[T]he House Committee on Commerce and Economic Development overwhelmingly approved a consumer protection bill that would regulate the multibillion-dollar rent-to-own industry and protect Vermonters from emerging scams.
The original bill, S.73, passed the Senate on March 18 after witnesses told the Senate Committee on Economic Development that they had been victims of expensive lease deals with companies similar to Rent-A-Center and Aaron’s.
Under the lending agreements, consumers were being pulled into long-term payment plans for bedroom furniture, TVs and other electronics, that would have been significantly cheaper for them to buy in cash at an average retailer.
The so-called rent-to-own bill caps the amount a company can charge a customer at 175 percent of the merchant’s cost of appliances or electronics worth less than $150; at 250 percent of the cost of furniture or jewelry; and at 200 percent of the cost of all other items.
The language also requires disclosures that break down how much a consumer could pay in cash for the item, how many payments are required before the consumer would own the item and any fees associated with the transaction.
Three pro-consumer organizations — Vermont Legal Aid, Vermont Businesses for Social Responsibility and AARP — said rent-to-own is an $8.5 billion industry and lauded House Commerce for clearing the bill from committee. Gov. Peter Shumlin also supports the bill, according to his spokesperson, Scott Coriell.
“Our members deserve to know what they are getting into if they enter into a rent-to-own agreement, and the industry should be limited in how much it can charge,” Greg Marchildon, executive director of AARP Vermont, said in a statement.
After weeks of testimony in House Commerce, S.73 has now been expanded into an eight-section consumer protection bill that aims to help Vermonters understand risky business offers — and give them information to help them avoid scams.
There are provisions in S.73 for oversight on lawsuit financing companies, home security companies, online dating scammers, fraudulent discount membership offers and data breach notification, among other things. The bill would also create a financial literacy commission, which advocates did not expect to take up until 2016.
Rep. Fred Baser, R-Bristol, is a financial planner who called himself “particularly stoked” about creating a financial literacy commission.
“I’ve spoken to hundreds and hundreds of Vermonters of all different backgrounds, and their financial literacy leaves a lot to be desired,” Baser said.
Rep. Bill Botzow, D-Bennington, chair of House Commerce, said the bill protects consumers while at the same time respecting businesses.
“It’s not that [consumers] don’t take care of themselves, but sometimes they don’t know what’s happening until it’s too late,” Botzow said. “Just let people know in a timely way, and they’ll make good decisions.”
If the House approves S.73 on the floor, the Senate would either have to accept the six additional sections or a conference committee would hammer out a final version.
Among the committee’s changes, the bill would place a moratorium to keep lawsuit financing companies from entering into non-recourse agreements with Vermonters seeking to obtain cash for their pending legal claims.
Rep. Corey Parent, R-St. Albans, was the lone dissenting vote. Parent said he opposed the idea of state government telling rent-to-own companies how much they can charge, and he opposed the settlement financing provisions.
“What kind of precedent do we set when we say ‘We don’t know enough about this business so we’re not going to allow them?’” Parent said.
The other main provisions to S.73 would make security companies disclose fees they charge to users when the company’s home security system automatically dials emergency personnel. The bill would also create guidelines on how companies report data breaches to Vermonters.
Luring Vermonters into discount membership programs — which the Attorney General’s Office said in March are sometimes subcontracted several times until the so-called membership is essentially useless — would become an “unfair and deceptive act and practice in commerce” under Vermont law.
Additionally, Internet dating services such as OkCupid and eHarmony would be required to take steps to notify users of romance or “catfish” scammers. Companies would have to disclose the user name or profile identity of a person who was banned for trying to lure money from other daters.
The companies would have to disclose the fact that the person was banned because of the phishing scam, include a warning to members that they should never send money to other daters, and provide users a hyperlink to information on avoiding online dating scams.
