S T A T E O F N E W Y O R K
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7746
2009-2010 Regular Sessions
I N A S S E M B L Y
April 23, 2009
___________
Introduced by M. of A. KELLNER -- read once and referred to the Commit-
tee 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
A. 7746 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
A. 7746 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
A. 7746 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.