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

                                  2641

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                            January 21, 2009
                               ___________

Introduced by M. of A. PRETLOW, AUBRY, PHEFFER -- read once and referred
  to the Committee on Consumer Affairs and Protection

AN  ACT  to  amend  the  personal property law, in relation to providing
  consumers with greater protection in rental purchase agreements and to
  repeal certain provisions of such law relating thereto

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

  Section 1. Subdivisions 2 and 6 of section 500 of the personal proper-
ty law, as added by chapter 792 of the laws of 1986, are amended and two
new subdivisions 7 and 8 are added to read as follows:
  2.  "Cash  price" means the AVERAGE price at which [a merchant, in the
ordinary course of business, would offer to sell the merchandise to  the
consumer  for  cash  on] THE MERCHANDISE OR MERCHANDISE OF SUBSTANTIALLY
THE SAME KIND, QUALITY OR QUANTITY, IS OFFERED FOR SALE BY A  REASONABLE
NUMBER OF MERCHANTS IN THE TRADE AREA DURING THE SIXTY DAYS PRIOR TO the
date of the rental-purchase agreement.
  6.  "Rental-purchase  agreement"  means  an  agreement  for the use of
merchandise by a consumer for PRIMARILY personal, family,  or  household
purposes,  for an initial period of four months or less, that is renewa-
ble with each payment after the initial  period  and  that  permits  the
[lessee]  CONSUMER  to  become the owner of the property, WHETHER OR NOT
THE CONSUMER IS OBLIGATED TO COMPLETE THE PAYMENTS ON THE AGREEMENT.  An
agreement that complies with this article is not  a  retail  installment
sales  contract, agreement or obligation as defined in this chapter or a
security interest as defined in [subdivision] SUBSECTION thirty-seven of
section 1-201 of the uniform commercial code.
  7. "LEASE CHARGE" MEANS THE CHARGE TO BE PAID BY THE CONSUMER FOR  THE
PRIVILEGE  OF ENTERING INTO A RENTAL-PURCHASE AGREEMENT OVER THE MAXIMUM
PERIOD THE AGREEMENT COULD RUN UNDER ITS TERMS, INCLUDING  ALL  RENEWALS
OR EXTENSIONS, LESS THE CASH PRICE. THE TERM DOES NOT INCLUDE ANY AMOUNT
FOR WHICH THE CONSUMER MAY BE LIABLE FOR LOSS OR DAMAGE, ANY LATE CHARG-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03472-03-9
              

A. 2641                             2

ES, REINSTATEMENT FEES OR EARLY TERMINATION FEES OR OTHER FEES OR CHARG-
ES  FOR  INSTALLATION, DELIVERY, SERVICE, REPAIR OR OTHER SERVICES INCI-
DENTAL TO THE AGREEMENT. SUCH CHARGE SHALL BE  CLEARLY  PRESENTED  AS  A
PERCENTAGE OF THE CASH PRICE.
  8.  "TRADE  AREA"  MEANS  THE  GEOGRAPHICAL AREA IN WHICH THE MERCHANT
SOLICITS OR MAKES RENTAL-PURCHASE AGREEMENTS.
  S 2. Paragraphs (e) and (f) of subdivision 3 and subdivisions 4, 6 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 paragraph (g) is added to
subdivision 3 to read as follows:
  (e) requiring the payment of a late charge or reinstatement fee unless
a periodic payment is delinquent for more than three days for agreements
that are renewed on week by week terms and  seven  days  for  agreements
that are renewed on month by month terms, PROVIDED HOWEVER, THAT NEITHER
SATURDAYS,  SUNDAYS  NOR  FEDERALLY-RECOGNIZED HOLIDAYS DURING WHICH THE
UNITED STATES POSTAL SERVICE IS NOT  OPEN  TO  THE  PUBLIC  SHALL  COUNT
TOWARD  THE  THREE  OR  SEVEN DAY TOTALS, and the charge or fee is in an
amount not more than the greater of ten percent of the delinquent amount
or three dollars for agreements that are renewed on week by  week  terms
and not more than the greater of ten percent of the delinquent amount or
five dollars for agreements that are renewed on month by month terms. In
the  event that multiple items are leased to a consumer pursuant to more
than one rental-purchase agreement, any late  fee  imposed  pursuant  to
this  section  shall not exceed ten percent of the total of the periodic
payments that are delinquent[.];
  (f) requiring a payment in addition to regular  periodic  payments  in
order  to  acquire  ownership  of  the merchandise or requiring periodic
payments totalling more than the cost to acquire ownership, as  provided
in section five hundred three of this article[.]; AND
  (G)  REQUIRING  THE PAYMENT OF A LEASE CHARGE IN EXCESS OF TWENTY-FIVE
PERCENT OF THE CASH PRICE PER ANNUM.
  4. Only one late charge or reinstatement fee may  be  assessed  for  a
delinquent  periodic  payment  regardless  of the period during which it
remains in default. No merchant shall assess a late charge for a period-
ic payment made in full on its due date or within three days for  agree-
ments  that  are  renewed on week by week terms or seven days for agree-
ments that are renewed on month by month terms when the only delinquency
is attributable to late fees  assessed  on  earlier  periodic  payments,
PROVIDED  HOWEVER,  THAT NEITHER SATURDAYS, SUNDAYS NOR FEDERALLY-RECOG-
NIZED HOLIDAYS DURING WHICH THE UNITED STATES POSTAL SERVICE IS NOT OPEN
TO THE PUBLIC SHALL COUNT TOWARD THE THREE OR SEVEN DAY  TOTALS.    With
respect  to  payments  accepted  by  mail  or  by  store deposit box, no
merchant shall assess a late fee for payments which are  post-marked  or
received before the expiration of the applicable delinquency periods.
  6.  This section does not prevent a merchant from attempting to repos-
sess merchandise during the reinstatement period, provided in  paragraph
(b)  of  subdivision five of this section. The consumer's right to rein-
state an agreement does not expire because of such a repossession.  UPON
REPOSSESSION, THE MERCHANT SHALL PROVIDE WRITTEN NOTICE TO THE  CONSUMER
OF THE CONSUMER'S RIGHT TO REINSTATE THE AGREEMENT PURSUANT TO PARAGRAPH
(B)  OF SUBDIVISION FIVE OF THIS SECTION AND THE FINAL DATE FOR PAYMENTS
NECESSARY FOR REINSTATEMENT PURSUANT TO SUCH PARAGRAPH  ALONG  WITH  THE
APPROPRIATE AMOUNT DUE. On reinstatement, the merchant shall provide the
consumer with the same merchandise or substitute merchandise of compara-
ble  quality  and  condition. If substitute merchandise is provided, the

A. 2641                             3

merchant shall provide the consumer with  the  disclosures  required  in
subdivision seven of this section.
  7.  A  rental-purchase  agreement  must  disclose in a conspicuous and
informative fashion:
  (a) a BRIEF description of  the  merchandise  provided  SUFFICIENT  TO
IDENTIFY  THE MERCHANDISE TO THE CONSUMER AND THE MERCHANT, INCLUDING AN
IDENTIFICATION NUMBER, IF APPLICABLE;
  (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]  THE  TOTAL
AMOUNT TO BE PAID BY THE CONSUMER PRIOR TO OR AT THE CONSUMMATION OF THE
RENTAL-PURCHASE  AGREEMENT, USING THE TERM "AMOUNT DUE AT CONTRACT SIGN-
ING." THE MERCHANT SHALL ITEMIZE EACH COMPONENT OF THE TOTAL  AMOUNT  BY
TYPE  AND  AMOUNT,  INCLUDING  ANY  REFUNDABLE SECURITY DEPOSIT, ADVANCE
PERIODIC PAYMENT, AND AMOUNT OF ANY DOWN PAYMENT;
  (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".  THIS AMOUNT IS THE SUM OF  THE  TOTAL
AMOUNT  DUE AT SIGNING PROVIDED PURSUANT TO PARAGRAPH (C) OF THIS SUBDI-
VISION (LESS ANY REFUNDABLE  AMOUNTS),  THE  TOTAL  AMOUNT  OF  PERIODIC
PAYMENTS  (LESS ANY PORTION OF THE PERIODIC PAYMENT PAID AT THE TIME THE
AGREEMENT IS SIGNED), AND OTHER CHARGES OR FEES DISCLOSED  AND  ASSESSED
PURSUANT TO PARAGRAPH (F) OF THIS SUBDIVISION;
  (e)  the  amount and purpose of any payment, charge, or fee, INCLUDING
THE LEASE CHARGE, 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
lesser of: (1) the price the consumer would have  paid  to  exercise  an
early purchase option pursuant to this article or (2) the ACTUAL cost of
the  repair  [as  determined  by the merchant] REDUCED BY ALL DISCOUNTS,
PAID BY THE MERCHANT OR (3) TWO ITEMIZED ESTIMATES OF THE COST  OF  SUCH
REPAIR;
  (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] RENTAL PURCHASE AGREEMENT;
  (J) THE NUMBER, AMOUNT, AND DUE DATES OR PERIODS OF PAYMENTS SCHEDULED
UNDER THE RENTAL-PURCHASE AGREEMENT, AND THE TOTAL DOLLAR AMOUNT OF  THE
PERIODIC PAYMENTS;
  (K)  THE TERM OF THE RENTAL-PURCHASE AGREEMENT WITH A DESCRIPTION SUCH
AS "THE NUMBER OF PERIODS OF PAYMENTS IN YOUR AGREEMENT BEFORE  YOU  OWN
THE MERCHANDISE";
  (L)  A  STATEMENT  SPECIFYING  WHETHER THE CONSUMER OR THE MERCHANT IS
RESPONSIBLE FOR MAINTAINING OR SERVICING THE MERCHANDISE, TOGETHER  WITH
A BRIEF DESCRIPTION OF SUCH RESPONSIBILITY;
  (M) A STATEMENT OF THE MERCHANT'S STANDARDS FOR WEAR AND USE (IF ANY),
WHICH MUST BE REASONABLE; AND

A. 2641                             4

  (N) A STATEMENT IDENTIFYING ALL EXPRESS WARRANTIES AND GUARANTEES FROM
THE  MANUFACTURER OR MERCHANT WITH RESPECT TO THE MERCHANDISE THAT APPLY
TO THE CONSUMER.
  S 3. Section 502 of the personal property law, as added by chapter 792
of the laws of 1986, is amended to read as follows:
  S  502.  Availability.  Every rental purchase agreement shall indicate
that a consumer at his or her written  request  shall  be  permitted  to
review  a  completed  rental-purchase  agreement for up to [twenty-four]
SEVENTY-TWO hours prior to signing.
  S 4. Section 504 of the personal property law, as added by chapter 792
of the laws of 1986, is amended to read as follows:
  S 504. Early purchase option. At any time, after the initial  payment,
the  consumer  may  acquire  ownership  of  the property by tendering an
amount equal to the cash price of the merchandise minus  [fifty  percent
of]  all  previous [rental-purchase] payments made UNDER THE RENTAL-PUR-
CHASE AGREEMENT, NOT INCLUDING THE PORTION OF ANY SUCH PAYMENTS  ATTRIB-
UTABLE TO THE LEASE CHARGE OR OTHER CHARGES FOR ANY AMOUNT FOR WHICH THE
CONSUMER  MAY  BE  LIABLE  FOR  LOSS  OR DAMAGE, ANY LATE CHARGES, REIN-
STATEMENT FEES OR EARLY TERMINATION FEES OR OTHER FEES  OR  CHARGES  FOR
INSTALLATION,  DELIVERY, SERVICE, REPAIR OR OTHER SERVICES INCIDENTAL TO
THE AGREEMENT.
  S 5. Subdivisions 1 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:
  1. An advertisement for a rental-purchase agreement [that refers to or
states  the amount of a payment or the right to acquire ownership of any
one particular item under the agreement] shall clearly and conspicuously
state:
  (a) that the transaction advertised is a rental-purchase agreement;
  (b) the total number of payments and the total amount to  be  paid  to
acquire  ownership,  which  amount  shall  be  explicitly labeled "total
cost"; [and]
  (c) the circumstances under which the consumer can  acquire  ownership
rights;
  (D) THAT THE MERCHANDISE OFFERED MAY BE NEW OR USED; AND
  (E) THE LEASE CHARGE.
  [3.] 2. Every item displayed or offered under a rental-purchase agree-
ment  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; [and]
  (c)  the  total  amount  that  must  be  paid  to acquire ownership of
merchandise, which amount shall be explicitly labeled total cost; AND
  (D) THE LEASE CHARGE.
  S 6. Subdivision 2 of section 505 of  the  personal  property  law  is
REPEALED.
  S  7.  This  act shall take effect on the ninetieth day after it shall
have become a law and shall apply to  all  agreements  entered  into  or
offered on or after such date.