Coalition Calls on State Leaders to Remove Rent-to-Own Industry Exemptions from State Budget Bill

Media Contacts

WISPIRG

A broad coalition of consumer, faith-based, aging, family, and public interest organizations is urging state lawmakers to remove language in Governor Walker’s budget proposal that exempts the rent-to-own industry from Wisconsin’s consumer protection laws.  

“We should not make special exemptions for special interests that are predatory and trap consumers in a cycle of high-cost, perpetual debt,” said Bruce Speight, WISPIRG Director.  “The Rent-to-own industry should not receive special treatment in Wisconsin, and Wisconsin consumers deserve the protections provided by our consumer laws for all high-cost credit products, including Rent-to-own.”

Rent-to-own businesses are appliance and furniture retailers that arrange lease agreements rather than typical installment sales contracts.  These leases are regulated as a form of credit because the consumer is buying a product over time and paying a very high premium over the product’s sales price.  

The chief problem with rent-to-own contracts are that these supposed leases are used to mask installment sales, and that these sales are made at astronomic, and undisclosed, annual percentage rates. Under most rent-to-own contracts, the customer will pay between $1000 and $2400 for a TV, stereo, or other major appliance worth as little as $200 retail, if used, and seldom more than $600 retail, if new. This means that a rent-to-own customer may pay 1½ to 12 times what a cash customer would pay in a traditional retail store for the same appliance.

Despite industry efforts to redefine their product as not a credit product, rent-to-own transactions have been held by the Wisconsin Court of Appeals to be credit transactions.  Nonetheless, the industry seeks, through Governor Walker’s budget proposal, to treat the transactions as leases, not credit sales. That would mean fewer protections for consumers.  

A letter signed by WISPIRG, the Wisconsin Catholic Conference, the Wisconsin Council on Children and Families, Legal Aid Society of Milwaukee, Citizen Action of Wisconsin, Community Action Coalition for South Central WI, Inc., Wisconsin Association for Justice, the Consumer Law Litigation Clinic of the University of Wisconsin Law School, WISDOM, Wisconsin Community Action Program Association, Inc., Wisconsin Council of Churches, and Coalition of Wisconsin Aging Groups was sent to all Wisconsin state legislators and Governor Walker today.  

“State legislators should reject this special interest exemption for the rent-to-own industry and stand up for Wisconsin consumers,” concluded Speight.

 
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