LBD03472-10-9
S. 557--A 2
Therefore, it is the intent of the legislature to require rent-to-own
merchants to provide consumers with enhanced disclosures and to estab-
lish reasonable price controls based on an extensive retail survey to be
performed by the consumer protection board and the department of econom-
ic development. Upon receipt of this survey data, the legislature
intends to amend article 11 of the personal property law to implement
fair and reasonable formulas for use by rent-to-own merchants in setting
cash prices, ensuring that rent-to-own customers pay fair prices and
providing much-needed regulatory guidance to rent-to-own merchants.
S 2. Article 11 of the personal property law is REPEALED and a new
article 11 is added to read as follows:
ARTICLE 11
RENTAL PURCHASE AGREEMENTS
SECTION 500. DEFINITIONS.
501. FORM.
502. AVAILABILITY.
503. TOTAL OF RENTAL PAYMENTS.
504. EARLY PURCHASE OPTION.
505. MAINTENANCE OF MERCHANDISE.
506. ADVERTISEMENT.
507. EXEMPTED TRANSACTIONS.
508. ENFORCEMENT.
S 500. DEFINITIONS. FOR THE PURPOSES OF THIS ARTICLE:
1. "ADVERTISEMENT" MEANS A COMMERCIAL MESSAGE IN ANY MEDIUM THAT
DIRECTLY OR INDIRECTLY PROMOTES OR ASSISTS A RENTAL-PURCHASE AGREEMENT.
2. "CASH PRICE" MEANS THE PRICE FOR WHICH THE MERCHANT WOULD SELL THE
PROPERTY TO THE CONSUMER FOR CASH ON THE DATE OF THE RENTAL-PURCHASE
AGREEMENT. THE CASH PRICE MUST BE REASONABLY RELATED TO THE FAIR MARKET
VALUE OF THE PROPERTY. THE CASH PRICE OF NEW MERCHANDISE IS REASONABLY
RELATED TO FAIR MARKET VALUE IF IT IS EQUAL TO OR LESS THAN THE AMOUNTS
DETERMINED BY MULTIPLYING THE MERCHANT COST BY THE APPLICABLE FACTOR SET
FORTH BELOW. FOR PURPOSES OF THIS SUBDIVISION, "MERCHANT COST" MEANS THE
BONA FIDE ACTUAL COST, INCLUDING FREIGHT CHARGES, OF THE RENTAL PROPERTY
PAID BY THE MERCHANT TO A WHOLESALER, DISTRIBUTOR, MANUFACTURER OR OTHER
PROVIDER, NET OF VOLUME REBATES, DISCOUNTS OR OTHER INCENTIVES RECEIVED
BY THE MERCHANT AT THE TIME THE MERCHANT PURCHASED THE ITEM. THE MAXIMUM
CASH PRICE MUST BE COMPUTED AS FOLLOWS:
(A) FOR APPLIANCES, THE APPLICABLE FACTOR IS 1.75;
(B) FOR ELECTRONICS HAVING MERCHANT COST LESS THAN ONE HUNDRED FIFTY
DOLLARS, THE APPLICABLE FACTOR IS 1.75;
(C) FOR ELECTRONICS HAVING MERCHANT COST GREATER THAN OR EQUAL TO ONE
HUNDRED FIFTY DOLLARS, THE APPLICABLE FACTOR IS 2.00;
(D) FOR FURNITURE AND JEWELRY, THE APPLICABLE FACTOR IS 2.50; AND
(E) FOR ITEMS NOT LISTED IN PARAGRAPHS (A), (B), (C) AND (D) OF THIS
SUBDIVISION, THE APPLICABLE FACTOR IS 2.00.
3. THE CASH PRICE OF USED MERCHANDISE OFFERED FOR RERENTAL MAY NOT
EXCEED THE MAXIMUM PERMITTED CASH PRICE OF THE PROPERTY WHEN NEW AND
MUST BE ADJUSTED FOR OTHER RELEVANT FACTORS. OTHER RELEVANT FACTORS
INCLUDE:
(A) THE DURATION OF PRIOR RENTALS AND WHETHER THE ITEM HAS BEEN
REPAIRED ONE OR MORE TIMES;
(B) WHETHER THE CONSUMER PRICE OF THE GENERAL CLASS OF ITEMS TO WHICH
THE ITEM BELONGS HAS DECREASED OR INCREASED SINCE THE MERCHANT
ORIGINALLY PURCHASED IT; AND
(C) THE CONDITION OF THE ITEM.
S. 557--A 3
4. "CONSUMER" MEANS AN INDIVIDUAL WHO LEASES PERSONAL PROPERTY UNDER A
RENTAL-PURCHASE AGREEMENT.
5. "MERCHANDISE" MEANS THE PERSONAL PROPERTY THAT IS THE SUBJECT OF A
RENTAL-PURCHASE AGREEMENT.
6. "MERCHANT" MEANS A PERSON WHO, IN THE ORDINARY COURSE OF BUSINESS,
REGULARLY LEASES, OFFERS TO LEASE, OR ACTS AS AN AGENT FOR THE LEASING
OF MERCHANDISE UNDER A RENTAL-PURCHASE AGREEMENT.
7. "RENTAL-PURCHASE AGREEMENT" MEANS AN AGREEMENT FOR THE USE OF
MERCHANDISE BY A CONSUMER PRIMARILY FOR PERSONAL, FAMILY, OR HOUSEHOLD
PURPOSES, FOR AN INITIAL PERIOD OF FOUR MONTHS OR LESS, THAT IS RENEWA-
BLE BY THE CONSUMER WITH EACH PAYMENT AFTER THE INITIAL PERIOD AND THAT
PERMITS THE CONSUMER TO BECOME THE OWNER OF THE PROPERTY. AN AGREEMENT
AS DEFINED IN THIS ARTICLE IS NOT A RETAIL INSTALLMENT SALES CONTRACT,
AGREEMENT OR OBLIGATION AS DEFINED IN THIS CHAPTER, NOR A SECURITY
INTEREST AS DEFINED IN SUBDIVISION THIRTY-SEVEN OF SECTION 1-201 OF THE
UNIFORM COMMERCIAL CODE.
8. "COST OF RENTAL" MEANS THE DIFFERENCE BETWEEN THE TOTAL OF PAYMENTS
AND THE CASH PRICE PLUS TAX.
9. "FEE" MEANS ANY PAYMENT, CHARGE, FEE, COST OR EXPENSE, HOWEVER
DENOMINATED, OTHER THAN A RENTAL PAYMENT.
10. "TOTAL COST" MEANS THE SUM OF ALL RENTAL PAYMENTS, PLUS APPLICABLE
TAXES NECESSARY TO ACQUIRE OWNERSHIP OF THE MERCHANDISE.
11. "INITIAL PAYMENT" MEANS THE AMOUNT TO BE PAID BEFORE OR AT THE
CONSUMMATION OF THE AGREEMENT OR THE DELIVERY OF THE PROPERTY IF DELIV-
ERY OCCURS AFTER CONSUMMATION, INCLUDING THE RENTAL PAYMENT, TAXES,
DELIVERY FEE, AND ANY OPTIONAL FEES AGREED TO BY THE CONSUMER.
12. "RENEWAL PAYMENT" MEANS THE SUM OF THE RENTAL PAYMENT AND APPLICA-
BLE TAX THE CONSUMER MUST PAY TO RENEW THE AGREEMENT FOR A SPECIFIED
RENTAL TERM.
13. "RENTAL PAYMENT" MEANS THE AMOUNT OF RENT REQUIRED TO BE PAID BY
THE CONSUMER FOR THE POSSESSION AND USE OF THE PROPERTY FOR A SPECIFIC
RENTAL TERM, BUT DOES NOT INCLUDE TAXES OR ANY OTHER FEES.
14. "RENTAL TERM" MEANS A WEEK, MONTH OR OTHER SPECIFIC PERIOD OF
TIME, DURING WHICH THE CONSUMER HAS A RIGHT TO POSSESS AND USE THE PROP-
ERTY THAT IS THE SUBJECT OF A RENTAL-PURCHASE AGREEMENT AFTER PAYING THE
RENAL PAYMENT AND ANY APPLICABLE TAXES FOR SUCH PERIOD.
15. "PAYMENT SCHEDULE" MEANS THE AMOUNT, NUMBER, AND TIMING OF RENEWAL
PAYMENTS.
S 501. FORM. 1. A RENTAL-PURCHASE AGREEMENT MUST BE WRITTEN IN PLAIN
ENGLISH AND IN ANY OTHER LANGUAGE USED BY THE MERCHANT IN AN ADVERTISE-
MENT RELATED TO THE RENTAL-PURCHASE AGREEMENT. NUMERICAL AMOUNTS MUST BE
STATED IN FIGURES.
2. DISCLOSURES REQUIRED BY THIS SECTION MUST BE PRINTED OR TYPED IN
EACH RENTAL-PURCHASE AGREEMENT IN A SIZE EQUAL TO AT LEAST TEN-POINT
BOLD-FACED TYPE IN A COLOR THAT CLEARLY CONTRASTS WITH THE BACKGROUND.
3. A RENTAL-PURCHASE AGREEMENT MAY NOT CONTAIN A PROVISION:
(A) REQUIRING A CONFESSION OF JUDGMENT;
(B) AUTHORIZING A MERCHANT OR AN AGENT OF THE MERCHANT TO COMMIT A
BREACH OF THE PEACE IN THE REPOSSESSION OF MERCHANDISE;
(C) WAIVING A DEFENSE, COUNTERCLAIM, OR RIGHT THE CONSUMER MAY HAVE
AGAINST THE MERCHANT OR AN AGENT OF THE MERCHANT;
(D) REQUIRING THE PURCHASE OF INSURANCE FROM THE MERCHANT TO COVER THE
MERCHANDISE;
(E) REQUIRING THE PAYMENT OF A LATE CHARGE OR REINSTATEMENT FEE UNLESS
A RENEWAL PAYMENT IS DELINQUENT FOR MORE THAN THREE DAYS FOR AGREEMENTS
THAT ARE RENEWED MORE FREQUENTLY THAN MONTHLY AND SEVEN DAYS FOR AGREE-
S. 557--A 4
MENTS THAT ARE RENEWED MONTHLY 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 MORE FREQUENTLY THAN MONTHLY AND
NOT MORE THAN THE GREATER OF TEN PERCENT OF THE DELINQUENT AMOUNT OR
FIVE DOLLARS FOR AGREEMENTS THAT ARE RENEWED MONTHLY;
(F) REQUIRING A PAYMENT IN ADDITION TO REGULAR RENEWAL PAYMENTS AND
PAST DUE LATE FEES IN ORDER TO ACQUIRE OWNERSHIP OF THE MERCHANDISE OR
REQUIRING RENEWAL PAYMENTS TOTALING MORE THAN THE COST TO ACQUIRE OWNER-
SHIP, AS PROVIDED IN SECTION FIVE HUNDRED THREE OF THIS ARTICLE.
4. ONLY ONE LATE FEE MAY BE ASSESSED FOR A DELINQUENT RENEWAL PAYMENT
REGARDLESS OF THE PERIOD DURING WHICH IT REMAINS DELINQUENT. NO MERCHANT
SHALL ASSESS A LATE FEE FOR A RENEWAL PAYMENT MADE IN FULL ON ITS DUE
DATE OR WITHIN THREE DAYS FOR AGREEMENTS THAT ARE RENEWED ON MORE
FREQUENT THAN MONTHLY PERIODS OR SEVEN DAYS FOR AGREEMENTS THAT ARE
RENEWED ON MONTHLY PERIODS WHEN THE ONLY DELINQUENCY IS ATTRIBUTABLE TO
LATE FEES ASSESSED ON EARLIER RENEWAL PAYMENTS; 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 EXPI-
RATION OF THE APPLICABLE DELINQUENCY PERIODS.
5. A RENTAL-PURCHASE AGREEMENT MUST PROVIDE THAT:
(A) A CHARGE IN ADDITION TO RENEWAL 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 BY PAYING ALL DELINQUENT
RENEWAL PAYMENTS AND LATE FEES, AND TAX WITHIN SEVEN DAYS OF A DELIN-
QUENT PAYMENT FOR AGREEMENTS RENEWED ON TERMS MORE FREQUENTLY THAN
MONTHLY, AND WITHIN FOURTEEN DAYS OF A DELINQUENT PAYMENT FOR AGREEMENTS
THAT ARE RENEWED MONTHLY;
(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
ONE YEAR AFTER THE DATE OF THE RETURN OF THE MERCHANDISE; AND
(D) THIS SECTION DOES NOT PREVENT A MERCHANT FROM ATTEMPTING TO REPOS-
SESS MERCHANDISE DURING THE REINSTATEMENT PERIOD PROVIDED IN PARAGRAPH
(B) OF THIS SUBDIVISION. THE CONSUMER'S RIGHT TO REINSTATE AN AGREEMENT
DOES NOT EXPIRE BECAUSE OF SUCH REPOSSESSION.
6. EVERY RENTAL-PURCHASE AGREEMENT SHALL BE CONTAINED IN A SINGLE
DOCUMENT WHICH SHALL SET FORTH ALL OF THE RIGHTS AND OBLIGATIONS OF EACH
PARTY. EVERY RENTAL-PURCHASE AGREEMENT SHALL BE WRITTEN IN AT LEAST
TEN-POINT TYPE IN WORDS WITH COMMON AND EVERY DAY MEANINGS, AND SHALL
CLEARLY AND CONSPICUOUSLY DISCLOSE ALL OF THE FOLLOWING:
A. THE NAMES OF THE MERCHANT AND THE CONSUMER, THE MERCHANT'S BUSINESS
ADDRESS AND TELEPHONE NUMBER, THE CONSUMER'S ADDRESS, THE DATE ON WHICH
THE AGREEMENT IS EXECUTED, AND A DESCRIPTION OF THE MERCHANDISE SUFFI-
CIENT TO IDENTIFY IT;
B. WHETHER THE MERCHANDISE SUBJECT TO THE RENTAL-PURCHASE AGREEMENT 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 OF THE "INITIAL PAYMENT," USING THAT TERM AND AN ITEMI-
ZATION OF THE COMPONENTS OF THE INITIAL PAYMENT;
S. 557--A 5
D. THE AMOUNT OF THE "RENEWAL PAYMENT," USING THAT TERM, AND AN ITEMI-
ZATION OF THE COMPONENTS OF THE RENEWAL PAYMENT;
E. THE "TOTAL COST," USING THAT TERM AND SUBSTANTIALLY THE FOLLOWING
STATEMENT: "THIS IS THE AMOUNT YOU WILL HAVE PAID IF YOU MAKE ALL
RENEWAL PAYMENTS NECESSARY TO ACQUIRE OWNERSHIP AS SCHEDULED. YOU CAN
PURCHASE THE MERCHANDISE FOR LESS BY USING THE EARLY PURCHASE OPTION";
F. THE "CASH PRICE PLUS TAX," USING THAT TERM, AND SUBSTANTIALLY THE
FOLLOWING STATEMENT: "THE AMOUNT YOU WOULD PAY TO PURCHASE THE MERCHAN-
DISE TODAY";
G. THE "COST OF RENTAL," USING THAT TERM, WITH SUBSTANTIALLY THE
FOLLOWING STATEMENT "THE AMOUNT OVER THE CASH PRICE PLUS TAX YOU WILL
PAY TO ACQUIRE OWNERSHIP IF YOU MAKE ALL SCHEDULED RENEWAL PAYMENTS";
H. THE "PAYMENT SCHEDULE" USING THAT TERM, BASED ON THE RENTAL TERM
AGREED TO BY THE CONSUMER AND THE MERCHANT;
I. THE AMOUNT AND AN EXPLANATION OF ANY FEE THE CONSUMER MAY INCUR
OTHER THAN RENEWAL PAYMENT, INCLUDING FOR EXAMPLE, ANY DELIVERY FEE,
LATE FEE, OR FEE FOR OPTIONAL PRODUCTS OR SERVICES AGREED TO BY THE
CONSUMER AND, TO THE EXTENT APPLICABLE, SUBSTANTIALLY THE FOLLOWING
STATEMENT: "THE TOTAL COST DOES NOT INCLUDE LATE PAYMENT FEES YOU MAY
INCUR OR CHARGES FOR OPTIONAL PRODUCTS OR SERVICES YOU AGREED TO PAY
FOR;"
J. 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 PURSU-
ANT 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
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;
K. THAT THE CONSUMER DOES NOT ACQUIRE OWNERSHIP RIGHTS UNLESS THE
CONSUMER HAS COMPLIED WITH ONE OF THE OWNERSHIP TERMS OF THE AGREEMENT;
L. THE FOLLOWING NOTICE:
"NOTICE
YOU ARE RENTING THIS MERCHANDISE. YOU WILL NOT OWN IT UNTIL YOU MAKE
ALL OF THE REGULARLY SCHEDULED PAYMENTS OR YOU USE THE EARLY PURCHASE
OPTION. YOU DO NOT HAVE THE RIGHT TO KEEP THE MERCHANDISE IF YOU DO NOT
MAKE REQUIRED PAYMENTS OR DO NOT USE THE EARLY PURCHASE OPTION. IF YOU
MISS A PAYMENT, THE MERCHANT CAN REPOSSESS THE MERCHANDISE, BUT, YOU MAY
HAVE THE RIGHT TO THE RETURN OF THE SAME OR SIMILAR MERCHANDISE. SEE THE
CONTRACT FOR AN EXPLANATION OF YOUR RIGHTS."
M. A STATEMENT OF THE CONSUMER'S RIGHT TO ACQUIRE OWNERSHIP AS
PROVIDED IN SECTION FIVE HUNDRED FOUR OF THIS ARTICLE, INCLUDING
SUBSTANTIALLY THE FOLLOWING STATEMENT: "THE ATTACHED CHART SHOWS THE
AMOUNT REQUIRED TO EXERCISE YOUR EARLY PURCHASE OPTION AFTER EACH
RENEWAL PAYMENT, ASSUMING YOU MAKE EACH RENEWAL PAYMENT ON TIME." THE
RENTAL-PURCHASE AGREEMENT SHALL BE ACCOMPANIED BY A CHART SHOWING THE
AMOUNT REQUIRED TO EXERCISE THE CONSUMER'S EARLY PURCHASE OPTION AFTER
EACH RENEWAL PAYMENT IF PAYMENTS ARE MADE AS SCHEDULED;
N. A DESCRIPTION OF THE CONSUMER'S REINSTATEMENT RIGHTS AS PROVIDED IN
SUBDIVISION FIVE OF THIS SECTION;
O. IF WARRANTY COVERAGE IS TRANSFERABLE TO A CONSUMER WHO ACQUIRES
OWNERSHIP OF THE MERCHANDISE, A STATEMENT THAT THE UNEXPIRED PORTION OF
ALL WARRANTIES PROVIDED BY THE MANUFACTURER, DISTRIBUTOR, OR SELLER OF
THE MERCHANDISE THAT IS THE SUBJECT OF THE RENTAL-PURCHASE AGREEMENT
S. 557--A 6
WILL BE TRANSFERRED BY THE MERCHANT TO THE CONSUMER AT THE TIME THE
CONSUMER ACQUIRES OWNERSHIP OF THE MERCHANDISE FROM THE MERCHANT; AND
P. A DESCRIPTION OF THE MERCHANT'S MAINTENANCE AND REPAIR OBLIGATION
AS PROVIDED IN SECTION FIVE HUNDRED FIVE OF THIS ARTICLE.
7. THE DISCLOSURES REQUIRED BY PARAGRAPHS E, F, G, H, M, AND N OF
SUBDIVISION SIX OF THIS SECTION SHALL BE PRINTED IN AT LEAST TEN-POINT
BOLDFACED TYPE AND CAPITAL LETTERS IF TYPED AND SHALL BE GROUPED TOGETH-
ER IN A BOX FORMED BY A HEAVY LINE IN THE FOLLOWING FORM. THE BOX
DESCRIBED IN THIS SUBDIVISION SHALL APPEAR IMMEDIATELY ABOVE THE SPACE
RESERVED FOR THE BUYER'S SIGNATURE.
8. THE DISCLOSURES REQUIRED BY PARAGRAPHS E, F, AND G, OF SUBDIVISION
SIX OF THIS SECTION SHALL BE GROUPED TOGETHER IN A BOX FORMED BY A HEAVY
LINE IN THE FORM PRESCRIBED IN SUBDIVISION SIX OF THIS SECTION AND SHALL
BE CLEARLY AND CONSPICUOUSLY PLACED ON A TAG OR STICKER AFFIXED TO THE
MERCHANDISE AVAILABLE FOR RENTAL-PURCHASE. IF THE MERCHANDISE AVAILABLE
FOR RENTAL-PURCHASE IS NOT DISPLAYED AT THE MERCHANT'S PLACE OF BUSINESS
BUT APPEARS IN A PHOTOGRAPH OR CATALOG SHOWN TO CONSUMERS, THE DISCLO-
SURES REQUIRED BY THIS SUBDIVISION SHALL APPEAR WITH THE PHOTOGRAPH OR
IN THE CATALOG OR BE PROVIDED TO THE CONSUMER IN THE FORM OF A TAG OR
STICKER.
S 502. AVAILABILITY. EVERY RENTAL PURCHASE AGREEMENT SHALL STATE THAT
A CONSUMER AT HIS OR HER REQUEST SHALL BE PERMITTED TO REVIEW A
COMPLETED RENTAL-PURCHASE AGREEMENT FOR UP TO FORTY-EIGHT HOURS PRIOR TO
SIGNING. THE MERCHANT SHALL HAVE NO OBLIGATION TO HOLD MERCHANDISE FOR
A CONSUMER WHILE A RENTAL-PURCHASE AGREEMENT IS BEING REVIEWED PURSUANT
TO THIS SECTION. A COPY OF THE FULLY COMPLETED RENTAL-PURCHASE AGREEMENT
AND ALL OTHER DOCUMENTS WHICH THE MERCHANT REQUESTS THE CONSUMER TO SIGN
SHALL BE GIVEN TO THE CONSUMER AT THE TIME THEY ARE SIGNED. THE RENTAL-
PURCHASE AGREEMENT SHALL NOT BE ENFORCEABLE AGAINST THE CONSUMER UNTIL
THE CONSUMER HAS RECEIVED A SIGNED COPY. IN ADDITION TO ANY OTHER RIGHT
OF CANCELLATION, A CONSUMER HAS THE RIGHT TO CANCEL A RENTAL-PURCHASE
AGREEMENT, WITHOUT PENALTY OR OBLIGATION IF THE CONSUMER HAS NOT TAKEN
POSSESSION OF THE PROPERTY.
S 503. TOTAL OF RENTAL PAYMENTS. NO MERCHANT SHALL OFFER A RENTAL-PUR-
CHASE AGREEMENT REQUIRING RENTAL PAYMENTS NECESSARY TO ACQUIRE OWNERSHIP
TOTALING MORE THAN AN AMOUNT, FORTY-FIVE PERCENT OF WHICH EQUALS THE
CASH PRICE OF THE MERCHANDISE. WHEN RENTAL PAYMENTS MADE BY A CONSUMER
TOTAL AN AMOUNT, FORTY-FIVE 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.
S 504. EARLY PURCHASE OPTION. 1. 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 PLUS ANY PAST DUE
FEES AND TAXES LESS FORTY-FIVE PERCENT OF ALL RENTAL PAYMENTS PREVIOUSLY
MADE BY THE CONSUMER, PLUS APPLICABLE TAXES. THE MINIMUM EARLY PURCHASE
OPTION AMOUNT MAY NOT BE LESS THAN THE AMOUNT OF ONE RENTAL PAYMENT.
2. AFTER EACH RENEWAL PAYMENT IS MADE, THE MERCHANT SHALL PROVIDE THE
CONSUMER WITH A RECEIPT OR STATEMENT STATING THE AMOUNT OF THE EARLY
PURCHASE OPTION AT THAT TIME.
S 505. MAINTENANCE OF MERCHANDISE. 1. THE MERCHANT SHALL MAINTAIN THE
PROPERTY SUBJECT TO THE RENTAL-PURCHASE AGREEMENT IN GOOD WORKING ORDER
WHILE THE AGREEMENT IS IN EFFECT WITHOUT CHARGING ANY FEE FOR THE
SERVICE TO THE CONSUMER IN ADDITION TO THE REGULARLY SCHEDULED RENEWAL
PAYMENTS SET FORTH IN THE RENTAL-PURCHASE AGREEMENT. AFTER THE MERCHANT
RECEIVES NOTICE, IF REPAIRS CANNOT BE COMPLETED WITHIN A REASONABLE TIME
UNDER THE CIRCUMSTANCES, THE MERCHANT SHALL TEMPORARILY SUBSTITUTE PROP-
S. 557--A 7
ERTY OF COMPARABLE QUALITY AND CONDITION WHILE REPAIRS ARE BEING MADE.
IF REPAIRS CANNOT BE COMPLETED TO THE REASONABLE SATISFACTION OF THE
CONSUMER WITHIN NINETY DAYS AFTER THE MERCHANT RECEIVES NOTICE FROM THE
CONSUMER OR WITHIN A LONGER PERIOD VOLUNTARILY AGREED TO BY THE CONSUM-
ER, THE MERCHANT SHALL PERMANENTLY REPLACE THE PROPERTY WITH THE SAME
BRAND, IF AVAILABLE, AND COMPARABLE IN QUALITY, AGE, CONDITION, AND
WARRANTY COVERAGE TO THE REPLACED PROPERTY. THE CONSUMER'S RENTAL
PAYMENT SHALL BE DEFERRED FOR ANY PRO RATA PORTION OF A RENTAL TERM FOR
ANY PERIOD OF TIME GREATER THAN ONE FULL DAY AND EACH FULL DAY THEREAFT-
ER DURING WHICH THE CONSUMER'S USE OF THE PROPERTY IS MATERIALLY LIMITED
DUE TO THE NEED FOR REPAIR OR SUBSTITUTE PROPERTY HAS NOT BEEN PROVIDED
TO THE CONSUMER.
2. THIS SECTION SHALL NOT APPLY TO THE REPAIR OF DAMAGES FOR WHICH THE
CONSUMER IS LIABLE PURSUANT TO PARAGRAPH J OF SUBDIVISION SEVEN OF
SECTION FIVE HUNDRED ONE OF THIS ARTICLE. IF THE MERCHANT DOES NOT
COMPLY WITH THIS SECTION, THE MERCHANT HAS THE BURDEN OF PROOF TO ESTAB-
LISH THAT NONCOMPLIANCE WAS JUSTIFIED AND IN GOOD FAITH.
3. A MERCHANT SHALL NOT DELIVER TO A CONSUMER ANY PROPERTY WHICH THE
MERCHANT KNOWS OR HAS REASON TO KNOW IS DEFECTIVE UNLESS SUCH DEFECT IS
DISCLOSED TO THE CONSUMER IN WRITING. DEFECTS SHALL NOT INCLUDE VISIBLE
DAMAGE OR THE EFFECTS OF NORMAL WEAR AND TEAR.
S 506. ADVERTISEMENT. 1. AN ADVERTISEMENT FOR RENTAL-PURCHASE AGREE-
MENTS THAT REFERS TO OR STATES THE AMOUNT OF A PAYMENT OR THE RIGHT TO
ACQUIRE OWNERSHIP OF ANY SPECIFIC ITEM OR ITEMS SHALL CLEARLY AND
CONSPICUOUSLY STATE:
(A) THAT THE TRANSACTION ADVERTISED IS A RENTAL-PURCHASE AGREEMENT;
(B) FOR EACH SUCH ITEM, THE RENTAL TERM, THE RENTAL PAYMENT, THE TOTAL
NUMBER OF RENTAL PAYMENTS, AND THE TOTAL AMOUNT OF RENTAL PAYMENTS TO BE
PAID TO ACQUIRE OWNERSHIP, WHICH AMOUNT SHALL BE EXPLICITLY LABELED
"TOTAL OF PAYMENTS";
(C) THAT THE CONSUMER DOES NOT ACQUIRE OWNERSHIP RIGHTS UNLESS THE
CONSUMER COMPLIES WITH THE OWNERSHIP TERMS OF THE AGREEMENT;
(D) THE CIRCUMSTANCES UNDER WHICH THE CONSUMER CAN ACQUIRE OWNERSHIP
RIGHTS; AND
(E) WHETHER THE ADVERTISED TERMS ARE FOR NEW OR USED MERCHANDISE.
2. AN ADVERTISEMENT FOR RENTAL-PURCHASE AGREEMENTS THAT REFERS TO MORE
THAN ONE ITEM WITHIN A CLASS OR TYPE OF ITEMS AND INCLUDES INFORMATION
ON RENTAL PAYMENT AMOUNTS, SUCH AS "STARTING AT" OR "AS LOW AS", SHALL
INCLUDE A REPRESENTATIVE ITEM AVAILABLE AT THAT AMOUNT AND SHALL
CONSPICUOUSLY STATE:
(A) THAT THE TRANSACTION ADVERTISED IS A RENTAL-PURCHASE AGREEMENT;
(B) FOR THE REPRESENTATIVE ITEM, THE RENTAL TERM, THE RENTAL PAYMENT,
THE TOTAL NUMBER OF RENTAL PAYMENTS, AND THE TOTAL AMOUNT OF RENTAL
PAYMENTS TO BE PAID TO ACQUIRE OWNERSHIP, WHICH AMOUNT SHALL BE EXPLIC-
ITLY LABELED "TOTAL OF PAYMENTS";
(C) THAT THE CONSUMER DOES NOT ACQUIRE OWNERSHIP RIGHTS UNLESS THE
CONSUMER COMPLIES WITH THE OWNERSHIP TERMS OF THE AGREEMENT; AND
(D) WHETHER THE ADVERTISED TERMS ARE FOR NEW OR USED MERCHANDISE.
S 507. EXEMPTED TRANSACTIONS. THIS ARTICLE SHALL NOT APPLY TO:
1. AGREEMENTS FOR THE RENTAL OF MERCHANDISE IN WHICH THE PERSON WHO
RENTS THE MERCHANDISE HAS NO LEGAL RIGHT TO BECOME THE OWNER OF THE
PROPERTY AT THE END OF THE RENTAL TERM;
2. A LEASE OF A SAFE DEPOSIT BOX; AND
3. RETAIL INSTALLMENT SALES AGREEMENTS, CONTRACTS, OR OBLIGATIONS.
S. 557--A 8
S 508. ENFORCEMENT. 1. A CONSUMER WHO HAS SUFFERED A LOSS DUE TO A
VIOLATION OF THIS ARTICLE BY A MERCHANT IS ENTITLED TO RECOVER FROM THE
MERCHANT ACTUAL DAMAGES, REASONABLE ATTORNEY'S FEES AND COURT COSTS.
2. WHENEVER A COURT FINDS THAT A CONSUMER HAS BEEN INJURED BECAUSE A
MERCHANT ACTED IN BAD FAITH IN ITS PERFORMANCE UNDER THIS ARTICLE, THE
MERCHANT SHALL BE SUBJECT TO A PENALTY OF NOT LESS THAN ONE HUNDRED
DOLLARS NOR MORE THAN ONE THOUSAND DOLLARS AS DETERMINED BY THE COURT.
3. A VIOLATION OF THIS ARTICLE IS A DECEPTIVE TRADE PRACTICE UNDER
SECTION THREE HUNDRED FORTY-NINE OF THE GENERAL BUSINESS LAW.
4. WHENEVER THERE SHALL BE A VIOLATION OF THIS ARTICLE AN APPLICATION
MAY BE MADE BY THE ATTORNEY GENERAL IN THE NAME OF THE PEOPLE OF THE
STATE OF NEW YORK TO A COURT OR JUSTICE HAVING JURISDICTION TO ISSUE AN
INJUNCTION, AND UPON NOTICE TO THE DEFENDANT OF NOT LESS THAN FIVE DAYS,
TO ENJOIN AND RESTRAIN THE CONTINUANCE OF SUCH VIOLATIONS; AND IF IT
SHALL APPEAR TO THE SATISFACTION OF THE COURT OR JUSTICE, THAT THE
DEFENDANT HAS, IN FACT, VIOLATED THIS SECTION AN INJUNCTION MAY BE
ISSUED BY SUCH COURT OR JUSTICE ENJOINING AND RESTRAINING ANY FURTHER
VIOLATION, WITHOUT REQUIRING PROOF THAT ANY PERSON HAS, IN FACT, BEEN
INJURED OR DAMAGED THEREBY. IN ANY SUCH PROCEEDING, THE COURT MAY MAKE
ALLOWANCES TO THE ATTORNEY GENERAL AS PROVIDED IN PARAGRAPH SIX OF
SUBDIVISION (A) OF SECTION EIGHTY-THREE HUNDRED THREE OF THE CIVIL PRAC-
TICE LAW AND RULES AND DIRECT RESTITUTION. WHENEVER THE COURT SHALL
DETERMINE THAT A VIOLATION OF THIS ARTICLE HAS OCCURRED, THE COURT MAY
IMPOSE A CIVIL PENALTY OF NOT MORE THAN FIVE HUNDRED DOLLARS FOR EACH
VIOLATION. IN CONNECTION WITH ANY SUCH PROPOSED APPLICATION THE ATTORNEY
GENERAL IS AUTHORIZED TO TAKE PROOF AND MAKE A DETERMINATION OF THE
RELEVANT FACTS AND TO ISSUE SUBPOENAS IN ACCORDANCE WITH THE CIVIL PRAC-
TICE LAW AND RULES.
5. NOTHING IN THIS ARTICLE SHALL BE CONSTRUED SO AS TO NULLIFY OR
IMPAIR ANY RIGHT OR RIGHTS WHICH A CONSUMER MAY HAVE AGAINST A MERCHANT
AT COMMON LAW, BY STATUTE, OR OTHERWISE.
6. A MERCHANT OR ASSIGNEE MAY NOT BE HELD LIABLE IN AN ACTION BROUGHT
UNDER THIS ARTICLE FOR A VIOLATION OF THIS ARTICLE THAT WAS UNINTEN-
TIONAL AND RESULTED FROM A BONA FIDE OR CLERICAL ERROR NOTWITHSTANDING
THE MAINTENANCE OF PROCEDURES REASONABLY ADOPTED TO AVOID ANY SUCH
ERROR.
7. AN ACTION SHALL NOT BE BROUGHT UNDER THIS ARTICLE MORE THAN FOUR
YEARS AFTER THE OCCURRENCE OF THE ACT, METHOD OR PRACTICE WHICH IS THE
SUBJECT OF THE ACTION OR MORE THAN ONE YEAR AFTER THE LAST PAYMENT IN A
TRANSACTION INVOLVING THE METHOD, ACT OR PRACTICE WHICH IS THE SUBJECT
OF THE ACTION, WHICHEVER IS LATER.
S 3. 1. The consumer protection board, in conjunction with the depart-
ment of economic development, and in consultation with representatives
from the rent-to-own industry, the business community, and consumer
advocates, shall perform a survey of retailers located within the state
to determine the average markup applied by retailers to consumer goods
offered for sale to the public. In performing such survey the consumer
protection board and department of economic development shall:
(a) gather data on those goods generally offered for sale and rental
by rent-to-own stores and separately consider and report on markups
applied to computer systems, electronic sets, appliances, automotive
accessories, furniture, jewelry and musical instruments;
(b) gather data from a representative sample of retailers, including
those with high sales volume, those with low sales volume and those who
sell used merchandise; and
S. 557--A 9
(c) gather data from every market in which rent-to-own transactions
are offered to the public to the extent practicable.
2. Any records, documents, papers, maps, books, tapes, photographs,
files, sound recordings, or other business material, regardless of form
or characteristics, obtained by the consumer protection board and
department of economic development pursuant to this section are confi-
dential. At the conclusion of the survey, any matter determined by the
consumer protection board and the department of economic development to
be a trade secret or proprietary confidential business information held
by either the consumer protection board or the department of economic
development pursuant to such survey shall be considered confidential.
3. The consumer protection board and department of economic develop-
ment shall prepare and submit, on or before March 1, 2010, the results
of the survey and its joint recommendation as to appropriate and fair
formulas for determining cash prices for computer systems, electronic
sets, appliances, automotive accessories, furniture, jewelry and musical
instruments, and other merchandise for the purpose of establishing
limits on the total cost of rental-purchase transactions to the gover-
nor, temporary president of the senate, speaker of the assembly, and
minority leaders of the senate and assembly.
4. For the purposes of this section, the terms:
(a) "markup" shall mean the difference between the retailer's cost of
goods and the price at which such goods are offered for sale to the
public; and
(b) "retailer's cost" shall mean the documented actual cost, including
actual freight charges, of the merchandise to the retailer from a whole-
saler, distributor, supplier, or manufacturer and net of any discounts,
rebates, and incentives.
S 4. This act shall take effect on the one hundred eightieth day after
it shall have become a law and shall apply to all agreements entered
into or offered on or after such date; provided, however, that section
three of this act shall take effect immediately and shall expire and be
deemed repealed March 1, 2010.
