NY State Senate Bill 2009-S1239

Archive: Last Bill Status - In Senate Committee Judiciary Committee

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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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2010	referred to judiciary
Jan 28, 2009	referred to judiciary

2009-S1239 (ACTIVE) - Details

See Assembly Version of this Bill:: A7180
Current Committee:: Senate Judiciary
Law Section:: Personal Property Law
Laws Affected:: Amd §§500, 501, 502, 504 & 505, Per Prop L

2009-S1239 (ACTIVE) - Summary

Provides for greater protections to consumers in rental purchase agreements; defines certain terms, including "lease charge" and "trade area"; provides greater disclosure to consumer regarding the amount, number and times at which various payments relating to such an agreement are due and owing; makes various provisions regarding the method and information required to be disclosed in advertising for such agreements

2009-S1239 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S1239

 TITLE OF BILL :
An act to amend the personal property law, in relation to providing
consumers with greater protection in rental purchase agreements


 PURPOSE OF BILL :
Strengthen the law governing "rent-to-own" agreements.

 SUMMARY OF SPECIFIC PROVISIONS :
The bill would:

Establish a standard for the "cash price" of merchandise, which must
be a representative price of merchandise offered within the trade
area;

* Define the "lease charge" as the equivalent of the financing charge,
or interest, which is to be paid by the consumer as the cost of
entering into a rental-purchase agreement;
* Exempt Saturdays, Sundays, and federally recognized holidays from
the three day and seven day periods used to determine late charges or
reinstatement fees under these agreements;
* Prohibit lease charges in excess of 25%;
* Provide notification upon repossession of the consumers right to
reinstatement;

* Clarify the disclosures required under a rental-purchase agreement,
to be closer to those required under federal Regulation M; and
* Require clear disclosure of the lease charge.

 JUSTIFICATION :
The rent-to-own industry is a four billion dollar industry, serving
almost 3 million consumers annually. Approximately 7,500 stores, offer
appliances, furniture, computers and other goods for rent with an
option to buy. Consumers make weekly or monthly payments on these
agreements. If the payments under the agreement are completed, the
consumer attains ownership of the merchandise.

The Public Interest Research Group conducted a survey in states on
these businesses in the spring of 1997. They found that R TO stores
charge an average financing charge of 100 percent (although not
calculated as an annual percentage rate, the cost of purchasing works
out to be this much on average). Also among the survey's major
findings was that the "cash prices" being charged were significantly
above those charged at other retail establishments. Because of these
findings, and numerous other consumer complaints regarding this
industry, the need for additional regulation is apparent. Targeting
mostly poor people who have little other choice, RTO stores rent and
repossess the same items over and over again. Many people may have
"bought" the same appliance.  only to have it repossessed and resold.
If a consumer is able to make all the payments, they typically have
paid double the normal cost of the item. or more. This bill clarifies
existing statutes and provides additional protection to consumers
entering into these contracts.

 FISCAL IMPLICATIONS :
None to the State.

 EFFECTIVE DATE :
90 days after enactment.

2009-S1239 (ACTIVE) - Bill Text download pdf

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

                                  1239

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                            January 28, 2009
                               ___________

Introduced  by Sen. THOMPSON -- 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  providing
  consumers with greater protection in rental purchase agreements

  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]
NOR  a  security  interest  as  defined  in  subdivision 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 WHICH 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  CHARGES, REINSTATEMENT FEES, EARLY TERMINATION FEES, OR OTHER FEES

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03472-02-9

S. 1239                             2

OR  CHARGES  FOR  INSTALLATION,  DELIVERY,  SERVICE,  REPAIR,  OR  OTHER
SERVICES  INCIDENTAL  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  pursu-
ant  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  para-
graph  (b)  of subdivision five of this section. The consumer's right to
reinstate 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  comparable  quality  and  condition.  If  substitute  merchandise is
provided, the merchant shall provide the consumer with  the  disclosures
required in subdivision seven of this section.

S. 1239                             3

  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
merchandise 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 OR NOT the consumer is liable for loss or  damage  to  the
merchandise 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] IS  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
  (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. 1239                             4

  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, OTHER CHARGES FOR ANY AMOUNT FOR WHICH THE
CONSUMER MAY BE LIABLE FOR LOSS OR DAMAGE, LATE  CHARGES,  REINSTATEMENT
FEES,  EARLY  TERMINATION  FEES, OTHER FEES OR CHARGES FOR INSTALLATION,
DELIVERY,  SERVICE,  REPAIR,  OR  OTHER  SERVICES  INCIDENTAL   TO   THE
AGREEMENT.
  S 5. Section 505 of the personal property law, as added by chapter 792
of the laws of 1986, is amended to read as follows:
  S 505. Advertisement. 1. An advertisement for a rental-purchase agree-
ment  [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.
  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.
  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; [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.  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.

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Senate Bill S1239

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Archive: Last Bill Status - In Senate Committee Judiciary Committee

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2009-S1239 (ACTIVE) - Details

2009-S1239 (ACTIVE) - Summary

2009-S1239 (ACTIVE) - Sponsor Memo

2009-S1239 (ACTIVE) - Bill Text download pdf

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Sponsored By

Antoine M. Thompson

Archive: Last Bill Status - In Senate Committee Judiciary Committee

Actions

2009-S1239 (ACTIVE) - Details

2009-S1239 (ACTIVE) - Summary

2009-S1239 (ACTIVE) - Sponsor Memo

2009-S1239 (ACTIVE) - Bill Text download pdf

Comments