You can keep your mid-life crisis – rent-to-own is still growing strong four decades in, in part because APRO still has this industry’s back.
It began with TVs – mostly 19-inch portables, some 25-inch consoles. No remotes, not yet. Then VCRs came along, and bam! Rent-to-own – which wasn’t even officially called that yet – had found its first dream product. About 40 pounds and $500 each, VCRs were the perfect rental item; they were complicated enough to require delivery and installation, but compact enough to fit into a customer’s car trunk in a bind. The machines went out, they came back, they went out, came back … the cycle continued, and America’s rental-dealer pioneers cashed in.
That, children, is how the illustrious business called RTO began more than four decades ago. It’s also where the idea of a real trade association for said business took root, as rent-to-own started to look like an enterprise with a future – at least to a few visionaries who had stumbled into it, people like Tom Devlin [Rent-A-Center founder], Bud Holladay [ABC Rentals], and Chuck Sims [Remco founder].
And then came Ed Winn III. Winn’s entrée into rent-to-own began almost exactly 40 years ago – October 1980 – with a simple talk about government regulations to a small group of rental dealers, who then decided it was time to launch their trade association and hired Winn on the spot. He spent the next five years doing everything from drafting the association’s bylaws, to acting as its de facto executive director, to fighting the first few of many nasty legal and political battles in states up and down the eastern seaboard.
And that is how the Association of Progressive Rental Organizations – APRO – and its General Counsel Ed Winn became intimately entangled for the next two score. Winn has claimed he probably wouldn’t have made it as an attorney without RTO; it’s all but definite rent-to-own wouldn’t have made it as an industry without Winn. To-day, Winn is just about the last man standing, having been there at the very beginning of this industry and still actively serving it today. So it seems only just and right that he guide us, as he ever has, through a review of APRO’s wobbly early years, difficult yet defining moments, and current COVID-19-steeped status, as well as his insightful thoughts about the future of this industry.
All businesses have their fair share of disreputable merchants in them. Today, RTO has its fair share, but only its fair share.
Let me be candid, and confess upfront that much of the information in this article is being gleaned from prior big-anniversary-for-APRO articles penned by Ed Winn, and some of the language is bound to be verbatim snatched from Winn, because there is some phraseology that simply can’t be put any better than he has put it. I’m sure he won’t mind, as he’s just happy and grateful not to be writing another big-anniversary-for-APRO article. So, with that caveat, let’s move on …
… or backward, as the case may be, to the 1970s, the wild-west days of rent-to-own. Not all the rental dealer pioneers were visionaries; in fact, they were mostly a fast and loose bunch back then, running their companies the same way. Many were getting into the business to make a quick killing and get out. RTO was high-risk, high-reward, and there were no laws yet, so dealers acted accordingly.
“The worst collection stories you hear come from those early years,” Winn recalls. “But there were some who wanted the business they were building to be a legal, legitimate, maybe even laudable enterprise, deserving of a secure place in the American economy. Bud Holladay was the first person to ever convene a meeting of rental dealers, in a Dallas motel in July 1980. It was a group of about 40, and they estimated there were maybe 400 stores total nationwide. Chuck Sims was really my mentor. Chuck was a big thinker, and he had a vision, he knew rent-to-own could be something special. He was an extremely thoughtful guy, and I learned just about everything I know about RTO from him.”
So four months later, rental dealers got together again, decided to design their own trade association, and hired Winn to help it happen. Their initial purpose in creating an association was to forge a safe legal environment around what they did every day and what they wanted to do for long time to come: rent and collect. They weren’t really interested in sharing business methods or “trade secrets” with their competitors, nor were they intent upon bettering the industry.
“There wasn’t much competition yet, and they wanted to keep it that way,” notes Winn. “The association’s first bylaws actually required membership applicants to have been in business for at least 90 days and have at least 150 BOR [balance on rent] before they could become regular APRO members.”
The biggest issue – and the common ground on which the association was established – was the definition of its members’ transactions: Lease or sale? On this issue, they all agreed they wanted to be defined and regulated as a lease transaction. But they didn’t agree on much else.
The first and most obvious conflict was Big Guys vs. Little Guys, a struggle that continues even now. Fierce in-fighting followed between the “let the sunshine in” progressive dealers and the conservative “under the rock” rental dealers. Eventually, all acquiesced to the truth that you just can’t conceal a great idea.
“Chuck Sims and Bud Holladay agreed that if folks were going to rent TVs anyway, then they needed to know how to do it properly,” Winn remembers, “especially in a fledgling industry, where the bad actions of a single company could cause serious repercussions for everyone. They put together many early-era training seminars, and the industry became more ethical and more expansive because of it.”
Disclosure was a recurring hot button for the first wave of rental dealers. While some wanted to disclose the total rent-to-own price of products to customers, many stopped just short – revealing the weekly rate and number of weeks to ownership, but not doing the math for the customer. Likewise, some rental dealers wanted to disclose whether an item had been used, while others didn’t, fearing no one would accept used goods.
Another difference of perspective came up around customer approach. While some dealers clearly had genuine appreciation and even affection for their clientele, others had blatant disrespect for theirs. While some considered their clients simply down on their luck, and worthy of the same respect and attention as customers in any sort of store, others thought of their customers as “those people,” and the dealers’ only interest in them was how to profit off of them.
“All businesses have their fair share of disreputable merchants in them,” concedes Winn. “Today, RTO has its fair share, but only its fair share. Wisdom and openness and enlightenment prevailed in these and other debates as our fledgling industry struggled to find its way.”
Meanwhile, back at the uncertain legal underpinnings of the industry … Almost as soon as the association was official, APRO representatives went directly to Washington, D.C., to seek a satisfactory resolution to their top-priority lease-versus-sales issue. They met with the Federal Trade Commission and the Federal Reserve Board, and by 1983, a federal bill regulating rent-to-own transactions – with just six disclosures and definition as a lease under federal law – passed the U.S. Senate with a vote of 94-0. And then it died a silent death in the U.S. House.
Without the relatively quick fix hoped for from Capitol Hill, APRO turned to the states to pass favorable RTO measures. The state program has been a slow burn – it continues even now – but overall, hugely successful. Today, rental dealers in 47 U.S. states enjoy the type of safe legal environment that allows them and their bankers to sleep peacefully at night.
While the state program was unfurling, APRO pursued a federal bill a few more times – most recently around 2005 – but found it much more effective and economical to stick to the states.
“Washington, D.C., is a very expensive game to play,” Winn attests. “Today, it would take $10 to $20 million to get a federal law passed. And not every industry is regulated by the feds; and so it is with rent-to-own.”
“APRO,” says Winn, “has always been stronger and achieved more when it has united its membership around a common enemy – and for better or worse, rent-to-own has never needed to create one.” The most intense of these clashes have provided some of the association’s most defining moments:
APRO is a much tighter ship than it ever has been, and it’s making for smoother sailing for everyone.
With the great lease-versus-sale wars pretty well settled for the past decade-plus, relative newcomers to the RTO industry might think the association’s main role nowadays is as a sort of insurance – with minimum maintenance, it’s there should you need it. But challenges to the industry continue, and today, APRO is helping its members navigate a shapeshifting rent-to-own terrain, thanks to the influx of online shopping everything.
“The explosion of virtual RTO – ecommerce dealers and retail kiosks – has dramatically changed the business landscape,” confirms Winn. “And it isn’t done yet. It remains my prediction that very soon, all retail furniture, appliance, and electronics stores will have a rent-to-own option, which will present a real challenge to the industry’s traditional brick-and-mortar storefronts. The upside, I suppose, is that this will definitely expose many more people to the RTO transaction, who might otherwise never have thought about or even heard of rent-to-own.”
“The direct issue for the association is figuring out how to make belonging to APRO a value-added proposition for the new, virtual rent-to-own companies,” he continues. “They have no memory or understanding of the legal issues we’ve faced and fixed. They didn’t fight the wars, they’ve never been sued – yet. They’re just out there making money, and they believe there’s no risk. But there is, still.”
A significant “changing of the guard” at APRO has also happened since the association’s latest big anniversary: Jill McClure took over as Executive Director in 2017, following Bill Keese’s 28-year leadership run.
“Keese had been here almost as long as I had, and when he left, some folks left with him,” Winn says. “Jill has built her own small-but-mighty staff and is a true association professional – it’s clear in the way she manages the organization. Keese was a politician who learned on the job; Jill came with a skillset and a philosophy about how a trade association should function and how it should be run. So APRO is a much tighter ship than it ever has been, and it’s making for smoother sailing for everyone.”
APRO members have shared both common goals and common nemeses, and have come together as few other industries, ever.
That’s a good thing, considering how 2020 has come at us. The COVID-19 crisis blindsided rental dealers the same way it did the rest of the business world, but a clear issue quickly emerged, requiring clear-cut clarification: Do rent-toown companies qualify as “essential businesses?” APRO went to work.
“Regulations regarding shutdowns were coming out all over the map,” recalls Winn. “There were federal recommendations, state recommendations, recommendations from county health departments and city leaders. They were coming fast and furious, and looking at the language, we concluded RTO must be essential.”
So APRO responded to every single regulatory effort it came across, issuing dozens of alerts and helping individual dealers establish exactly why rent-to-own companies should be considered and treated as essential.
“We got shut down in a few locations for a day or two,” Winn concedes. “But nowhere to my knowledge did a city, state, or health department say, ‘No, RTO is not essential.’” [For the full story, see “Why We’re Here: APRO’s Pandemic Response,” page 36.]
Ed Winn would want to make sure we make this point: APRO and the rent-to-own industry are not completely synonymous, as not all rental dealers are association members [though he believes all the best ones are]. But he’s also resolute in his conviction that APRO’s diligence in driving its membership to do the right thing – e.g., unite, share openly, help each other, practice the Golden Rule with colleagues and customers alike – has produced a much more successful industry than could have developed otherwise.
Herding cats may be easier, but herding rental dealers is what we do.
“I think the rent-to-own industry is bigger, better, and more ethical than it would have been had APRO not helped lead the way toward making this an authentically respectable business – which it did not begin as,” concludes Winn. “APRO members have shared both common goals and common nemeses, and have come together as few other industries, ever do. This is a vital and progressive organization that began with the industry’s best interests at heart, and it continues today with those very same interests in the very same place.”
And what wisdom does rent-to-own’s favorite soothsayer have to impart about the future prospects of the business we call RTO?
“Well, we’re thriving during a global pandemic,” Winn quips. “So yep, business is good, and I see no reason for that to change.”
Kristen Card has been a contributing writer for RTOHQ: The Magazine for more than 15 years.
1983
U.S. Senator Paula Hawkins [R-FL], the only woman ever elected from Florida to the U.S. Senate, proposed the Consumer Lease and Rental Purchase Agreement Act. It was passed by the Senate but, opposed by APRO and its member companies, the bill was defeated in the House.
1993
Spurred by consumer groups, U.S. Representative Henry González [D-TX] and U.S. Senator Howard Metzenbaum [D-OH] championed federal measures to redefine and regulate RTO transactions as credit sales, and to cap the value of terminability at five percent of cash price. APRO rallied its members and avoided devastation of the industry by telling the story of what rent-to-own is really about, rather than letting the consumer groups negatively label it.
1997
The Internal Revenue Service [IRS] redefined taxable income for the industry, saying any customer payment must be reported and taxed as the full-term projected income on that product. APRO showed the IRS how its decision had been based on faulty data and presented them with accurate data. The IRS code change defining RTO transactions as leases and codifying a reasonable way for rental dealers to depreciate their inventory for tax purposes won the day.
2010
The Dodd-Frank Wall Street Reform and Consumer Protection Act overhauled financial regulation in the wake of the Great Recession, including new consumer protections against abusive financial services practices. Thanks to APRO and its members’ continuing relationships with their elected officials, rent-to-own was blessedly excluded from the legislation.
APRO Did You Know?
Early APRO leaders included “Progressive” in the association name to reflect their belief that this new industry should continuously work to be better and treat its customers better, while also forging a lasting legal and political identity.
An initial catchphrase for association members was “Rent from A-PRO.” Get it?
In recent years, APRO has thwarted an attempt to ban rent-to-own transactions from military bases and military personnel.
