Legislative & regulatory experts tell APRO members to watch out – decision makers have their eyes on rent-to-own.
It’s so very important that we tell friend and foe alike the rent-to-own story,” APRO General Counsel Ed Winn III told more than 100 attendees at this spring’s Virtual Legislative Conference. “As you are aware, today the narrative is everything. They’re all telling a story. So RTO has a story to be told. There are two sides to that story; legal aid lawyers are telling their side of that story, and we need to be telling our side of the story. That’s why we go to D.C.”
Except, like last year, APRO members did not go to the nation’s capital for their annual meet-and-greet with their Congressional representatives. But unlike last year, APRO’s annual Legislative Conference did go on, albeit online.
The single-day event opened and closed with state-specific group meetings – a State Association Presidents’ Meetup began the day, while State Associations & Advocates Breakouts ended the event. In-between, legislative and regulatory experts provided attendees with tons of important information about the country’s changing political landscape and invaluable insights regarding how to navigate it. Overall, the message was clear: RTO is under increasing scrutiny, and while no emergency exists yet, rental dealers need to be paying attention in order to avoid one.
FROM FLSA TO LGBTQ+
The afternoon Legislative Conference sessions kicked off with a bang, with Legislative and Legal Updates from Winn and from Brian Farrington, Shareholder at Cowles & Thompson. Farrington, an employment law expert, covered a broad spectrum of employment topics of interest for rent-to-own businesses, beginning with wage-and-hour issues.
Farrington highlighted a significant Fair Labor Standards Act matter: recording hours worked by non-salaried employees. Since the pandemic began, many hourly employees have been working from home, which can make it more difficult to determine how many hours they’ve worked. But employers are still required to keep accurate records of the hours and times their people work.
“It was very interesting listening to national and state lobbyists provide their outlook on the current political landscape and potential pitfalls for our industry.”
Paul Metivier, Vice President, Impact RTO Holdings, dba Rent-A-Center
“You have to have a mechanism in place to record hours of work,” asserted Farrington. “Employees who are working from home and are signed in on their computers might decide on their own hook to put in extra time. This is extremely problematic. If that extra time is not recorded, then the employees can circle back months later, file a complaint or a lawsuit, and you’ve got a problem with a Department of Labor [DOL] investigation, or you get served with a lawsuit for back wages for hours worked but not paid.”
Farrington said employers should have policies in place detailing whether and when employees working from home can work beyond their schedules. If workers violate these policies, they will still have to be paid for any overtime worked, but can be subject to disciplinary action for going against workplace policy.
Farrington briefly noted that the Occupational Safety and Health Administration, which has been relatively dormant during the COVID-19 crisis, is likely to become much more active under the new presidential administration. Likewise, the DOL rules defining independent contractors vs. employees, and joint employment as it concerns franchisors and franchisees, are expected to swing back toward counting more workers as employees rather than independent contractors – making it easier to hold franchisors responsible for franchisee violations of employment laws.
Finally, Farrington reminded participants that same-sex marriage is now the law for all purposes, including insurance benefits. Employers must not discriminate against employees because of their sexual orientation or transgender status.
“Modify your Equal Employment Opportunity policies,” Farrington recommended. “And ensure all of your employees – especially management – know they need to be just as careful about not discriminating on sexual status as they are about not discriminating on race, age, or gender.”
AN UPTICK IN ATTENTION
Winn began his session with a reminder to APRO members about why staying involved in the political world is essential to the wellbeing of their businesses, then gave a typically entertaining and educational presentation on the state of federal policy, current and recent investigations, and legislation and regulations at the state level.
While Winn forecast that federal legislation against rent-to-own seems unlikely, with everything else Congress is dealing with, he nevertheless noted an “undeniable” uptick in attention to the RTO industry.
“For example, the Federal Trade Commission [FTC] last spring got a consent decree from some of the larger RTO companies not to do market allocations,” attested Winn. “These three had done some store swaps, which folks have been doing for as long as we’ve been an industry. Now, the FTC says you can’t do that anymore, they think it’s a violation of antitrust law to allocate markets, it allows monopoly power, and gives too much control over pricing.
“Last summer, the FTC levied a fine against a virtual RTO company for $175 million – the largest fine ever assessed against a rent-to-own business,” he continued. “So the FTC has expressed an interest in the RTO industry, they got a big settlement, and they might go for more.”
Federal pandemic-relief money approved by Congress this spring, said Winn, is being divvied out in chunks to the states, so they can offer grants to small businesses to help offset their losses during the COVID-19 crisis. While most of the businesses needing and getting the grants are restaurants, a list exists of industries that don’t qualify for these grants, period.
“In California and Washington state, RTO is included on that list, so it can’t qualify for that money,” Winn explained. “And they’re calling us bad names. Those two departments of commerce put us in a category of ‘socially undesirable activity or activity that may be considered predatory, like rent-to-own and payday.’”
Winn covered state bills, amendments, and attorney general investigations, including a couple of cases he referred to as “further evidence of the uptick in attention to the RTO industry.”
“Some states are homing in on the sorts of products that may be rented,” asserted Winn. “The basic rule is, if the customer can’t give it back in more or less the condition they got it in, then it’s not a product you can rent. So in Arizona, they’re cracking down on rentto- own wheel alignments, while in Georgia, they’re tightening up on RTO dental implants.”
THREAT IS REAL, BUT MANAGEABLE
During Challenges in a New Administration, Shareholders at Greenberg Traurig LLP Robbie Kamerschen and Demetrius McDaniel provided an overview on the state of play in Washington, D.C., beginning with the FTC and its changing leadership, membership, and 3-2 makeup – now with a majority of Democratic commissioners.
“Luckily, we don’t see subprime or rent-to-own at the top of their priority list,” Kamerschen noted. “There really is a macro-battle happening that, at times, bridges the gap between the two political parties, and that is big tech. Decision makers feel like big tech has gotten too big, has too much power, and something needs to be done about it because they’re abusing that power. So the FTC’s top priorities are to regulate big tech and review big tech’s impact on journalism.”
Another concern is the Consumer Financial Protection Bureau, which is also getting new leadership under the Biden administration, and is expected to undo many prior policies and decisions. While the agency doesn’t have direct jurisdiction over the RTO industry, it does have some say-so over collections practices – so rent-to-own must stay alert.
“The legal environment has the potential to severely impact our industry; we must remain vigilant.”
James MacAlpine, Senior Vice President, Benefit Marketing Solutions
“We might get someone coming after us, saying ‘I don’t have RTO jurisdiction directly, but I need you to prove to me you’re not a disguised credit sale,’” warns Kamerschen. “True-believing federal regulators, particularly if they don’t like an industry, can be very creative and very aggressive. I think we need to be buttoned-up and ready for it, if or when that day happens.”
The presenting pair covered important issues to rental dealers – like minimum wage, corporate and personal tax rates, arbitration agreements, collection practices regulation, and trade policy and tariffs, then turned to issues important to rent-to-own customers – such as supplemental federal unemployment insurance [extended until 9.6.2021], the end of the pandemic-induced eviction moratorium [expired 5.1.21], and infrastructure spending through the American Jobs Plan and the American Tax Plan, which will fund it.
“Biden’s tax agenda includes plans to increase taxes on businesses, wealthy individuals, and investors,” McDaniel explained. “The business tax hikes are intended to go to help pay for infrastructure improvements and clean energy, while the other raises will help pay for social priorities, like childcare and pre-kindergarten.”
After fielding a few questions from attendees, Kamerschen and McDaniel wrapped up their presentation with a solid bottom line:
“Protect the rent-to-own transaction,” stated Kamerschen. “We’re smart enough to figure out everything else that might come up. The threat under the new administration is real, but it’s manageable.”
“We can’t run rent-to-own by our whims. There are larger legal issues that affect all RTO businesses, and we must remain up-to-date to support the fight for RTO rights.”
Dan Singh, CEO, Dial Rent To Own
RED, BLUE, & PURPLE PERSPECTIVE
In the final presentation of the day, Legislative Conference attendees enjoyed a compare-and-contrast State Issues Lobbyist Panel, featuring P.J. Cimini, Founder and Principal at Capitol Strategies Group LLC in Connecticut [a “blue” state], Mike Houlihan, Founder of Drexwood Partners LLC in Illinois [a “purple” state], and Corinne Mixon, Senior Director of Government Relations at Rutledge Ecenia, PA in Florida [a “red” state].
The panel began by discussing new and different ways they’ve had to find to connect with state lawmakers during the COVID-19 crisis. While all agreed Zoom interactions have required some getting used to, they’ve also offered some benefits that might have staying power beyond the pandemic.
“It’s a way you can engage in political participation speedily and easily,” Cimini attested. “So you can work with your team statewide in a timely fashion whenever an issue comes up quickly.”
Answering an attendee question about the best way to secure an appointment with a legislator, the lobbyists suggested calling the members’ office and asking a legislative aide.
“Say, ‘I want to establish myself as a resource for you in this community and this state; what’s the best way to set up a meeting with you?’” recommended Mixon. “Straightforwardness almost always works.”
Cimini added that if the meeting occurs via Zoom, limit participants to ten people, and for the greatest impact, they should be caring, passionate, well-spoken advocates who ideally work on the frontlines of rent-to-own.
Houlihan spoke about Illinois measures targeting the subprime industry, including payday loan and auto title businesses, but excluding RTO … for now.
“Everyone should be concerned about getting the word out that rent-toown is not subprime,” he asserted. “We provide service for our merchandise, and so many options and such flexibility that it has become something of value and deserving of a little additional cost.”
Cimini emphasized the value in building advocacy relationships with customers and the folks who represent them at the state capital.
“Underserved, minority communities are our RTO customers,” he said. “We’re there for them, we’ve been there for them, especially during the COVID-19 crisis. So we reach out to legislators in these communities; we’re visible, we’re active, and we work closely with our Black and Puerto Rican caucuses. This is an extremely important point in our history; we’ve played a key role in supporting these groups historically, and we want to continue to do so.”
The lobbyist panel concluded by reiterating the message communicated in various ways by all the 2021 Virtual Legislative Conference presenters: Stay aggressively engaged with legislative and regulatory matters, but don’t be too visible – keep a low profile and remain on high alert.
“It is so very important to be involved, even when there’s no imminent danger to our industry.”
Bill French, Vice President, O’Rourke Sales Company
APRO would like to once again express our thanks to our 2021 Virtual Legislative Conference sponsors:
TRIB Group
Nationwide RentDirect
Benefit Marketing Solutions
Ashley Furniture Industries
Nationwide Southwest
PTS Direct Benefits
Whitsell and Company, PC
Rivero, Gordier & Company PA
Slumba LLC
Audit Advantage
O’Rourke Sales Company
THANK YOU, SPONSORS!
TRIB Group
For nearly four decades, TRIB Group (The Rental Industry Buying Group) has been the largest member-owned and run non-profit buying cooperative specifically for the rent-to-own industry. Our nationwide membership is proudly comprised of single store owners to multi-location franchises.
We continuously strive to provide our members with superior benefits and services and, with our collective 3,600+ store locations, our mass buying power offers lower prices on millions of products & services… supporting virtually EVERY purchase for our members rent-to-own operations.
Dennis Shields | (770) 451-4302 | dennis@tribgroup.com | www.tribgroup.com
Nationwide RentDirect
RentDirect gives members access to billions of dollars in buying power with top consumer brands. Plus, exclusive private-label products and group rebates to boost the bottom line.
As a partner with North America’s most successful network of rent-to-own and retail independent dealers, you can instantly expand your peer support network, as well as your purchasing clout with major vendor partners.
Plus, gain affordable access to industry-leading digital and website solutions as well as many other programs and services.
Keven Dalke | (972) 689-7591 | keven.dalke@nationwidegroup.org | www.nationwidegroup.org/nationwide-rentdirect
Benefit Marketing Solutions
BMS better for your customers, better for you!
BMS offers robust membership benefit programs that safely increase revenue and customer retention while providing peace of mind and everyday savings for your customer. With more than 30 years of expertise, BMS is the trusted club provider to 90% of the rent-to-own industry. Our Exclusive membership benefits add real value to RTO club programs in the areas of product protection, health and wellness discounts, and everyday savings.
Susan Matthews | (888) 322-6705 | Susan.Matthews@benefitmarketingsolutions.com | www.benefitmarketingsolutions.com
Ashley Furniture Industries
Who we are. Where we are going.
As the world’s largest manufacturer of furniture with 30,000+ worldwide employees, we strive to exceed the expectations of our retail partners and consumers in more than 155 countries across the globe.
Ashley’s vision is, “We want to be the best furniture company.” And since 1945, we strive for nothing less than earning the loyalty and trust of our employees and customers every day. The best is yet to come even more in our next 75 years of business.
Gary Jones | (469) 265-6108 | gjones@ashleyfurniture.com | www.ashleyfurnitureindustriesllc.com
Nationwide Southwest
Nationwide Southwest is America’s leading marketing, buying, and operational support organization for Rentto- Own Dealers and others in industries like major appliances, consumer electronics, furniture, bedding, home theater, and the outdoors. For over 40 years with our Internal Support Team, we get involved in executing deals between vendors, distributors, and our members every day of the year. With our dedicated team of business advisors and digital marketing specialists, we will work hand-in-hand to help you learn about all things Nationwide Southwest.
Dennis Willich | (972) 650-0770 | denniswillich@nationwidesw.com | www.nationwidegroup.org/nationwide-southwest
