doesn’t believe there is such a thing as just a vendor in the industry— especially when it comes to federal legislative activity. “My big thing is, we’re all in this together—whether you’re a dealer or a vendor,” Crider asserts. “I think we should not look at [legislative involvement] as somebody else’s job, but see the importance of grassroots efforts. We need everybody to be part of that effort— and when I say everybody, I mean everybody.” Strong speech from a man known for his understated ways. But Crider—general manager of RSSS (Rental & Sales Software Systems, www.rsss.com) and APRO’s 2006 Vendor of the Year—is quietly, yet extremely, passionate about what role rent-to-own plays on Capitol Hill.
An industry veteran of 25 years, Crider has spent 18 years providing software specifically designed to help RTO companies centralize all of their data in real time and offering access to it 24/7 via a secure, state-of-the-art online network. But for the past dozen years or so, Crider has also spent a solid slice of time working to secure federal legislation that would provide a legal definition and consumer protection regulation for the rent-to-own industry nationwide. Every time legislation fitting that bill has been proposed over the past five years, Crider has secured the co-sponsorship of his congressional representatives in Texas—an accomplishment he is proud of, but typically humble about. Crider says the secret of his legislative success is no secret—simply a straightforward, egalitarian approach with elected officials. “We’re all just people,” Crider explains. “The congressman puts his pants on one leg at a time, just like I do. So I just go into it as, we’re just talking to our representatives as equals. They’re not anything better or bigger; they’re just people who happened to get elected into their jobs. They work for us, and we’re just going in to talk with them about an issue that’s important to us.”
While nurturing relationships with legislators, Crider has also sought to expand the rent-to-own playing field. In the past few years, RSSS has helped bring the musical instrument industry into the rent-to-own fold, customizing that business’ software needs to include the RTO transaction. With this expansion, Crider estimates that an additional $2 billion has been generated within our industry. Our musical industry colleagues have rallied to support favorable rent-to-own legislation and have denounced unfavorable legislation, such as that proposed last year by New York Senator Charles Schumer. We owe Crider a large debt of gratitude for being, well, instrumental in this key relationship with the music industry. Crider also employs a nurturing approach as the vendor representative on the APRO Board of Directors and as vice chair of APRO’s Vendor Advisory Committee. In these positions, he’s known for his knack for listening and encouraging all sides of the issue at-hand to come up with a mutually agreeable resolution. In addition to his leadership within the RTO community, he’s also a leader in his district’s Rotary Club, having served as its president and assistant district governor.
Crider has adopted Rotary’s motto, “Service Above Self,” as his motivation in helping to better the rent-to-own industry. It’s that dedication to service and a talent for connecting people as individuals that makes Crider especially successful in his work—both at RSSS headquarters in Corpus Christi, Texas, and within the halls of the U.S. Capitol in Washington, D.C. “I’m just one person, and one person can make a difference,” Crider says. “But it’s up to the whole industry to make a concerted, concentrated effort to get as much support as possible.” “Don’t get me wrong,” he adds. “There have been a lot of vendors who have already stepped up to the plate. But there are a lot more who still need to do so.”
Missouri’s mighty Cs
Just call them Missouri’s Mighty Cs: Larry Carrico, president of St. Louisbased Rent One; “Tiger” John Cleek, president of Columbia, Missouri’s Cleek’s Lease or Own; and Dan Cole, president of National Rent To Own, also based in St. Louis—a trio of rent-to-own veterans who, between them, run some 85 stores in Missouri and surrounding states and have almost a half-century of collective experience championing their industry with APRO up on Capitol Hill. It was this threesome that secured the current lead U.S. House sponsorship for the federal Consumer Rental-Purchase Agreement Act from a quite unlikely source.
Representative William Lacy Clay (D-Missouri) was elected to Congress in 2000, following in the footsteps of his father, the Honorable Bill Clay—who served in the House for 32 years, was a founding member of the Congressional Black Caucus and refused to give the rent-to-own industry the time of day. “Bill Clay really wouldn’t have anything to do with us,” Cole recalls. “He didn’t quite understand [our industry],” Carrico agrees. “He had a stereotype of the industry already in his mind. We could talk to him all day long and it wouldn’t matter because he was stuck on a negative stereotype.” But when Bill Clay retired and Lacy Clay was elected to succeed him, a definite shift of attitude and approach happened.
“When we first started going to see Congressman [Lacy] Clay about eight years ago, what we found was that Frank Davis, his chief legislative assistant, had really done his homework on our industry and on APRO,” Cleek remembers. “He really was the best-prepared congressman,” Cole confirms. “His staff had done its research and knew all about us. And Clay understood the actual customers we deal with. He’s one of the few congressmen I’ve heard say that he believes the rent-to-own transaction is actually necessary for his constituents. But the fact that he’s our lead sponsor today is the culmination of years of work.” “We had the influence we needed through our employees in his district,” Carrico explains. “We gave him the information he needed, and finally, we asked for his sponsorship and he granted it.” “You earn trust over a period of years,” Cleek says.
“That’s what has happened here; and that’s really what good politics are all about.” Interestingly, Missouri’s Mighty Cs didn’t originally meet among the halls of our nation’s capitol, via APRO, or even at home in the Show-Me State, but rather in Canada on a Speed-Queen-sponsored fishing expedition back in 1989. Carrico, Cleek and Cole— all avid anglers—have found that the fragile balance of persistence and patience they use out on the water also applies nicely to grassroots lobbying in Washington, D.C. “When I really, really believe in something, I just won’t give up,” Cleek asserts. “When you’re doing the right thing, you don’t give up.” “It’s our biggest battle,” Cole says. “We must continue to thank co-sponsors, educate new congressmen or women, keep the process going.
You can’t stop just because you have a little success. You have to keep working at it. Whether it’s Congress, the media or your neighbor, you’ve got to sit down with them, explain what you do, help them understand the real risks we’re taking and the unique services we’re providing. Then, you’ll win them over.” “What APRO has achieved legislatively, the relationships we’ve built, have always come from our grassroots efforts,” current APRO president Carrico concludes. “Not big lobbyists, not big money, but from individual dealers’ time, money, sweat and hard work. Grassroots is our livelihood.”
Lyn Leach
Lyn Leach has “Good News,” and he wants to spread it nationwide to potential customers, the rent-toown industry and federal lawmakers. Leach—president of Ace Rent- To-Own, former APRO president and 2001 APRO Rental Dealer of the Year—believes in lifetime reinstatement, a perk that his 12 Nebraska- and Iowa-based stores already offer as part of their “Good News” program. Essentially, lifetime reinstatement is a 100 percent guarantee that lets customers who change their minds about a product transfer the payments they’ve already made to another product. Even if they choose to close their account, they can reactivate it later and use their past paid rent toward paying for a new item.
“Helping consumers achieve ownership is vital to customer satisfaction,” Leach insists. “The number-one reason people change companies they’re doing business with is because they’re walking away with nothing to show for their money. I think lifetime reinstatement should be included in federal legislation because it simply develops loyalty like nothing else we do.” Loyalty is something Leach knows a little something about. A 26-year veteran of the rent-to-own industry, Leach has been a loyal and longtime advocate for federal legislation to protect dealers and customers alike. He has served as a member of APRO’s Government Relations Committee, as past chair of the Membership Committee and as a co-chair of APRO’s Political Action Committee. He also headed up an APRO task force to encourage greater participation in APRO’s Legislative Conference. “I’ve contributed to the industry by getting others involved,” Leach says. “When I was on the APRO board, one of my assignments was to get people from every state to come to the APRO Legislative Conference. We were extremely successful; we lacked representatives from only four states and that was because some folks backed out at the last minute.”
Leach has also been successful in gaining enthusiastic support for federal rent-to-own legislation from both of the Cornhusker State’s U.S. Senators, Chuck Hagel and Ben Nelson. “Senator Hagel votes for what he believes in,” Leach notes. “So all we had to do was show him what we do, who we are as dealers, who our customers are and what our transaction really represents. Once he saw it was a good transaction, just needing some definition and regulation, he signed on and has been helpful in getting us support from both sides of the aisle. “Senator Nelson’s office initially told us they felt that RTO wasn’t a big enough issue, that their constituents weren’t concerned enough about it,” Leach continues. “So I went home and drafted a letter of support for the business and we offered it to every client as they came into the stores; every day, we faxed hundreds of signed letters to the senator’s office. Finally, an aide [to Nelson] called me and said, ‘OK, enough. We’re ready to sign on as a co-sponsor.’ Senator Nelson has been a huge supporter of ours ever since.”
With Leach, a longtime horse and livestock enthusiast, it’s clear—whether he’s working with legislative leaders or wrangling with Longhorn cattle—this isn’t Leach’s first rodeo. Yet, over a quarter-century later, Leach says he hasn’t lost even an ounce of his not-so-secret ingredient for effectiveness—and happiness. “Passion,” he asserts. “If you go into legislators’ offices armed with the facts and your plan is to ‘wow’ them with just the facts, then I think you’re going about it the wrong way. When people can see the passion you have for your industry—in serving both your clients and your staff—when they can see how much you love what you’re doing, there’s a willingness to help that goes way beyond the facts, way past the law.”
Bryce Company's Bryan Collins
When you ask Bryan Collins how he helps with the grassroots legislative efforts for the rent-to-own industry, he’s so über-humble—he essentially acts like he doesn’t know what you’re talking about. “We go to the [APRO buying] shows,” Collins shrugs. “We try to support APRO wherever we can.” The truth is that, although Collins’ company’s contribution to the happenings up on Capitol Hill is physically no bigger than your thumbnail, what his efforts as a vendor represent is huge. Collins is president of Bryce Co. (www.brycejewelry.com), a leader in jewelry programs for the rent-to-own industry. Collins and his co-owner wife, Jennifer, launched the Alabama-based company in 2001; today, their turnkey jewelry program is in hundreds of RTO stores.
“What we create is a full jewelry department within the stores,” Collins explains. “We use all ‘live’ jewelry—not an alloy or sample program—because jewelry is an impulse item. What you see is what you get, so you’ve got to make sure they can get what they see. And our whole program is about performance; we have a performance guarantee that says that the stores will be renting jewelry to 10 percent of their customers within a year or we’ll buy it back. There’s really no risk for the dealer.” Collins, who has been in the jewelry business for 25 years, worked for another jewelry company selling to and serving the rent-to-own industry prior to putting up his own shingle. He’s been an APRO member for the past dozen years. With the launch of his own business, Collins decided he wanted to delve deeper as an APRO vendor.
“As we were getting more into it, I said, ‘I’d like to do something for APRO and rent-to-own; we make our living off of this industry and I want to give something back,’” Collins recalls. “So we decided to do the pins for APRO.” Bryce Co. became the producer of the legislative lapel pin that APRO members wear to identify themselves stylishly with the organization while they walk the halls and visit congressional offices in the U.S. Capitol and at other times, as well. These buttons o’ bling, distributed to participants at APRO’s annual Legislative Conference, are a great way for rent-to-own reps to display for congressional members and staffers the solidarity they share. And Collins’ company not only designs the pieces especially for APRO, but also donates an equal amount of the would-be profits from the pins to APRO’s Political Action Committee—a noble and generous gesture from a vendor who cares deeply about the well-being of the industry.
“The long-term survival of the rent-toown industry is as important to [vendors] as it is to dealers,” Collins says. “This is how we all make our living. So as I see it, we’re all partners, we all have a vested interest and we all need to take care of it. I don’t care if you’re a vendor or a dealer—if the industry goes away, then it will hurt all of us. So we need to team up and take care of each other.” Collins clearly sees the benefits of involvement in APRO and its legislative efforts as much more direct than not. “What I’ve learned in this business, without a doubt, is that if you put effort into the industry and really strive to be part of the program, then it will benefit you,” Collins advises his fellow vendors. “You’re going to make a lot of friends, and that’s really what it’s all about.”
Tom Bernau
Tom Bernau might have been a first-timer to APRO’s Legislative Conference earlier this year, but it wasn’t his first grassroots lobbying effort on behalf of an industry organization—it’s just that last time he was meeting with congressional lawmakers as a banker. In fact, if you swap medicine for money, Bernau possesses a partial nursery rhyme of professions: banker, lawyer, merchant/ chief. He grew up in a family of bankers, practiced real estate mergers and acquisitions law and today serves as both merchant and chief in his position as the president of Arona Corp.—with 23 Midwestern locations, the third-largest Aaron’s Sales & Lease Ownership franchise nationwide. “This is very much a helping industry, and I like that,” Bernau says of his current, now decade-long rent-to-own career.
“It seems that what we do is sometimes very misunderstood. We hear a constant stream of stories about people who didn’t have a bed, for example, and our industry provides them with one of the real, true basics of living today.” And Bernau, a third-generation Iowa businessman, provides the rent-to-own industry with a powerhouse of political clout with congressional representatives and senators who hail from America’s heartland. “My grandfather was a successful manufacturer and was involved in the theatre business here in Iowa; my father was the chief banking regulator for the state,” Bernau says. “So we have multi-generational connections to Iowa and the business community. I think that’s a definite advantage when you’re walking into one of our delegation’s offices and you have something to say about something important to you. I think it’s really helpful; then, I just talk honestly about what we do within their district, who we employ, etcetera.”
Bernau knows that getting a foot in the door up on Capitol Hill doesn’t necessarily safeguard against getting hit in the rear with it on your way out. Which is why being prepared and polished—along with straightforward and open—are part of his presentation to federal legislators. Oh, and having a little backup helps, too. “I believe in homework, in being ready, and I tried to be up-to-speed on our legislation before going in,” Bernau says. “But one thing that was extremely helpful was making the rounds with [former APRO president] Lyn Leach (see his profile on page 27). Where I’m still learning about the measure, he was there to support me, answering many of the more detailed questions about the legislation. And I was able to make the local connection with almost everybody, so it was a good combination—and the more I hang around people like Lyn, the better-versed I become at answering questions.”
But while Bernau may still be uncertain about some of the specifics of legislation that would define and regulate rent-to-own across the nation, he couldn’t be more certain about why he should be actively working for it. “At the federal and at the state level, the appropriate legislative climate is critical to the success of our industry,” Bernau asserts. “We all have to be active with our local representatives in order to make sure we keep the legislation we have and promote the positive changes we can. You don’t want to wake up someday to find a law passed by your particular congressman that affects you in a negative way— especially when all you had to do was pick up the phone or take a flight to make one visit and protect yourself.”
Benefit Marketing Solutions
You might not think there’s much of a connection between University of Oklahoma football legends and federal rent-to-own legislation. But there really is a fairly strong connection—and its name is Benefit Marketing Solutions. BMS (www.benefitmarketingsolutions. com), is the rent-to-own industry’s leading provider of membership programs—rental addon products that allow dealers to extend benefits to customers for an additional fee. Benefits offered might include insurance protection on merchandise during its rental, warranty protection following its purchase or money-saving opportunities wherever customers might regularly spend, from the grocery store to the doctor’s office. BMS currently serves about 65 percent of America’s rent-to-own industry, marketing its packages through approximately 4,500 stores nationwide, via 200 or so dealers. Next year, BMS founders will celebrate a 20-year partnership with rent-to-own.
For the past 15 years, the company has been involved in legislative grassroots efforts at the national level, advocating for the RTO industry. Here’s where OU football comes into the picture: the business, originally known as Foresight, was co-founded by Danny Wright, still the company’s CEO, and Steve Owens, famed OU running back and 1969 Heisman Trophy winner. The pair worked together to persuade Republican U.S. Representative J.C. Watts Jr. to support the Consumer Rental-Purchase Agreement Act, federal legislation to protect both the RTO industry and its customers. Their in? Watts had been a much-celebrated quarterback for—you guessed it—the University of Oklahoma. “J.C. already knew us, trusted us and was open to what we had to say,” Wright recalls. “It wasn’t hard because we already had a relationship with him involving a great deal of trust and if what you’ve got to say is a good thing and makes sense, then it’s not difficult to get involvement.” Wright and Owens not only secured Watts’ support, but the congressman agreed to be the first Republican to lead sponsorship of a rent-to-own bill. Confident with that success, Owens and Wright traveled to Capitol Hill to lobby Oklahoma’s congressional delegation for a favorable definition-and-depreciation treatment as part of the Taxpayer Relief Act of 1997.
They were once again successful, perhaps due in part to a member of the delegation being— yep—another OU football great, Steve Largent. But BMS managers understand that such a soul-to-pigskin connection doesn’t always exist when it comes to gaining legislative yardage, so they depend upon other vital resources, such as good old-fashioned perseverance. “It is all about relationship,” BMS Executive Vice President of Sales & Marketing Susan Matthews says. “In order to create that relationship, you’ve got to stay with it. I may not be one of the more outspoken participants in a large meeting, but my determination helps make sure the deal gets sealed—both on the job and on the Hill.” Matthews is clearly passionate about the important role rent-to-own vendors play in the success of the industry as a whole. “We consider our involvement in getting this legislation passed equally as important to us, as vendors, as it is to rental dealers,” Matthews says.
And she speaks from experience when it comes to the relationship between dealers and vendors; her husband, Dan Matthews, is a rental dealer and president of the Texas Association of Rental Agencies. “What’s good for this industry is also good for us.” “I think a lot of people in the rent-to-own industry don’t realize how much progress has been made by APRO membership going up to Washington, D.C., each year,” BMS Senior Vice President and General Counsel Brad Denison says. “This industry has achieved more than many bigger industries. At BMS, we know that APRO’s Legislative Conference and continuing grassroots efforts are a valuable way to support the industry; that’s why we’re there.”
Identity Theft in the Rent-to-Own World
by Ed Winn III
Rarely a day goes by without news headlines declaring the loss of private, sensitive financial information from consumer files by the thousands, or even millions. Laptops get lost or stolen; CDs go missing; sensitive paper files are tossed into dumpsters behind stores. Retail giants such as Radio Shack, CVS Pharmacy, TJ Maxx, Marshall’s and EZ Pawn have all suffered such losses.1 If no rent-toown store has yet made the news, it’s probably only a matter of time. The reason for the headlines is the fear that the loss of this information will give rise to identity theft, one of the fastest growing, most pernicious crimes in the country. Rent-to-own stores do, after all, regularly collect the kind of financial information from current and future customers that can give rise to identity theft. Of course, if thieves were logical, they would steal the identities of people with impressive credit, since the whole idea behind identity theft is to pretend to be someone else in order to buy things using that person’s name and good credit, empty that person’s bank accounts and otherwise profit from that person’s station in life.
If you are going to steal someone’s identity, you want to steal an identity that has assets and credit from which to profit. But the law does not draw a distinction between stealing the identity from a rich man or from a poor man. The Texas attorney general recently filed a suit against CNG Finance Corp. and its subsidiary, EZ Pawn, for violations of the Texas Identity Theft Enforcement and Protection Act (2005), which provides penalties of up to $50,000 per violation. The attorney general also cited CNG for violations of another Texas statute concerning the businesses’ retention and disposal procedures for customer information; it provides a $500 penalty for each abandoned record. The allegation in the lawsuit is that the company failed to safeguard the private financial information of its customers when it threw boxes of customer files into dumpsters behind several stores. One might suppose that the pawn shop customers were credit constrained, but that detail did not trouble the attorney general, nor is that distinction acknowledged in any of the laws that the attorney general is seeking to enforce.
Nor is there any evidence that any thieves went dumpster diving behind the pawn shops. There need not be any such evidence. No records need actually to be stolen and used for liability to attach to a business that fails to destroy its records properly. It is the mere failure to dispose of customer records in accordance with the law that gives rise to liability—regardless of any identities actually been stolen. There is an assortment of statutes and regulations that affect how businesses must deal with the personal and financial information that they have on consumers. The Fair and Accurate Credit Transactions Act (2003), or FACTA, is the federal government’s response to the identity theft problem. FACTA is a multi-faceted statute that amends the Consumer Reporting Act and regulates consumer reporting agencies—Equifax, TransUnion and Experian—and the companies that do business with them. FACTA rules provide that credit card receipts can display no more than the last five digits of a card number. The statute also gives consumers enhanced rights regarding their access to information in their credit reports and what they can do if they become—or fear that they might become—victims of identity theft.
Recent rules promulgated by the Federal Trade Commission under the authority of FACTA concern the disposal of consumer information by certain businesses.2 The rule applies to companies that get information directly from, or derived from, consumer credit reports. Rent-to-own companies do not generally run credit reports on customer applicants and so the specifics of the new FTC rule do not apply to them. However, dealers who use Teletrack or other subprime reporting services may be covered by the rule. Chris Kelleher, writing about FACTA for Entrepreneur.com3 suggests that if you are not sure whether you are covered by the FACTA rules for safeguarding consumer financial data, be on the safe side and assume that you are. FACTA rules generally require businesses to design and implement “reasonable” plans to safeguard consumer information. The plan need not be foolproof and companies can implement plans commensurate with the risk. Some companies deal with more consumer information and must have more comprehensive plans in place.
The plans must identify “material internal and external” risks to security and then control for those risks. The plan must have contingencies in place if a breach occurs—notice to affected consumers and the like. Relatively new rules from the FTC regulate how customer files must be destroyed or deleted. Once again, few RTO companies are covered by these rules because the information they are collecting is coming directly from consumers themselves and not from consumer reporting agencies. However, as a practical matter, there are state statutes already in place or pending that will cover any businesses exempt under FACTA, such as rent-to-own companies. The state statutes cover private financial information, however derived. Therefore, rental dealers are going to have to take steps to safeguard the information they collect on their customers or suffer painful, perhaps catastrophic, consequences under these state statutes; the Texas attorney general is using state law to go after the pawn shops.
The statutes vary from state to state, but generally require proper destruction of consumer records and impose notice requirements if the company becomes aware of a breach in consumer information security. So, what should rent-to-own companies do? 1 Think about the information that you are collecting from your customers. How important is a customer’s Social Security number to the success of your business? This is an important question to answer because a Social Security number is a keystone to identity and, therefore, identity theft. This number is carved out for separate treatment in a number of state statutes. See, for example, the Texas Business & Commerce Code, section 501.001: “Confidentiality of Social Security Numbers;” or California Civil Code, section 1789-85-89.
There is a certain amount of information you need from a customer in order to be able to rent and collect successfully. You need the customer’s name, address, telephone number and work information. You need references and his or her contact information. You may not need the customer’s bank account number unless you are setting up a direct-debit account with that customer. Copying a driver’s license number is probably a good idea. If you have not reviewed your rental application/ order form in this century, now is a good time to review it, line by line. 2 Review your current policies and procedures concerning customer information. This will require more than pulling out the manual. You will need to talk to employees and get the truth about what is really happening in the store(s). Who has access to customer files? When can the hard copies of those files leave the store? Who is in charge of checking those files in and out of the system? What are the rules about credit/debit card numbers?
Do your delivery or collection colleagues have their own notebooks with customer information, including credit/ debit card numbers in them? You need a frank assessment of where sensitive customer information is located in the company in order to begin to corral it. 3 Review any applicable state laws concerning how you have to treat customer information. The National Conference of State Legislatures’ Web site is a good place to start.4 Then contact your local chamber of commerce and Better Business Bureau for more information. 4 Develop and implement a written plan to safeguard customer information. There are currently more than 2,000 companies offering identity theft prevention services, document destruction services and consulting services, and they all have written plans for retail companies.
Any good plan will have one person in charge of the program, limit access to customer information to those who need it, have employee management and training provisions, encourage regular audits, demand accountability for adherence to the plan all the way up to the governing board of the company, have sign-offs for employees to acknowledge understanding of and commitment to the plan, have systems for detecting and managing breaches of customer security, have implementation of an information security control framework that is tested and enhanced continuously and have rules for the proper destruction of customer information. There are useful outlines for plans that are available online from the Federal Trade Commission and/or the California Office of Information Security & Privacy Protection.5 5 Review existing customer information eligible for destruction. Shred with a cross hatch shredder, hammer into pieces or erase, as appropriate. 6 Create a plan that will keep pace with the rules in this rapidly developing area of the law.
The federal government and state legislatures have all gotten very serious about the crime of identity theft. They are pursuing identity thieves with a vengeance. They are also making it possible for private citizens, together as a class, to pursue businesses that fail to do everything possible to safeguard private consumer information that falls into the wrong hands. As sure as I am penning this article, sadly, we will all live to read about a rent-to-own company brought low, not because it charged customers too much, used a bad rental agreement or abused collection practices, but because private customer information leaked out of a store and hundreds or thousands of customers got together and used these new identity theft laws to sue the company out of existence. Make sure that lawsuit does not have your company’s name on it.
APRO's 2008 Convention Education:
Your gateway to new ideas
APRO’s 2008 Rent-to-Own Convention and Buying Show, August 11–14 in St. Louis, is all about making connections— connecting with fellow rental dealers and vendors, and also connecting with better ways to do business. For this year’s big event, we’ve lined up a full day of educational sessions that will keep you connected to the latest business practices, technologies and news that you can take back to your stores and put to good use. This year’s seminar schedule has been streamlined, offering a wide variety of topics all in one “Education Day,” Tuesday, August 12. The morning will start with a return of APRO’s very popular All- Industry Roundtable, where rental dealers with companies both large and small will gather to discuss the entire spectrum of rent-to-own issues, including—but not limited to—community involvement, changing perceptions of rent-to-own, employee salaries, learning from business mistakes, new technologies, an overview of APRO’s 2008 Rent-to-Own Industry Statistical Survey and more. All convention attendees are urged to participate in the roundtable, where you’re bound to gather some highly useful information to help your business.
Roundtable participants will be able to give and receive immediate insight into current issues via an interactive keypad-response system, which will display polled results on large screens in real time during the session. APRO’s 2008 Education Day will continue in the afternoon with presentations from rent-to-own industry experts. This year’s seminars have been arranged by topics—“RTO Business Operations,” “Growing Your Business” and “Leadership”—so that you can follow the track that best suits your needs. On the two days following Education Day, we’re introducing “Info- To-Go” sessions, to be held on the exhibit hall stage during the Buying Show. Store display ideas, furniture repair, store security and protection, the latest furniture and electronics trends and more will be featured in these tip-packed sessions. Take a look at the seminar descriptions on the following pages and start planning for your best connections to better business practices at this year’s APRO Rent-to-Own Convention and Buying Show.
All education sessions will be held in America’s Center, which is located directly across the street from APRO’s host hotel, the Renaissance Grand. The All-Industry Roundtable will be held on level 1; all seminars will be held on level 2. APRO’s 2008 Rent-to-Own All-Industry Roundtable Moderated by Tom Krapu 8:30–11:30 a.m., America’s Center’s Ferrara Theater, level 1 The annual rent-to-own roundtable held during the APRO Convention offers attendees an abundance of new ideas to take back to their stores. In the “all-industry” format, all dealers— whether one-store or multistore operators—are encouraged to assemble for this lively information-gathering session. Potential roundtable discussions include, but are not limited to: community involvement, changing perceptions of rent-to-own, employee salaries, learning from business mistakes, new technologies, an overview of APRO’s 2008 Rent-to-Own Industry Statistical Survey and more.
Roundtable participants will be able to give and receive immediate insight into the issues under discussion via an interactive keypadresponse system that will display poll results throughout the duration of the session. Roundtable moderator Tom Krapu is a facilitator for Arbinger, a consulting firm that specializes in helping businesses and individuals reach their full potential in the workplace and in life. Krapu has facilitated APRO’s annual board meeting and delivers team-building seminars to APRO-member companies.
RTO business operations :
Managing Talent:
Hiring and Keeping the Best
Jim Corter, Corter Consulting
1–2:30 p.m. and 2:45–4:15 p.m., Room 230
Are there effective ways to select the right people for the job and keep them? You bet! In this session you will learn methods to assess prospective employees beyond the initial job interview, how to determine what type of person the job position really needs and how to give specific and effective feedback. You’ll also discover the top three employer behaviors that motivate top performers. Jim Corter is president of Corter Consulting, a human resource management firm headquartered in Jonesboro, Arkansas. Since 1995, the company has conducted training, surveys and behavioral profiling for more than 70 organizations across the country. Prior to starting the firm, Corter served as a human resource manager for a Fortune 500 company.
RTO business operations :
2008 Rent-to-Own Legal Update
Ed Winn III, APRO
4:30–6 p.m., Room 230
Rental dealers face an array of challenges every day: competition, human resources, inventory control and the ever-evolving legal environment. This session will bring rental dealers up to date on the latest legal challenges faced by rental dealers, including a review of current state legislative initiatives, the status of lawsuits brought by and against rental companies and the implications of those suits for the industry as a whole. Winn will also address the latest legal developments concerning gas card scams, bed bugs, products liability, warning labels, military reimbursement programs, identity theft, convenience fees, shut-off devices, the tort of improvident extensions of credit vis-à-vis rent-to-own, plus other issues that dealers want to discuss. Ed Winn III is a partner in the Martinec, Winn, Vickers and McElroy law firm based in Austin, Texas. He has served as APRO’s general counsel since its formation in 1980.
RTO business operations :
Safety is No Accident: Ideas You Can Use in Your Business
Ralph Hood, Speak Inc.
1–2:30 p.m., Room 231
It is generally accepted that safety on the job is dependent on the safety standards set by the company—but they need to be the right standards. At this session, you will learn how to develop good safety standards and evaluate your current ones. Ralph Hood’s proficiency for setting safety standards comes from having spent 39 years as a pilot and aviation writer. He has taught his safety standards program to ISASI— an organization comprised of airline accident investigators—as well as other organizations coast to coast.
RTO business operations :
Setting Customer Standards: Techniques that Work!
Ralph Hood, Speak Inc.
2:45–4:15 p.m., Room 231
Customer service is the name of the game in today’s world of rising costs and competition. Learn the two most important concepts of customer service and put them to work immediately.
Ralph Hood has been teaching customer service for more than three decades. The customer training video he wrote and narrated for the world’s largest aviation association is considered a classic. He has written about customer service in many business publications and is the author of the books The Truth and Other Lies and Southern Raised in the Fifties.
RTO business operations :
Where’s the Money? Financing Tips for Your Rent-to-Own Business
A Bankers Panel: Reed Allton, David Belt and Greg Heggemeier
4:30–6 p.m., Room 231
Bankers and rental dealers measure the success of rent-to-own operations differently—bankers like strong profits and healthy balance sheets while rental dealers like strong revenue growth and low income taxes. This makes it difficult for the small dealer to strike a balance and achieve all the goals required. In this session, conducted by a group of finance experts who’ve worked specifically with the rent-to-own industry, you’ll learn how to obtain financing for your company and what information you should have in hand before approaching a banker. These experts might not be able to “show you the money,” but at least they’ll guide you in how best to find the money you’ll need to grow. Allton has been a banker for 24 years and has financed rental dealers since 1992. He has worked for Texas Capital Bank in Dallas, Texas, since it was founded in 1999. Belt has been the chief financial officer for Whiteco Commercial Finance since 1998. Prior to working for Whiteco, Belt was vice president and chief financial officer for Action Rent-to-Own. Heggemeier has worked in banking since 1993 and is currently a vice president for the Milwaukee-based Southwest Bank Commercial Group.
Growing your business :
Growing Your RTO Business— One Customer at a Time
Dave Edwards and Brian Brereton, SEI/Aaron’s
1–2:30 p.m., Room 240
Growing your rent-to-own business begins by hiring the right people with the right attitude. This session will offer a three-part plan to enhance every rent-to-own operation. Unrealistic expectations and other factors that keep rental dealers from reaching their full potential will be discussed. Discover specific activities that will add new customers and agreements to your business and, as a result, increase revenue and profit. In short, you’ll cultivate a wealth of tips to grow the business. Dave Edwards is president and COO of SEI/Aaron’s. He has more than 18 years of experience in the rent-to-own industry and was instrumental in reorganizing the New York State Rental Dealers Association in 2007. Brian Brereton is SEI/Aaron’s recruiter and dean of management development.
Growing your business :
Imagineering: Thinking Outside the Traditional RTO Box
Lawrence Helms, Trainergy
2:45–4:15 p.m. and 4:30–6 p.m., Room 240
Your success is not a matter of luck or happenstance; it’s predicated on new ways of doing business in a faltering economy. Those who blindly rely on yesterday’s practices are handicapping themselves when they compete with those who are ready, willing and able to abandon less-productive practices and create new “mental boxes” appropriate for a changing business environment. “Imagineering”—using the imagination to climb out of old, non-productive mental boxes—combines the best use of right-brain creativity with leftbrain practicality. In this fast-paced, humorous presentation, Lawrence Helms, PhD, will examine why some cling to old, comfortable ways of doing business while productivity and sales slide. He’ll address the psychology of change and unveil the WADIT (“We’ve Always Done It That” way) Principle. Helms will help uncover the most common mental blocks that prevent rent-to-own dealers from exploring new business practices and how instead you can adapt the strategies that will help your business grow. Helms is one of APRO’s most popular seminar speakers. He brings a unique combination of academic training and practical experience to his presentations.
Leadership :
Real Communication Skills for Leaders
Lawrence Helms, Trainergy
1–2:30 p.m., Room 241
Communication is much more than simply talking and listening. Effective leaders know that the way they communicate affects morale and can either motivate or demotivate employees. They also know that an effective communication style can be the first step in long-term staff and customer retention.
“Info-To-Go” sessions
At this year’s buying show, you can stock up on inventory while also stocking up on great ideas to take back to your stores. Don’t miss the new “Info-To-Go” educational sessions that will be presented on the new APRO exhibit hall stage in America’s Center during both days of the buying show. These sessions are included with your exhibit hall admittance.
Trends in Electronics
Toby Groves, LG Electronics
1:30–2 p.m., Wednesday, August 13
This presentation will compare and contrast LCD and plasma television technologies. It will also reveal often-overlooked add-on sales opportunities to compliment flat-panel television sales. Learn the latest trends affecting display technologies, including a look at how much thinner flat-panels will become and what customers really want in a flat-panel purchase or rental. Toby Groves is the director of national retail training for LG Electronics. He has worked in the consumer electronics business for more than 25 years, with experience in both retail sales and manufacturing.
The Eye Test: Visual Merchandising for Your RTO Store
Gary Jones, Ashley Furniture
3:30–4 p.m., Wednesday, August 13
Do you have 20/20 vision when it comes to setting up your rent-to-own store so that it looks appealing to your customers? Or do you need glasses? Learn how the appearance of your showroom affects your rental revenue and how you can easily transform your store into one that looks inviting and attracts customers. With a visually appealing store, you can increase your rental revenues without having to increase your square footage. With more than 12 years of experience in the rent-to-own industry, Gary Jones is vice president of rental at Ashley Furniture. Prior to working for Ashley, he was director of merchandising for an 86-store rent-to-own chain.
Protect Your Store and Maximize Your Profits
Alan Bacon, Stealth Security Services
10–10:30 a.m., Thursday, August 14
Meet the victim of an in-store armed robbery and hear his story. Alan Bacon will share tips on how you can avoid a similar occurrence. Find out which safety issues should be top priority, what your store vulnerabilities are and how to use security as a management tool that saves you money. Bacon is the vice president and head of deterrent operations at Stealth Security Services, a leading provider of security equipment to rent-to-own businesses. With more than 10 years in the security industry, Bacon has amassed quite an education in criminal activity and knows how to help rental dealers become more profitable while staying safe.
Furniture Repair Made Easy
Sue Harman and Doug Sabin, Guardsman Products
1:30–2 p.m., Thursday, August 14
One way to ease the effects of an economic downturn is to make your rent-to-own furniture last longer through proper care and maintenance. This session will address several methods and products to consider—before, during and after each rental cycle— that can extend the life of your furniture. Sue Harman is a technical sales representative and trainer for Guardsman Products. She has more than 20 years of experience in the furniture and coatings industries. Doug Sabin has been a research-and-development chemist for Guardsman for the past 13 years. Both Harman and Sabin have spent the past eight years training professionals in the process of cleaning and repairing upholstered furniture. This session will explore the psychology of communication, miscommunication, subliminal communication, confusing communication and more. Attendees will learn how to identify and avoid the four deadly sins of the tongue. Lawrence Helms is no dry, academic “talking head,” but is instead an “edu-tainer” possessing a talent for blending humor and entertainment with his thought-provoking message.
Leadership : Leadership and Self-Deception: Powerful Collaborative Teaming
Tom Krapu
2:45–4:15 p.m. and 4:30–6 p.m., Room 241
Using principles outlined in the book Leadership and Self-Deception, this session will explore the power of relationships in developing and maintaining a highly collaborative team. Upon learning a powerful organizational model of efficiency that inspires good teamwork, participants will leave with some helpful tools for developing better relationships in their rent-to-own businesses. Tom Krapu is a facilitator for Arbinger, a consulting firm that specializes in helping businesses and individuals overcome the hurdles of self-deception. He serves on the company’s “Results Coaching” team, which helps participants reach their full potential in the workplace and in life. Krapu has facilitated APRO’s annual board meeting and delivers team-building seminars to APROmember companies.
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