“Those who cannot remember the past are doomed to repeat it,” George Santayana. This statement is no less true for rental dealers than it is for soldiers and statesmen. Rent-To-Own has not been around all that long in the scheme of things—maybe a half century or a little more, and its beginnings were decidedly rocky. Dealers who lived through those times cannot help but remember what it was like to wake up every day wondering if the morning paper would have the latest RTO scandal above the fold or if the mail would bring yet another lawsuit filed by legal aid. Some of those newer to the business are woefully, and, one hopes, not willfully ignorant of the industry’s past.
It is largely thanks to the freedom allowed in the U.S. economy that RTO was allowed to sprout initially and ultimately flourish as it has in a world of its own, distinct from the world of credit, and for the most part, subject to manageable government regulation.
That past, without delving into the details, which by the way are archived by APRO, involved a lot of lawsuits and legislative activity at all levels, some of which results were favorable; some not. RTO as a stand-alone transaction, separate and apart from credit of any kind does not exist everywhere. RTO may have won the war but lost some important battles along the way. RTO is credit by court decisions in Minnesota, New Jersey, and Wisconsin. And not incidentally, dealers might note that the industry has paid out over $500 million over the years in legal settlements and to pay judgments in lawsuits it has had to defend.
What if history had gone the other way? It did go the other way in Great Britain and several countries once part of the British Commonwealth. That should serve as a reminder that dealers have no divine right to rent TVs. It is largely thanks to the freedom allowed in the U.S. economy that RTO was allowed to sprout initially and ultimately flourish as it has in a world of its own, distinct from the world of credit, and for the most part, subject to manageable government regulation.
One reads that too many Americans have grown skeptical of capitalism and are embracing socialist ideals. Like it or not, that issue is front and center in the current political climate. If that notion ever predominates in this country and takes power, RTO will not likely be an immediate casualty, but it will almost certainly eventually be curtailed.
From its inception, RTO has sought to distinguish itself from the credit world for any number of reasons involving the front end and the back end of the transaction and dealers’ relationships with their customers. RTO, after all, imposes no obligation on the customer ever to keep paying. RTO customers do not go into debt. RTO advertising and marketing trumpet the lack of obligation and the flexibility that the transaction offers. That is all well and good until dealers begin blurring the lines between RTO and credit. Some do it in the very names of their companies. Some do it in their advertising. Some do it with the kinds of products they pretend to rent. Some, for all we know, are doing it in their transactions with customers.
That is not how it used to be. While there is nothing wrong with combining retail and credit and RTO under the same roof or on the same website, which is occurring everywhere at light speed, it is wrong if customers are being confused about what they are getting into.
After all, RTO started in retail stores. Early customers doubtless were confused, some of them, as the industry groped its way toward making meaningful and easy-to-understand disclosures about the nature of the transaction.
RTO has enjoyed 20-plus years of relative legal and political tranquility. It has not always been so. There are volumes of press clippings from the “old days” whose articles excoriate the RTO industry, generally, certain RTO companies by name and their business practices. We never want to go back to those days again. The only way to ensure that does not happen is that some of us “Never Forget.”
Ed Winn III serves as APRO General Counsel. For legal advice, members in good standing can email legal@rtohq.org.
