NY State Senate Bill 2009-S1347

Senate Bill S1347

2009-2010 Legislative Session

Makes various provisions relating to rent-to-own sales practices and disclosure requirements for rental-purchase agreements

download bill text pdf

Archive: Last Bill Status - Lost

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jul 16, 2009	lost ordered to third reading cal.902 committee discharged and committed to rules
Jun 02, 2009	reported and committed to codes
Jan 28, 2009	referred to judiciary

Votes

- Jul 16, 2009 - Floor Vote
  S1347
  
  28
  
  Aye
  
  29
  
  Nay
  
  0
  
  Absent
  
  5
  
  Excused
  
  0
  
  Abstained
  - - Floor Vote: Jul 16, 2009
      
      aye (28)
      
      Adams
      
      Addabbo Jr.
      
      Aubertine
      
      Breslin
      
      Dilan
      
      Duane
      
      Espada
      
      Hassell-Thompson
      
      Huntley
      
      Johnson
      
      Klein
      
      Krueger
      
      Monserrate
      
      Montgomery
      
      Onorato
      
      Oppenheimer
      
      Parker
      
      Perkins
      
      Sampson
      
      Savino
      
      Schneiderman
      
      Serrano
      
      Smith
      
      Stachowski
      
      Stavisky
      
      Stewart-Cousins
      
      Thompson
      
      Valesky
      
      nay (29)
      
      Alesi
      
      Bonacic
      
      DeFrancisco
      
      Farley
      
      Flanagan
      
      Fuschillo
      
      Golden
      
      Griffo
      
      Hannon
      
      LaValle
      
      Lanza
      
      Larkin
      
      Leibell
      
      Libous
      
      Little
      
      Marcellino
      
      Maziarz
      
      McDonald
      
      Morahan
      
      Nozzolio
      
      Padavan
      
      Ranzenhofer
      
      Robach
      
      Saland
      
      Seward
      
      Skelos
      
      Volker
      
      Winner
      
      Young
      
      excused (5)
      
      Diaz
      
      Foley
      
      Johnson
      
      Kruger
      
      Squadron
  Jul 16, 2009 - Rules Committee Vote
  S1347
  
  16
  
  Aye
  
  2
  
  Nay
  
  5
  
  Aye with Reservations
  
  0
  
  Absent
  
  1
  
  Excused
  
  0
  
  Abstained
  - - Rules Committee Vote: Jul 16, 2009
      
      aye (16)
      
      Dilan
      
      Duane
      
      Espada
      
      Hassell-Thompson
      
      Klein
      
      Krueger
      
      Larkin
      
      Monserrate
      
      Montgomery
      
      Padavan
      
      Parker
      
      Serrano
      
      Smith
      
      Stachowski
      
      Stewart-Cousins
      
      Valesky
      
      nay (2)
      
      Skelos
      
      Volker
      
      aye wr (5)
      
      Farley
      
      Hannon
      
      LaValle
      
      Saland
      
      Seward
      
      excused (1)
      
      Johnson

2009-S1347 (ACTIVE) - Details

Law Section:: Personal Property Law
Laws Affected:: Amd §§500, 501, 505 & 503, Pers Prop L

2009-S1347 (ACTIVE) - Summary

Makes various provisions relating to rent-to-own sales practices and disclosure requirements for rental-purchase agreements; requires that the termination of rent-to-own contracts not exceed five percent of the contract price; prohibits any merchant from assessing interest rates at a rate exceeding 25%.

2009-S1347 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S1347

 TITLE OF BILL :
An act to amend the personal property law, in relation to rent-to-own
sales practices and disclosure requirements for rental-purchase
agreements


 PURPOSE :
To insure that consumers are fully informed of all costs associated
with rent-to-own merchandise.  Further, the bill requires that
termination of rent-to-own contracts shall not exceed five percent of
the contract price and that no usurious interest fees are charged to
consumers in rent-to-own agreements.

 SUMMARY OF PROVISIONS :
Section One of the bill amends subdivision 2 of section 500 of the
personal property law by adding a new subdivision 3-a to read as
follows:

"Cash Price" means the bona fide retail price at which a merchant, in
the ordinary cost of business, would offer to sell the merchandise to
the consumer for cash on the date of the rental-purchase agreement.
Such price shall be representative of merchandise offered within the
market area and shall be competitive and comparable in price to
similar merchandise for retail in such area.

"Effective Annual Percentage Rate" means the annual percentage rate of
the merchandise subject to a rental-purchase agreement, calculated in
the same manner as an annual percentage rate under section 107 of the
Federal Truth in Lending Act except that (a) in the place of a finance
charge, there shall be substituted the difference between total
payments to acquire ownership and the cash price, less any amounts
specifically excluded from the finance charge under the truth in
lending act; (b) in the place of the amount financed, there shall be
substituted the cash price less any down payment; and (c) it shall be
assumed that the consumer shall pay the total of payments to acquire
ownership in the merchandise.

Section Two amends subdivisions 5 and 7 of section 501 of the personal
property law and adds a new subdivision 2-a to read as follows:

"A Rental Purchase Agreement" shall set forth the items required to be
disclosed by (a) the Federal Truth in Lending Act and the regulations
thereunder, as such act and regulations may from time to time be
amended, (b) the Federal Equal Credit Opportunity Act as such statute
may from time to time be amended, (c) the Federal Fair Debt and
Collection Practices Act as such statute may from time to time be
amended and (d) the Fair Credit Reporting Act as such statute from
time to time be amended.

A consumer shall have the right to terminate the rental-purchase
agreement at any time during the contract period and the termination
fee for such shall not exceed five percent of the contract price.

In addition to what must be disclosed in a rent-to-own contract,
already in law, the bill further requires that a contract must include
the amount of periodic payment and the total number of periodic
payments required for ownership under the terms of the agreement, an
itemization of services offered under the rental-purchase agreement
and the price for each service and the effective annual percentage
rate associated with the merchandise under the rental-purchase
agreement (which may be accompanied by a statement that this rate
applies only if the consumer acquires ownership by making all
payments.)

Section Three of the bill amends subdivisions 2 and 3 of section 505
of the personal property law that in addition to other disclosures,
already required in law, for rental purchase agreements to disclose
the effective annual percentage rate associated with the merchandise
under the rental-purchase agreement (which may be accompanied by a
statement that this rate applies only if the consumer acquires
ownership by making all payments), include the amount of the periodic
payment and the total number of periodic payments required for
ownership under the terms of the agreement and an itemization of
services offered under the rental purchase agreement and the price for
each service.

Section Four of the bill amends Section 503 of the Personal Property
Law to state that notwithstanding any general or special statutes,
local laws or ordinances to the contrary, any late charge or fee
assessed by a merchant pursuant to this article shall be treated and
collected as interest assessed. No merchant shall assess any late
charge or fee as a leasing charge. Any merchant assessing interest
charges at a rate exceeding twenty-five per centum annum shall be
punishable under criminal usury in the first degree or criminal usury
in the second degree as defined in section 190.42 or 190.40 of the
penal law, respectively.

 EXISTING LAW :
While New York's personal property law outlines specific consumer
protections for rent-to-own contracts, the provisions do not go far
enough. Rent-to-own businesses are able to charge sky-rocketing fees
-- far beyond New York's usury statutes.

 JUSTIFICATION :
Consumers who decide to enter a rent-to-own purchase contract deserve
full disclosure. Many times a consumer, by the end of their
rent-to-own contract, has paid several times over the worth of the
merchandise they have rented. Often, rent-to-own businesses overprice
the cost of the merchandise to begin with. Terminating a rent-to-own
contract is costly to the consumer, with many hidden termination fees.
Finally, many rent-to-own businesses charge "fees" rather than
"interest" to circumvent New York's usury laws.

Consumers deserve protections and full disclosure on what entering a
rent-to-own contract will mean for them. Several states, including
Vermont have these strong consumer protections already in place.

 LEGISLATIVE HISTORY :
2006: S.8498 Died in Senate Rules Committee
2007-2008: S.2319 Died in Senate Judiciary Committee

 FISCAL IMPLICATIONS :
Minimal.

 LOCAL FISCAL IMPLICATIONS :
Minimal.

 EFFECTIVE DATE :
This act shall take effect on the one hundred eightieth day after it
shall have become a law.

2009-S1347 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  1347

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                            January 28, 2009
                               ___________

Introduced  by  Sen.  DUANE  -- read twice and ordered printed, and when
  printed to be committed to the Committee on Judiciary

AN ACT to amend the personal property law, in  relation  to  rent-to-own
  sales practices and disclosure requirements for rental-purchase agree-
  ments

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subdivision 2 of section 500 of the personal property  law,
as added by chapter 792 of the laws of 1986, is amended and a new subdi-
vision 3-a is added to read as follows:
  2.  "Cash price" means the BONA FIDE RETAIL price at which a merchant,
in the ordinary course of business, would offer to sell the  merchandise
to  the  consumer for cash on the date of the rental-purchase agreement.
SUCH PRICE SHALL BE REPRESENTATIVE OF  MERCHANDISE  OFFERED  WITHIN  THE
MARKET  AREA AND SHALL BE COMPETITIVE AND COMPARABLE IN PRICE TO SIMILAR
MERCHANDISE FOR RETAIL IN SUCH AREA.
  3-A. "EFFECTIVE ANNUAL PERCENTAGE RATE" MEANS  THE  ANNUAL  PERCENTAGE
RATE  OF  THE MERCHANDISE SUBJECT TO A RENTAL-PURCHASE AGREEMENT, CALCU-
LATED IN THE SAME MANNER AS AN ANNUAL PERCENTAGE RATE UNDER SECTION  107
OF THE FEDERAL TRUTH IN LENDING ACT (15 USC 1606) EXCEPT THAT (A) IN THE
PLACE  OF  THE FINANCE CHARGE, THERE SHALL BE SUBSTITUTED THE DIFFERENCE
BETWEEN THE TOTAL PAYMENTS TO ACQUIRE OWNERSHIP AND THE CASH PRICE, LESS
ANY AMOUNTS SPECIFICALLY EXCLUDED FROM  THE  FINANCE  CHARGE  UNDER  THE
TRUTH  IN  LENDING ACT; (B) IN PLACE OF THE AMOUNT FINANCED, THERE SHALL
BE SUBSTITUTED THE CASH PRICE LESS ANY DOWN PAYMENT; AND (C) IT SHALL BE
ASSUMED THAT THE CONSUMER SHALL PAY THE TOTAL  OF  PAYMENTS  TO  ACQUIRE
OWNERSHIP IN THE MERCHANDISE.
  S 2. Subdivisions 5 and 7 of section 501 of the personal property law,
as  added  by  chapter  792  of  the laws of 1986, are amended and a new
subdivision 2-a is added to read as follows:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01335-01-9

S. 1347                             2

  2-A. A RENTAL-PURCHASE AGREEMENT SHALL SET FORTH THE ITEMS REQUIRED TO
BE DISCLOSED BY (A) THE FEDERAL TRUTH IN LENDING ACT  (15  USC  1606  ET
SEQ)  AND  THE  REGULATIONS  THEREUNDER, AS SUCH ACT AND REGULATIONS MAY
FROM TIME TO TIME BE AMENDED, (B) THE FEDERAL EQUAL  CREDIT  OPPORTUNITY
ACT  (P.L.  93-435, 15 USC 1691 ET SEQ) AS SUCH STATUTE MAY FROM TIME TO
TIME BE AMENDED, (C) THE FEDERAL FAIR DEBT AND COLLECTION PRACTICES  ACT
(15  USC  1692 ET SEQ) AS SUCH STATUTE MAY FROM TIME TO TIME BE AMENDED,
AND (D) THE FAIR CREDIT REPORTING ACT (15 USC 1681 ET SEQ) AS SUCH STAT-
UTE MAY FROM TIME TO TIME BE AMENDED.
  5. A rental-purchase agreement [must] SHALL provide that:
  (a) a charge in addition to periodic payments, if any, must be reason-
ably related to the cost of a service performed;
  (b) a consumer who fails to make a timely  payment  may  reinstate  an
agreement without losing rights or options previously acquired and with-
out  incurring  any  charges,  other than rental charges for the time he
possessed the property, except for those charges provided for  in  para-
graph (e) of subdivision three of THIS section [five hundred one of this
article]  by  making the required payment before the later of seven days
or half the number of days in a regular payment  period  after  the  due
date of the payment; [and]
  (B-1) A CONSUMER SHALL HAVE THE RIGHT TO TERMINATE THE RENTAL-PURCHASE
AGREEMENT AT ANY TIME DURING THE CONTRACT PERIOD AND THE TERMINATION FEE
FOR SUCH SHALL NOT EXCEED FIVE PERCENT OF THE CONTRACT PRICE; AND
  (c)  if  the merchandise is returned or voluntarily surrendered by the
consumer, other than through judicial  process,  during  the  applicable
reinstatement period set forth in paragraph (b) of this subdivision, the
consumer's  right  to  reinstate the agreement as set forth in paragraph
(b) of this subdivision shall be extended for a period of not less  than
thirty  days  after  the  date  of  the  return of the merchandise. If a
consumer has paid one-half the total of payments  necessary  to  acquire
ownership,  the right to reinstate the agreement shall be extended for a
period of not less than sixty days after the date of the return  of  the
merchandise.  If  a  consumer  has  paid  three-quarters of the total of
payments necessary to acquire ownership, the consumer's rights to  rein-
state  the agreement shall be extended for a period of not less than one
hundred eighty days after the return of the merchandise.
  7. A rental-purchase agreement [must] SHALL disclose in a  conspicuous
and informative fashion:
  (a) a description of the merchandise provided;
  (b)  whether the merchandise is new or used, provided however, that it
shall not be a violation of this section to indicate that  the  merchan-
dise is used if it is actually new;
  (c)  the  amount and timing of rental-purchase payments, INCLUDING THE
AMOUNT OF THE PERIODIC PAYMENT AND THE TOTAL NUMBER OF PERIODIC PAYMENTS
REQUIRED FOR OWNERSHIP UNDER THE TERMS OF THE AGREEMENT;
  (d) the total number of payments and the total  amount  that  must  be
paid  to  acquire  ownership  of  the merchandise, which amount shall be
explicitly labelled "total cost";
  (e) the amount and purpose of any payment, charge, or fee, in addition
to the regular periodic payments;
  (f) whether the consumer is liable for loss or damage to the  merchan-
dise  and,  if  so,  the  maximum  amount  for which the consumer may be
liable, which in the case of loss shall in no event be greater than  the
price  the consumer would have paid to exercise an early purchase option
pursuant to this article. In the case  of  damage  to  the  merchandise,
other  than  normal  wear  and tear the consumer shall be liable for the

S. 1347                             3

lesser of the price the consumer would have paid to  exercise  an  early
purchase  option  pursuant  to this article or the cost of the repair as
determined by the merchant;
  (g)  that  the  consumer  does not acquire ownership rights unless the
consumer has complied with the ownership terms of the agreement;
  (h) the cash price of the merchandise; [and]
  (i) a statement of the conditions under which a consumer may  exercise
an  early  purchase  option and under which the merchant or consumer may
otherwise terminate the lease[.];
  (J) AN ITEMIZATION  OF  SERVICES  OFFERED  UNDER  THE  RENTAL-PURCHASE
AGREEMENT AND THE PRICE FOR EACH SERVICE; AND
  (K)  THE EFFECTIVE ANNUAL PERCENTAGE RATE ASSOCIATED WITH THE MERCHAN-
DISE UNDER THE RENTAL-PURCHASE AGREEMENT (WHICH MAY BE ACCOMPANIED BY  A
STATEMENT THAT THIS RATE APPLIES ONLY IF THE CONSUMER ACQUIRES OWNERSHIP
BY MAKING ALL PAYMENTS).
  S 3. Subdivisions 2 and 3 of section 505 of the personal property law,
as  added  by  chapter  792  of the laws of 1986, are amended to read as
follows:
  2. An advertisement for personal property  available  through  rental-
purchase agreements that refers to more than one appliance or particular
item  and includes information on periodic payment amounts shall include
a representative item available at that amount and  shall  conspicuously
state:
  (a) that the merchandise offered may be new or used;
  (b) that transaction advertised is a rental-purchase agreement; [and]
  (c)  that  the  consumer  does not acquire ownership rights unless the
consumer complies with the ownership terms of the agreement[.]; AND
  (D) THE EFFECTIVE ANNUAL PERCENTAGE RATE ASSOCIATED WITH THE  MERCHAN-
DISE  UNDER THE RENTAL-PURCHASE AGREEMENT (WHICH MAY BE ACCOMPANIED BY A
STATEMENT THAT THIS RATE APPLIES ONLY IF THE CONSUMER ACQUIRES OWNERSHIP
BY MAKING ALL PAYMENTS).
  3. Every item displayed or offered under a  rental-purchase  agreement
shall have clearly and conspicuously indicated in arabic numerals, so as
to  be  readable  and  understandable  by visual inspection, each of the
following affixed to the item:
  (a) the cash price of the merchandise;
  (b) the amount of the periodic payment and the total number of period-
ic payments required for ownership, INCLUDING THE AMOUNT OF THE PERIODIC
PAYMENT AND THE TOTAL NUMBER OF PERIODIC PAYMENTS REQUIRED FOR OWNERSHIP
UNDER THE TERMS OF THE AGREEMENT; [and]
  (c) the total amount  that  must  be  paid  to  acquire  ownership  of
merchandise, which amount shall be explicitly labeled total cost[.]; AND
  (D)  AN  ITEMIZATION  OF  SERVICES  OFFERED  UNDER THE RENTAL-PURCHASE
AGREEMENT AND THE PRICE FOR EACH SERVICE.
  S 4. Section 503 of the personal property law, as added by chapter 792
of the laws of 1986, is amended to read as follows:
  S 503. Total cost. 1. No merchant shall offer a rental-purchase agree-
ment requiring periodic payments totalling more than  an  amount,  fifty
percent  of  which  equals  the cash price of merchandise. When periodic
payments made by a consumer total an  amount,  fifty  percent  of  which
equals  the  cash  price  of the merchandise, the consumer shall acquire
ownership of the merchandise and  the  rental-purchase  agreement  shall
terminate.
  2.  NOTWITHSTANDING  ANY  GENERAL  OR  SPECIAL STATUTES, LOCAL LAWS OR
ORDINANCES TO THE CONTRARY,  ANY  LATE  CHARGE  OR  FEE  ASSESSED  BY  A
MERCHANT  PURSUANT  TO  THIS  ARTICLE  SHALL BE TREATED AND COLLECTED AS

S. 1347                             4

INTEREST ASSESSED. NO MERCHANT SHALL ASSESS ANY LATE CHARGE OR FEE AS  A
LEASING  CHARGE.  ANY  MERCHANT  ASSESSING  INTEREST  CHARGES  AT A RATE
EXCEEDING TWENTY-FIVE PER CENTUM PER ANNUM  SHALL  BE  PUNISHABLE  UNDER
CRIMINAL  USURY  IN  THE  FIRST  DEGREE  OR CRIMINAL USURY IN THE SECOND
DEGREE, AS DEFINED IN SECTION 190.42 OR 190.40 OF THE PENAL LAW, RESPEC-
TIVELY.
  S 5. This act shall take effect on the one hundred eightieth day after
it shall have become a law.

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