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Legal Article

Protecting the Transaction Legal Summit

Rental dealers interested in the current legal environment around their businesses arrived at RTO World a day early to attend the three-hour Protecting the Transaction Legal Summit. RTO companies are interested in the latest legal developments to ensure they are in compliance and protecting their customers. Recent bills introduced in the New York Legislature to revamp the state’s laws to recharacterize rentto- own transactions as credit sales have piqued interest.”

At the summit, panelists from the D.C-based law firm Hudson Cook LLP, Justin Hosie and Dailey Wilson, presented 11 recommendations for how dealers can minimize challenges to rent-to-own transactions:

  1. Application Process: Require customers, not storefront representatives, to complete all consumer applications and agreements.
  2. Pre-Agreement Charges: Do not charge the consumer any amount unless and until they have entered an agreement.
  3. Transparency & Accuracy: Be sure advertisements and payment terms are accurate and transparent.
  4. Transaction Nature: Disclose the short initial term and the maximum time to ownership.
  5. Total Cost: Disclose the total cost of the RTO/LTO transaction for the maximum time to ownership.
  6. Ancillary Charges: Ensure ancillary charges (loss damage waiver, extended warranty, delivery, etc.) are optional, cancellable if applicable, and not included in rental cost.
  7. Termination Rights: Disclose that the transaction is “no-obligation” and the process for the customer to perform a no-cost return.
  8. Personal Property: Rent-to-own only personal property allowed by law.
  9. Fair Credit Reporting Act (FCRA): Fully comply with the FCRA if you obtain third-party information or report RTO payments.
  10. Auto-Pay Options: For payment authorizations, always disclose clear terms, provide at least one option not from the consumer’s bank account, obtain the consumer’s express informed consent, and clearly disclose cancellation terms.
  11. Vendor Diligence: Require vendors to comply with consumer-protection laws, including accurately describing rent-to-own and following federal standards on incentivizing storefront employee behavior.

(L to R) Jeremy Pope of Pope/Partners, Joshua Threadcraft of Burr & Forman, and Dailey Wilson and Justin Hosie of Hudson Cook provide critical information and insights during the inaugural Protecting the Transaction Legal Summit.

Next, panelist Joshua Threadcraft, a Partner with the Southeast regional law firm of Burr & Forman LLP, presented an update on the FTC rule concerning employee non-compete agreements, estimated by the commission to cover about 20% of the U.S. workforce. The new rule had been scheduled to become effective September 4, 2024, but a federal district court in Texas ruled in August the rule was “unlawful” and set it aside. The FTC is expected to appeal this ruling.

The panel urged rental dealers to consult with employment attorneys for specific questions about how to handle existing non-compete agreements with employees. Panelists also discussed the Telephone Consumer Protection Act and recent decisions under that law.

There are also potential legal issues affecting RTO businesses under the FCRA, especially when dealers are reporting customer payment histories to credit reporting agencies (CRAs). When that happens, dealers are deemed to be “furnishers;” if a consumer disputes what a furnisher has sent to a CRA, the furnisher has a duty to investigate the information they provided and make corrections as necessary, or face liability.

Shannon Strunk, President of Baber Strunk Enterprises, posits a query to the legal minds presenting at the Protecting the Transaction Legal Summit during RTO World 2024.

The panel further discussed current trends in consumer-protection lawsuits, including common-law claims like invasion of privacy for not keeping customers’ financial information and debt-collection efforts private between the company and the consumer.

Jeremy Pope, Founder of the Alabama- based law firm Pope/Partners LLC then talked about the recharacterization issue as it has arisen in bankruptcy cases. What constitutes a “penalty” has been at play in some such cases, including whether the transaction has a downpayment or some form of capital-cost reduction, whether it requires a security deposit, whether the deposit is refundable or not, and whether there is a material burden on consumers when they want to return the property.

The seminar concluded on a cautionary yet hopeful note. Presenters agreed: rental dealers can minimize their exposure to government regulation by actively engaging in self-regulation. If they remain careful, fair, and transparent in their dealings with consumers, then they’ll survive whatever legal scrutiny comes their way.

Ed Winn III serves as APRO General Counsel.

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Mike Lewis

Central Properties dba Premier Rental-Purchase

Mike Lewis is a Premier Rental Purchase franchisee with multiple stores and currently serves as Vice President of Operations. With 33 years of experience in the rent-to-own industry, he has spent the past 20 years working closely with franchisee owners and previously spent 12 years in Corporate RTO, gaining a strong foundation in the business.

For the past five years, Mike has been sharing his knowledge by teaching managers and franchisees at the company’s Training Center.

Outside of work, he enjoys time with his family, kids, and grandkids, and appreciates the simple things in life – especially riding his Harley Davidson with the sun on his face. If you know, you know!

Lauren Talicska

Arona Corporation dba Arona Home Essentials

Lauren Talicska is an experienced multi-channel marketing specialist and the Vice President of Marketing & Communications at Arona Home Essentials. She has found her home in the RTO community, supporting stores in branding, growth, and increasing traffic.

You may recognize Lauren as a former RTO vendor, including her time as a partner for Nationwide RentDirect, or her previous participation in the APRO Vendor Advisory Committee. Lauren calls Columbus, Ohio, home and spends her workday crafting and executing marketing promotions from inception to realization, all while supporting the branding and social media needs of all the Arona stores in 12 states (plus Puerto Rico!).

Charles Smitherman

APRO

Charles Smitherman, JD, PhD, CAE, became CEO of APRO in 2023, bringing years of legal and executive experience in the rent-to-own industry. 

Prior to joining the association, Charles served as COO, General Counsel, and Vice President of PTS Financial Services, where he played an active role in the rent-to-own industry by representing his company through PTS’s club program offering with APRO member dealers. Charles is an attorney with two decades of experience across a wide variety of areas, including RTO, consumer financial services, antitrust, corporate law, mergers and acquisitions, litigation, franchise law, and privacy law. Following law school at the University of Georgia, Charles earned a Master of Legal Studies and PhD in Law from the University of Oxford in England.

Charles is credentialed as a Certified Association Executive (CAE) with the American Society of Association Executives, a Certified Franchise Executive (CFE) with the International Franchise Association, and a Certified Information Privacy Professional (CIPP/US) and Certified Information Privacy Manager (CIPM) through the International Association of Privacy Professionals. As APRO’s sixth CEO in its 45-year history, he brings a collaborative, member-focused approach to association leadership, emphasizing transparency, advocacy, and value creation. Outside of work, Charles is an active ultra runner and open water swimmer.

Mike Kays

Ashley Furniture Industries

As VP of Rental Sales for Ashley Furniture Industries, Mike thrives on building relationships with our RTO industry veterans, and helping businesses grow through new product, new marketing, and new supply chain options.

Mike works to leverage a wide breadth of relationships and influence, intimate knowledge of market trends, and unique knowledge of what RTO dealers need from a supplier to be successful.

The saying goes that a high tide raises all boats, and our goal is to leverage the world’s largest furniture manufacturer to drive the continued growth of the RTO industry and all the suppliers.

Mike Tissot

Countryside Rentals Inc., dba Rent-2-Own

Mike grew up in the rent-to-own industry under the guidance of his father, former APRO President and RTO legend Darrell Tissot. For nearly 25 years, Mike’s innovative leadership has helped expand the family business to more than 40 stores across Ohio and Kentucky while also shaping the industry as a whole.

He has served as President of the Ohio Rental Dealers Association, an APRO board member and Treasurer, and President and Treasurer of the TRIB Group. His contributions have earned him the APRO President’s Award of Excellence and the title of APRO Rental Dealer of the Year.

Outside of RTO, Mike enjoys time at the lake house or in Orange Beach, Alabama, with his girlfriend, Angela Strong McCool. A passionate Cincinnati Reds fan, he rarely misses a game, whether watching or listening alongside his parents. He also takes every opportunity to visit Arizona, where his daughter is currently attending Arizona State University.