Statement of WISPIRG Director Bruce Speight Regarding Rent-to-own Provisions in State Budget

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State Leaders Should Reject Special Interest Treatment for Industry

WISPIRG

Statement of WISPIRG Director Bruce Speight Regarding Rent-to-own Provisions in State Budget

Hi, my name is Bruce Speight and I am the Director of WISPIRG.  WISPIRG is a statewide, consumer advocacy organization that stands up to powerful special interests, like the rent-to-own industry and other predatory lenders.  We represent thousands of members across the state. 

First, I would like to thank Senator Grothman for his leadership on this issue, Archbishop Listecki and the other speakers for their support and strong words against usury and predatory lending.

Carving out a special interest exemption for a predatory industry that traps consumers, especially low-income consumers, in a cycle of high-cost, perpetual debt is not good for Wisconsin’s economy and it’s not good for Wisconsin consumers.  Unfortunately, the executive budget proposal does exactly that for the rent-to-own industry. 

This industry promises consumers the American dream of ownership. For example, they say “for only 78 weekly payments of $10, you, too, can own this television.” The industry doesn’t want to tell you that the effective interest rate on that loan, however, is 220% APR with $560 in interest and finance charges, AND that roughly 30% of customers don’t end up even owning the product.

On Monday, WISPIRG is releasing a new study that exposes the deceptive marketing and astronomical finance charges that the rent-to-own industry offers. 

Consumers should avoid rent-to-own contracts for any products. Instead save some money every month for just a few months, and then purchase the product outright in a department store at a much lower cost. Or consider layaway plans, which may be available. Even purchasing the product with a credit card, and diligently paying it off over an equivalent period of 18-24 months, will still be much cheaper than rent-to-own.

There should be no misunderstanding about this rent-to-own provision – it is not designed to protect consumers and it is not designed to allow the industry to operate in Wisconsin. Rent-to-own can and already does operate in Wisconsin.  The Rent-to-own industry wants special treatment in Wisconsin; they are working to create a special interest safe harbor for rent-to-own by exempting the industry from our stronger state law that provides more meaningful consumer protections.

Our state legislators should join with Senator Grothman and the other Republican and Democratic legislators who oppose this and reject special treatment for the rent-to-own industry.

Thank you.