99–006

107TH CONGRESS REPT. 107–590 " HOUSE OF REPRESENTATIVES ! 2d Session Part 1

CONSUMER RENTAL PURCHASE AGREEMENT ACT

JULY 18, 2002.—Ordered to be printed 

Mr. OXLEY, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

together with 

SUPPLEMENTAL VIEWS 

[To accompany H.R. 1701] 

[Including cost estimate of the Congressional Budget Office]

The Committee on Financial Services, to whom was referred the 

bill (H.R. 1701) to amend the Consumer Credit Protection Act to 

assure meaningful disclosures of the terms of rental-purchase 

agreements, including disclosures of all costs to consumers under 

such agreements, to provide certain substantive rights to consumers under such agreements, and for other purposes, having considered the same, report favorably thereon with an amendment and 

recommend that the bill as amended do pass. 

CONTENTS 

Page 

Amendment .............................................................................................................. 2 

Purpose and Summary ............................................................................................ 10 

Background and Need for Legislation .................................................................... 11 

Hearings ................................................................................................................... 11 

Committee Consideration ........................................................................................ 11 

Committee Votes ...................................................................................................... 12 

Committee Oversight Findings ............................................................................... 15 

Performance Goals and Objectives ......................................................................... 16 

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 16 

Committee Cost Estimate ....................................................................................... 16 

Congressional Budget Office Estimate ................................................................... 16 

Federal Mandates Statement ................................................................................. 18 

Advisory Committee Statement .............................................................................. 18 

Constitutional Authority Statement ...................................................................... 18 

Applicability to Legislative Branch ........................................................................ 19 

Section-by-Section Analysis of the Legislation ...................................................... 19 

Changes in Existing Law Made by the Bill, as Reported ..................................... 22 

2

Supplemental Views ................................................................................................ 35

AMENDMENT

The amendment is as follows: 

Strike all after the enacting clause and insert the following:

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Consumer Rental Purchase Agreement Act’’. 

SEC. 2. FINDINGS AND DECLARATION OF PURPOSE. 

(a) FINDINGS.—The Congress finds as follows: 

(1) The rental-purchase industry provides a service that meets and satisfies 

the demands of many consumers. 

(2) Each year, approximately 2,300,000 United States households enter into 

rental-purchase transactions and over a 5-year period approximately 4,900,000 

United States households will do so.

(3) Competition among the various firms engaged in the extension of rentalpurchase transactions would be strengthened by informed use of rental-purchase transactions. 

(4) The informed use of rental-purchase transactions results from an awareness of the cost thereof by consumers. 

(b) PURPOSE.—The purpose of this title is to assure the availability of rental-purchase transactions and to assure simple, meaningful, and consistent disclosure of 

rental-purchase terms so that consumers will be able to more readily compare the 

available rental-purchase terms and avoid uninformed use of rental-purchase transactions, and to protect consumers against unfair rental-purchase practices. 

SEC. 3. CONSUMER CREDIT PROTECTION ACT. 

The Consumer Credit Protection Act is amended by adding at the end the following new title: 

‘‘TITLE X—RENTAL-PURCHASE TRANSACTIONS

‘‘Sec. 1001. Definitions. 

‘‘Sec. 1002. Exempted transactions. 

‘‘Sec. 1003. General disclosure requirements. 

‘‘Sec. 1004. Rental-purchase disclosures. 

‘‘Sec. 1005. Other agreement provisions. 

‘‘Sec. 1006. Right to acquire ownership. 

‘‘Sec. 1007. Prohibited provisions. 

‘‘Sec. 1008. Statement of accounts. 

‘‘Sec. 1009. Renegotiations and extensions. 

‘‘Sec. 1010. Point-of-rental disclosures. 

‘‘Sec. 1011. Rental-purchase advertising. 

‘‘Sec. 1012. Civil liability. 

‘‘Sec. 1013. Additional grounds for civil liability. 

‘‘Sec. 1014. Liability of assignees. 

‘‘Sec. 1015. Regulations. 

‘‘Sec. 1016. Enforcement. 

‘‘Sec. 1017. Criminal liability for willful and knowing violation. 

‘‘Sec. 1018. Relation to other laws. 

‘‘Sec. 1019. Effect on government agencies. 

‘‘Sec. 1020. Compliance date.

‘‘SEC. 1001. DEFINITIONS. 

‘‘For purposes of this title, the following definitions shall apply: 

‘‘(1) ADVERTISEMENT.—The term ‘advertisement’ means a commercial message 

in any medium that promotes, directly or indirectly, a rental-purchase agreement but does not include price tags, window signs, or other in-store merchandising aids. 

‘‘(2) AGRICULTURAL PURPOSE.—The term ‘agricultural purpose’ includes—

‘‘(A) the production, harvest, exhibition, marketing, transformation, processing, or manufacture of agricultural products by a natural person who 

cultivates plants or propagates or nurtures agricultural products; and 

‘‘(B) the acquisition of farmlands, real property with a farm residence, or 

personal property and services used primarily in farming. 

‘‘(3) BOARD.—The term ‘Board’ means the Board of Governors of the Federal 

Reserve System. 

‘‘(4) CASH PRICE.—The term ‘cash price’ means the price at which a merchant, 

in the ordinary course of business, offers to sell for cash the property that is 

the subject of the rental-purchase transaction. 

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‘‘(5) CONSUMER.—The term ‘consumer’ means a natural person who is offered 

or enters into a rental-purchase agreement. 

‘‘(6) DATE OF CONSUMMATION.—The term ‘date of consummation’ means the 

date on which a consumer becomes contractually obligated under a rental-purchase agreement. 

‘‘(7) INITIAL PAYMENT.—The term ‘initial payment’ means the amount to be 

paid before or at the consummation of the agreement or the delivery of the 

property if delivery occurs after consummation, including the rental payment; 

service, processing, or administrative charges; delivery fee; refundable security 

deposit; taxes; mandatory fees or charges; and any optional fees or charges 

agreed to by the consumer. 

‘‘(8) MERCHANT.—The term ‘merchant’ means a person who provides the use 

of property through a rental-purchase agreement in the ordinary course of business and to whom a consumer’s initial payment under the agreement is payable. 

‘‘(9) PAYMENT SCHEDULE.—The term ‘payment schedule’ means the amount 

and timing of the periodic payments and the total number of all periodic payments that the consumer will make if the consumer acquires ownership of the 

property by making all periodic payments. 

‘‘(10) PERIODIC PAYMENT.—The term ‘periodic payment’ means the total payment a consumer will make for a specific rental period after the initial payment, including the rental payment, taxes, mandatory fees or charges, and any 

optional fees or charges agreed to by the consumer. 

‘‘(11) PROPERTY.—The term ‘property’ means property that is not real property under the laws of the State where the property is located when it is made 

available under a rental-purchase agreement. 

‘‘(12) RENTAL PAYMENT.—The term ‘rental payment’ means rent required to 

be paid by a consumer for the possession and use of property for a specific rental period, but does not include taxes or any fees or charges. 

‘‘(13) RENTAL PERIOD.—The term ‘rental period’ means a week, month, or 

other specific period of time, during which the consumer has a right to possess 

and use property that is the subject of a rental-purchase agreement after paying 

the rental payment and any applicable taxes for such period. 

‘‘(14) RENTAL-PURCHASE AGREEMENT.—

‘‘(A) IN GENERAL.—The term ‘rental-purchase agreement’ means a contract in the form of a bailment or lease for the use of property by a consumer for an initial period of 4 months or less, that is renewable with each 

payment by the consumer, and that permits but does not obligate the consumer to become the owner of the property. 

‘‘(B) EXCLUSIONS.—The term ‘rental-purchase agreement’ does not include—

‘‘(i) a credit sale (as defined in section 103(g) of the Truth in Lending 

Act); 

‘‘(ii) a consumer lease (as defined in section 181(1) of such Act); or 

‘‘(iii) a transaction giving rise to a debt incurred in connection with 

the business of lending money or a thing of value. 

‘‘(15) RENTAL-PURCHASE COST.—

‘‘(A) IN GENERAL.—For purposes of sections 1010 and 1011, the term 

‘rental-purchase cost’ means the sum of all rental payments and mandatory 

fees or charges imposed by the merchant as a condition of entering into a 

rental-purchase agreement or acquiring ownership of property under a rental-purchase agreement, such as the following: 

‘‘(i) Service, processing, or administrative charge. 

‘‘(ii) Fee for an investigation or credit report. 

‘‘(iii) Charge for delivery required by the merchant. 

‘‘(B) EXCLUDED ITEMS.—The following fees or charges shall not be taken 

into account in determining the rental-purchase cost with respect to a rental-purchase transaction: 

‘‘(i) Fees and charges prescribed by law, which actually are or will be 

paid to public officials or government entities, such as sales tax. 

‘‘(ii) Fees and charges for optional products and services offered in 

connection with a rental-purchase agreement. 

‘‘(16) STATE.—The term ‘State’ means any State of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, and 

the Northern Mariana Islands. 

‘‘(17) TOTAL COST.—The term ‘total cost’ means the sum of the initial payment 

and all periodic payments in the payment schedule to be paid by the consumer 

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to acquire ownership of the property that is the subject of the rental-purchase 

agreement. 

‘‘SEC. 1002. EXEMPTED TRANSACTIONS. 

‘‘This title shall not apply to rental-purchase agreements primarily for business, 

commercial, or agricultural purposes, or those made with Government agencies or 

instrumentalities. 

‘‘SEC. 1003. GENERAL DISCLOSURE REQUIREMENTS.

‘‘(a) RECIPIENT OF DISCLOSURE.—A merchant shall disclose to any person who will 

be a signatory to a rental-purchase agreement the information required by sections 

1004 and 1005. 

‘‘(b) TIMING OF DISCLOSURE.—The disclosures required under sections 1004 and 

1005 shall be made before the consummation of the rental-purchase agreement and 

clearly and conspicuously in writing as part of the rental-purchase agreement to be 

signed by the consumer.

‘‘(c) CLEARLY AND CONSPICUOUSLY.—As used in this section, the term ‘clearly and 

conspicuously’ means that information required to be disclosed to the consumer 

shall be worded plainly and simply, and appear in a type size, prominence, and location as to be readily noticeable, readable, and comprehensible to an ordinary consumer. 

‘‘SEC. 1004. RENTAL-PURCHASE DISCLOSURES. 

‘‘(a) IN GENERAL.—For each rental-purchase agreement, the merchant shall disclose to the consumer the following, to the extent applicable: 

‘‘(1) The date of the consummation of the rental-purchase transaction and the 

identities of the merchant and the consumer. 

‘‘(2) A brief description of the rental property, which shall be sufficient to 

identify the property to the consumer, including an identification or serial number, if applicable, and a statement indicating whether the property is new or 

used. 

‘‘(3) A description of any fee, charge or penalty, in addition to the periodic 

payment, that the consumer may be required to pay under the agreement, 

which shall be separately identified by type and amount. 

‘‘(4) A clear and conspicuous statement that the transaction is a rental-purchase agreement and that the consumer will not obtain ownership of the property until the consumer has paid the total dollar amount necessary to acquire 

ownership. 

‘‘(5) The amount of any initial payment, which includes the first periodic payment, and the total amount of any fees, taxes, or other charges, required to be 

paid by the consumer. 

‘‘(6) The amount of the cash price of the property that is the subject of the 

rental-purchase agreement, and, if the agreement involves the rental of 2 or 

more items as a set (as may be defined by the Board in regulation) a statement 

of the aggregate cash price of all items shall satisfy this requirement. 

‘‘(7) The amount and timing of periodic payments, and the total number of 

periodic payments necessary to acquire ownership of the property under the 

rental-purchase agreement. 

‘‘(8) The total cost, using that term, and a brief description, such as ‘This is 

the amount you will pay the merchant if you make all periodic payments to acquire ownership of the property.’. 

‘‘(9) A statement of the consumer’s right to terminate the agreement without 

paying any fee or charge not previously due under the agreement by voluntarily 

surrendering or returning the property in good repair upon expiration of any 

lease term. 

‘‘(10) Substantially the following statement: ‘OTHER IMPORTANT TERMS: 

See your rental-purchase agreement for additional important information on 

early termination procedures, purchase option rights, responsibilities for loss, 

damage or destruction of the property, warranties, maintenance responsibilities, 

and other charges or penalties you may incur.’. 

‘‘(b) FORM OF DISCLOSURE.—The disclosures required by paragraphs (4) through 

(10) of subsection (a) shall be segregated from other information at the beginning 

of the rental-purchase agreement and shall contain only directly related information, and shall be identified in boldface, upper-case letters as follows: ‘IMPORTANT 

RENTAL-PURCHASE DISCLOSURES’.

‘‘(c) DISCLOSURE REQUIREMENTS RELATING TO INSURANCE PREMIUMS AND LIABILITY WAIVERS.—

‘‘(1) IN GENERAL.—A merchant shall clearly and conspicuously disclose in 

writing to the consumer before the consummation of a rental-purchase agreeVerDate May 23 2002 06:13 Jul 20, 2002 Jkt 099006 PO 00000 Frm 00004 Fmt 6659 Sfmt 6621 E:\HR\OC\HR590P1.XXX pfrm12 PsN: HR590P1
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ment that the purchase of leased property insurance or liability waiver coverage 

is not required as a condition for entering into the rental-purchase agreement. 

‘‘(2) AFFIRMATIVE WRITTEN REQUEST AFTER COST DISCLOSURE.—A merchant 

may provide insurance or liability waiver coverage, directly or indirectly, in connection with a rental-purchase transaction only if—

‘‘(A) the merchant clearly and conspicuously discloses to the consumer the 

cost of each component of such coverage before the consummation of the 

rental-purchase agreement; and 

‘‘(B) the consumer signs an affirmative written request for such coverage 

after receiving the disclosures required under subparagraph paragraph (A) 

of this paragraph and paragraph (1).

‘‘(d) ACCURACY OF DISCLOSURE.—

‘‘(1) IN GENERAL.—The disclosures required to be made under subsection (a) 

shall be accurate as of the date the disclosures are made, based on the information available to the merchant. 

‘‘(2) INFORMATION SUBSEQUENTLY RENDERED INACCURATE.—If information required to be disclosed under subsection (a) is subsequently rendered inaccurate 

as a result of any agreement between the merchant and the consumer subsequent to the delivery of the required disclosures, the resulting inaccuracy shall 

not constitute a violation of this title. 

‘‘SEC. 1005. OTHER AGREEMENT PROVISIONS. 

‘‘(a) IN GENERAL.—Each rental-purchase agreement shall—

‘‘(1) provide a statement specifying whether the merchant or the consumer is 

responsible for loss, theft, damage, or destruction of the property; 

‘‘(2) provide a statement specifying whether the merchant or the consumer is 

responsible for maintaining or servicing the property, together with a brief description of the responsibility; 

‘‘(3) provide that the consumer may terminate the agreement without paying 

any charges not previously due under the agreement by voluntarily surrendering or returning the property that is the subject of the agreement upon expiration of any rental period; 

‘‘(4) contain a provision for reinstatement of the agreement, which at a minimum—

‘‘(A) permits a consumer who fails to make a timely rental payment to 

reinstate the agreement, without losing any rights or options which exist 

under the agreement, by the payment of all past due rental payments and 

any other charges then due under the agreement and a payment for the 

next rental period within 7 business days after failing to make a timely 

rental payment if the consumer pays monthly, or within 3 business days 

after failing to make a timely rental payment if the consumer pays more 

frequently than monthly; 

‘‘(B) if the consumer returns or voluntarily surrenders the property covered by the agreement, other than through judicial process, during the applicable reinstatement period set forth in subparagraph (A), permits the 

consumer to reinstate the agreement during a period of at least 60 days 

after the date of the return or surrender of the property by the payment 

of all amounts previously due under the agreement, any applicable fees, 

and a payment for the next rental period; 

‘‘(C) if the consumer has paid 50 percent or more of the total cost necessary to acquire ownership and returns or voluntarily surrenders the property, other than through judicial process, during the applicable reinstatement period set forth in subparagraph (A), permits the consumer to reinstate the agreement during a period of at least 120 days after the date of 

the return of the property by the payment of all amounts previously due 

under the agreement, any applicable fees, and a payment for the next rental period; and

‘‘(D) permits the consumer, upon reinstatement of the agreement to receive the same property, if available, that was the subject of the rental-purchase agreement, or if the same property is not available, a substitute item 

of comparable quality and condition may be provided to the consumer; except that, the Board may, by regulation or order, exempt any independent 

small business (as defined by the Board by regulation) from the requirement of providing the same or comparable product during the extended reinstatement period provided in subparagraph (C), if the Board determines, 

taking into account such standards as the Board determines to be appropriate, that the reinstatement right provided in such subparagraph would 

provide excessive hardship for such independent small business.

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‘‘(5) provide a statement specifying the terms under which the consumer shall 

acquire ownership of the property that is the subject of the rental-purchase 

agreement either by payment of the total cost to acquire ownership, as provided 

in section 1006, or by exercise of any early purchase option provided in the rental-purchase agreement; 

‘‘(6) provide a statement disclosing that if any part of a manufacturer’s express warranty covers the property at the time the consumer acquires ownership of the property, the warranty will be transferred to the consumer if allowed 

by the terms of the warranty; and

‘‘(7) provide, to the extent applicable, a description of any grace period for 

making any periodic payment, the amount of any security deposit, if any, to be 

paid by the consumer upon initiation of the rental-purchase agreement, and the 

terms for refund of such security deposit to the consumer upon return, surrender or purchase of the property. 

‘‘(b) REPOSSESSION DURING REINSTATEMENT PERIOD.—Subsection (a)(4) shall not 

be construed so as to prevent a merchant from attempting to repossess property 

during the reinstatement period pursuant to subsection (a)(4)(A), but such a repossession does not affect the consumer’s right to reinstate.

‘‘SEC. 1006. RIGHT TO ACQUIRE OWNERSHIP. 

‘‘(a) IN GENERAL.—The consumer shall acquire ownership of the property that is 

the subject of the rental-purchase agreement, and the rental-purchase agreement 

shall terminate, upon compliance by the consumer with the requirements of subsection (b) or any early payment option provided in the rental purchase agreement, 

and upon payment of any past due payments and fees, as permitted in regulation 

by the Board. 

‘‘(b) PAYMENT OF TOTAL COST.—The consumer shall acquire ownership of the rental property upon payment of the total cost of the rental-purchase agreement, as 

such term is defined in section 1001(17), and as disclosed to the consumer in the 

rental-purchase agreement pursuant to section 1004(a). 

‘‘(c) ADDITIONAL FEES PROHIBITED.—A merchant shall not require the consumer 

to pay, as a condition for acquiring ownership of the property that is the subject 

of the rental-purchase agreement, any fee or charge in addition to, or in excess of, 

the regular periodic payments required by subsection (b), or any early purchase option amount provided in the rental-purchase agreement, as applicable. A requirement that the consumer pay an unpaid late charge or other fee or charge which the 

merchant has previously billed to the consumer shall not constitute an additional 

fee or charge for purposes of this subsection. 

‘‘(d) TRANSFER OF OWNERSHIP RIGHTS.—Upon payment by the consumer of all 

payments necessary to acquire ownership under subsection (b) or any early purchase option amount provided in the rental-purchase agreement, as appropriate, the 

merchant shall—

‘‘(1) deliver, or mail to the consumer’s last known address, such documents 

or other instruments, which the Board has determined by regulation, are necessary to acknowledge full ownership by the consumer of the property acquired 

pursuant to the rental-purchase agreement; and 

‘‘(2) transfer to the consumer the unexpired portion of any warranties provided by the manufacturer, distributor, or seller of the property, which shall 

apply as if the consumer were the original purchaser of the property, except 

where such transfer is prohibited by the terms of the warranty. 

‘‘SEC. 1007. PROHIBITED PROVISIONS. 

‘‘A rental-purchase agreement may not contain—

‘‘(1) a confession of judgment; 

‘‘(2) a negotiable instrument; 

‘‘(3) a security interest or any other claim of a property interest in any goods, 

except those goods the use of which is provided by the merchant pursuant to 

the agreement; 

‘‘(4) a wage assignment;

‘‘(5) a provision requiring the waiver of any legal claim or remedy created by 

this title or other provision of Federal or State law; 

‘‘(6) a provision requiring the consumer, in the event the property subject to 

the rental-purchase agreement is lost, stolen, damaged, or destroyed, to pay an 

amount in excess of the least of—

‘‘(A) the fair market value of the property, as determined by the Board 

in regulation; 

‘‘(B) any early purchase option amount provided in the rental-purchase 

agreement; or 

‘‘(C) the actual cost of repair, as appropriate; 

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‘‘(7) a provision authorizing the merchant, or a person acting on behalf of the 

merchant, to enter the consumer’s dwelling or other premises without obtaining 

the consumer’s consent or to commit any breach of the peace in connection with 

the repossession of the rental property or the collection of any obligation or alleged obligation of the consumer arising out of the rental-purchase agreement; 

‘‘(8) a provision requiring the purchase of insurance or liability damage waiver to cover the property that is the subject of the rental-purchase agreement, 

except as permitted by the Board in regulation; 

‘‘(9) a provision requiring the consumer to pay more than 1 late fee or charge 

for an unpaid or delinquent periodic payment, regardless of the period in which 

the payment remains unpaid or delinquent, or to pay a late fee or charge for 

any periodic payment because a previously assessed late fee has not been paid 

in full. 

‘‘SEC. 1008. STATEMENT OF ACCOUNTS. 

‘‘Upon request of a consumer, a merchant shall provide a statement of the consumer’s account. If a consumer requests a statement for an individual account more 

than 4 times in any 12-month period, the merchant may charge a reasonable fee 

for the additional statements. 

‘‘SEC. 1009. RENEGOTIATIONS AND EXTENSIONS. 

‘‘(a) RENEGOTIATIONS.—A renegotiation occurs when a rental-purchase agreement 

is satisfied and replaced by a new agreement undertaken by the same consumer. 

A renegotiation requires new disclosures, except as provided in subsection (c). 

‘‘(b) EXTENSIONS.—An extension is an agreement by the consumer and the merchant, to continue an existing rental-purchase agreement beyond the original end 

of the payment schedule, but does not include a continuation that is the result of 

a renegotiation. 

‘‘(c) EXCEPTIONS.—New disclosures are not required for the following, even if they 

meet the definition of a renegotiation or an extension: 

‘‘(1) A reduction in payments. 

‘‘(2) A deferment of 1 or more payments. 

‘‘(3) The extension of a rental-purchase agreement. 

‘‘(4) The substitution of property with property that has a substantially equivalent or greater economic value provided the rental-purchase cost does not increase. 

‘‘(5) The deletion of property in a multiple-item agreement. 

‘‘(6) A change in rental period provided the rental-purchase cost does not increase. 

‘‘(7) An agreement resulting from a court proceeding. 

‘‘(8) Any other event described in regulations prescribed by the Board. 

‘‘SEC. 1010. POINT-OF-RENTAL DISCLOSURES. 

‘‘(a) IN GENERAL.—For any item of property or set of items displayed or offered 

for rental-purchase, the merchant shall display on or next to the item or set of items 

a card, tag, or label that clearly and conspicuously discloses the following: 

‘‘(1) A brief description of the property. 

‘‘(2) Whether the property is new or used. 

‘‘(3) The cash price of the property. 

‘‘(4) The amount of each rental payment. 

‘‘(5) The total number of rental payments necessary to acquire ownership of 

the property. 

‘‘(6) The rental-purchase cost. 

‘‘(b) FORM OF DISCLOSURE.—

‘‘(1) IN GENERAL.—A merchant may make the disclosure required by subsection (a) in the form of a list or catalog which is readily available to the consumer at the point of rental if the merchandise is not displayed in the merchant’s showroom or if displaying a card, tag, or label would be impractical due 

to the size of the merchandise.

‘‘(2) CLEARLY AND CONSPICUOUSLY.—As used in this section, the term ‘clearly 

and conspicuously’ means that information required to be disclosed to the consumer shall appear in a type size, prominence, and location as to be noticeable, 

readable, and comprehensible to an ordinary consumer. 

‘‘SEC. 1011. RENTAL-PURCHASE ADVERTISING. 

‘‘(a) IN GENERAL.—If an advertisement for a rental-purchase transaction refers to 

or states the amount of any payment for any specific item or set of items, the merchant making the advertisement shall also clearly and conspicuously state in the 

advertisement the following for the item, or set of items, advertised: 

‘‘(1) The transaction advertised is a rental-purchase agreement. 

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‘‘(2) The amount, timing, and total number of rental payments necessary to 

acquire ownership under the rental-purchase agreement. 

‘‘(3) The amount of the rental-purchase cost. 

‘‘(4) To acquire ownership of the property the consumer must pay the rentalpurchase cost plus applicable taxes. 

‘‘(5) Whether the stated payment amount and advertised rental-purchase cost 

is for new or used property. 

‘‘(b) PROHIBITION.—An advertisement for a rental-purchase agreement shall not 

state or imply that a specific item, or set of items, is available at specific amounts 

or terms unless the merchant usually and customarily offers, or will offer, the item 

or set of items at the stated amounts or terms. 

‘‘(c) CLEARLY AND CONSPICUOUSLY.—

‘‘(1) IN GENERAL.—For purposes of this section, the term ‘clearly and conspicuously’ means that required disclosures shall be presented in a type, size, shade, 

contrast, prominence, location, and manner, as applicable to different mediums 

for advertising, so as to be readily noticeable and comprehensible to the ordinary consumer. 

‘‘(2) REGULATORY GUIDANCE.—The Board shall prescribe regulations on principles and factors to meet the clear and conspicuous standard as appropriate to 

print, video, audio, and computerized advertising, reflecting the principles and 

factors typically applied in each medium by the Federal Trade Commission. 

‘‘(3) LIMITATION.—Nothing contrary to, inconsistent with, or in mitigation of, 

the required disclosures shall be used in any advertisement in any medium, and 

no audio, video, or print technique shall be used that is likely to obscure or detract significantly from the communication of the disclosures. 

‘‘SEC. 1012. CIVIL LIABILITY.

‘‘(a) IN GENERAL.—Except as otherwise provided in section 1013, any merchant 

who fails to comply with any requirement of this title with respect to any consumer 

is liable to such consumer as provided for leases in section 130. For purposes of this 

section, the term ‘creditor’ as used in section 130 shall include a ‘merchant’, as defined in section 1001. 

‘‘(b) JURISDICTION OF COURTS; LIMITATION ON ACTIONS.—

‘‘(1) IN GENERAL.—Notwithstanding section 130(e), any action under this section may be brought in any United States district court, or in any other court 

of competent jurisdiction, before the end of the 1-year period beginning on the 

date the last payment was made by the consumer under the rental-purchase 

agreement. 

‘‘(2) RECOUPMENT OR SET-OFF.—This subsection shall not bar a consumer from 

asserting a violation of this title in an action to collect an obligation arising 

from a rental-purchase agreement, which was brought after the end of the 1-

year period described in paragraph (1) as a matter of defense by recoupment 

or set-off in such action, except as otherwise provided by State law. 

‘‘SEC. 1013. ADDITIONAL GROUNDS FOR CIVIL LIABILITY.

‘‘(a) INDIVIDUAL CASES WITH ACTUAL DAMAGES.—Any merchant who fails to comply with any requirements imposed under section 1010 or 1011 with respect to any 

consumer who suffers actual damage from the violation shall be liable to such consumer as provided in section 130. 

‘‘(b) PATTERN OR PRACTICE OF VIOLATIONS.—If a merchant engages in a pattern 

or practice of violating any requirement imposed under section 1010 or 1011, the 

Federal Trade Commission or an appropriate State attorney general, in accordance 

with section 1016, may initiate an action to enforce sanctions against the merchant, 

including—

‘‘(1) an order to cease and desist from such practices; and 

‘‘(2) a civil money penalty of such amount as the court may impose, based on 

such factors as the court may determine to be appropriate. 

‘‘SEC. 1014. LIABILITY OF ASSIGNEES. 

‘‘(a) ASSIGNEES INCLUDED.—For purposes of section 1013, and this section, the 

term ‘merchant’ includes an assignee of a merchant. 

‘‘(b) LIABILITIES OF ASSIGNEES.—

‘‘(1) APPARENT VIOLATION.—An action under section 1012 or 1013 for a violation of this title may be brought against an assignee only if the violation is apparent on the face of the rental-purchase agreement to which it relates. 

‘‘(2) APPARENT VIOLATION DEFINED.—For purposes of this subsection, a violation that is apparent on the face of a rental-purchase agreement includes a disclosure that can be determined to be incomplete or inaccurate from the face of 

the agreement. 

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‘‘(3) INVOLUNTARY ASSIGNMENT.—An assignee has no liability in a case in 

which the assignment is involuntary. 

‘‘(4) RULE OF CONSTRUCTION.—No provision of this section shall be construed 

as limiting or altering the liability under section 1012 or 1013 of a merchant 

assigning a rental-purchase agreement. 

‘‘(b) PROOF OF DISCLOSURE.—In an action by or against an assignee, the consumer’s written acknowledgment of receipt of a disclosure, made as part of the rental-purchase agreement, shall be conclusive proof that the disclosure was made, if 

the assignee had no knowledge that the disclosure had not been made when the assignee acquired the rental-purchase agreement to which it relates. 

‘‘SEC. 1015. REGULATIONS. 

‘‘(a) IN GENERAL.—The Board shall prescribe regulations as necessary to carry out 

the purposes of this title, to prevent its circumvention, and to facilitate compliance 

with its requirements. 

‘‘(b) MODEL DISCLOSURE FORMS.—The Board may publish model disclosure forms 

and clauses for common rental-purchase agreements to facilitate compliance with 

the disclosure requirements of this title and to aid the consumer in understanding 

the transaction by utilizing readily understandable language to simplify the technical nature of the disclosures. In devising such forms, the Board shall consider the 

use by merchants of data processing or similar automated equipment. Nothing in 

this title may be construed to require a merchant to use any such model form or 

clause prescribed by the Board under this section. A merchant shall be deemed to 

be in compliance with the requirement to provide disclosure under section 1003(a) 

if the merchant—

‘‘(1) uses any appropriate model form or clause as published by the Board; or 

‘‘(2) uses any such model form or clause and changes it by—

‘‘(A) deleting any information which is not required by this title; or 

‘‘(B) rearranging the format, if in making such deletion or rearranging 

the format, the merchant does not affect the substance, clarity, or meaningful sequence of the disclosure. 

‘‘(c) EFFECTIVE DATE OF REGULATIONS.—Any regulation prescribed by the Board, 

or any amendment or interpretation thereof, shall not be effective before the October 1 that follows the date of publication of the regulation in final form by at least 

6 months. The Board may at its discretion lengthen that period of time to permit 

merchants to adjust to accommodate new requirements. The Board may also shorten 

that period of time, notwithstanding the first sentence, if it makes a specific finding 

that such action is necessary to comply with the findings of a court or to prevent 

unfair or deceptive practices. In any case, merchants may comply with any newly 

prescribed disclosure requirement prior to its effective date. 

‘‘SEC. 1016. ENFORCEMENT. 

‘‘(a) FEDERAL ENFORCEMENT.—Compliance with the requirements imposed under 

this title shall be enforced under the Federal Trade Commission Act (15 U.S.C. 41 

et seq.), and a violation of any requirements imposed under this title shall be 

deemed a violation of a requirement imposed under that Act. All of the functions 

and powers of the Federal Trade Commission under the Federal Trade Commission 

Act are available to the Commission to enforce compliance by any person with the 

requirements of this title, irrespective of whether that person is engaged in commerce or meets any other jurisdictional test in the Federal Trade Commission Act. 

‘‘(b) STATE ENFORCEMENT.—

‘‘(1) IN GENERAL.—An action to enforce the requirements imposed by this title 

may also be brought by the appropriate State attorney general in any appropriate United States district court, or any other court of competent jurisdiction. 

‘‘(2) PRIOR WRITTEN NOTICE.—

‘‘(A) IN GENERAL.—The State attorney general shall provide prior written 

notice of any such civil action to the Federal Trade Commission and shall 

provide the Commission with a copy of the complaint. 

‘‘(B) EMERGENCY ACTION.—If prior notice is not feasible, the State attorney general shall provide notice to the Commission immediately upon instituting the action. 

‘‘(3) FTC INTERVENTION.—The Commission may—

‘‘(A) intervene in the action; 

‘‘(B) upon intervening—

‘‘(i) remove the action to the appropriate United States district court, 

if it was not originally brought there; and 

‘‘(ii) be heard on all matters arising in the action; and 

‘‘(C) file a petition for appeal. 

10

‘‘SEC. 1017. CRIMINAL LIABILITY FOR WILLFUL AND KNOWING VIOLATION. 

‘‘Whoever willfully and knowingly gives false or inaccurate information or fails to 

provide information which he is required to disclose under the provisions of this title 

or any regulation issued thereunder shall be subject to the penalty provisions as 

provided in section 112.

‘‘SEC. 1018. RELATION TO OTHER LAWS. 

‘‘(a) RELATION TO STATE LAW.— ‘‘(1) NO EFFECT ON CONSISTENT STATE LAWS.—Except as otherwise provided in 

subsection (b), this title does not annul, alter, or affect in any manner the 

meaning, scope or applicability of the laws of any State relating to rental-purchase agreements, except to the extent those laws are inconsistent with any 

provision of this title, and then only to the extent of the inconsistency. 

‘‘(2) DETERMINATION OF INCONSISTENCY.—Upon its own motion or upon the request of an interested party, which is submitted in accordance with procedures 

prescribed in regulations of the Board, the Board shall determine whether any 

such inconsistency exists. If the Board determines that a term or provision of 

a State law is inconsistent, merchants located in that State need not follow such 

term or provision and shall incur no liability under the law of that State for 

failure to follow such term or provision, notwithstanding that such determination is subsequently amended, rescinded, or determined by judicial or other authority to be invalid for any reason. 

‘‘(3) GREATER PROTECTION UNDER STATE LAW.—Except as provided in subsection (b), for purposes of this section, a term or provision of a State law is 

not inconsistent with the provisions of this title if the term or provision affords 

greater protection and benefit to the consumer than the protection and benefit 

provided under this title as determined by the Board, on its own motion or upon 

the petition of any interested party. 

‘‘(b) STATE LAWS RELATING TO CHARACTERIZATION OF TRANSACTION.—Notwithstanding the provisions of subsection (a), this title shall supersede any State law 

to the extent that such law—

‘‘(1) regulates a rental-purchase agreement as a security interest, credit sale, 

retail installment sale, conditional sale or any other form of consumer credit, 

or that imputes to a rental-purchase agreement the creation of a debt or extension of credit, or 

‘‘(2) requires the disclosure of a percentage rate calculation, including a timeprice differential, an annual percentage rate, or an effective annual percentage 

rate.

‘‘(c) RELATION TO FEDERAL TRADE COMMISSION ACT.—No provision of this title 

shall be construed as limiting, superseding, or otherwise affecting the applicability 

of the Federal Trade Commission Act to any merchant or rental-purchase transaction. 

‘‘SEC. 1019. EFFECT ON GOVERNMENT AGENCIES. 

‘‘No civil liability or criminal penalty under this title may be imposed on the 

United States or any of its departments or agencies, any State or political subdivision, or any agency of a State or political subdivision. 

‘‘SEC. 1020. COMPLIANCE DATE. 

‘‘Compliance with this title shall not be required until 6 months after the date 

of the enactment of the Consumer Rental Purchase Agreement Act. In any case, 

merchants may comply with this title at any time after such date of enactment.’’.

PURPOSE AND SUMMARY

The purpose of the Consumer Rental Purchase Agreement Act is 

to set a ‘‘Federal floor’’ for consumer protection in rental-purchase 

transactions. Most States currently regulate rental-purchase transactions as leases; however, the scope and consumer protection requirements of these laws vary significantly by State. The bill improves consumer protections in 32 States, while allowing other 

States to adopt more stringent protections. 

Currently, there is no Federal oversight or regulation of the rent 

to own industry. This bill amends the Consumer Credit Protection 

Act (CCPA) to provide such oversight and regulation. It provides 

meaningful and consistent disclosure of all rental-purchase agreement terms and provides substantive rights to consumers under 

11

these agreements. This legislation provides a uniform method of 

disclosing the cost of the rental-purchase transactions in advertisements, product tags, and rental-purchase agreements; it would fill 

disclosure gaps that exist in many State laws and provide important substantive consumer protections. It would also ensure consistent treatment of the transaction as a lease and not a credit 

sale. 

BACKGROUND AND NEED FOR LEGISLATION

In April 2000, the Federal Trade Commission (FTC) issued a 

staff report entitled, ‘‘Survey of Rent-to-Own Customers’’ which 

concluded that potential rental-purchase customers should have 

clear and accurate information about the total cost of the transaction in order to allow customers to compare rental-purchase 

transactions to other alternatives. The FTC also noted that inadequacies exist in many State rental-purchase disclosure laws. This 

bill cures those inadequacies. 

Federal legislation to regulate this industry has been considered 

by Congress for more than a decade. Prior attempts to pass legislation failed largely over the issue of the appropriate level of consumer protections as part of a package that classifies these transactions as leases, as opposed to credit sales. The Consumer Rental 

Purchase Agreement Act addresses these concerns by adding consumer protections that are more substantive than prior bills and 

are in line with a majority of the States that have adopted rentalpurchase legislation. 

HEARINGS

The Subcommittee on Financial Institutions and Consumer Credit held a hearing on July 12, 2001, on the Consumer Rental Purchase Agreement Act. The following witnesses testified: Ms. Dolores Smith, Director, Division of Consumer Affairs, Board of Governors, Federal Reserve System; Mr. Howard Beales, Director, Bureau of Consumer Protection, Federal Trade Commission; Mr. 

David J. Gilles, Assistant Attorney General, Wisconsin Department 

of Justice; Mr. James Byrd, Byrd’s TV (d/b/a Curtis Mathes, Inc.); 

Ms. Mamie Salazar Harper, Secretary, Board of Directors, Association for Progressive Rental Organizations (APRO); and Ms. Margot 

Saunders, Managing Attorney, National Consumer Law Center. 

COMMITTEE CONSIDERATION

The Subcommittee on Financial Institutions and Consumer Credit met in open session on September 6 and October 28, 2001, and 

approved H.R. 1701 for full Committee consideration, as amended, 

by a record vote of 24 yeas and 4 nays, with 1 member voting 

present. 

The Committee on Financial Services met in open session on 

June 26 and 27, 2002, and ordered H.R. 1701 reported to the 

House with a favorable recommendation, with an amendment, by 

a record vote of 29 yeas and 9 nays.

12

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. A motion by Mr. 

Oxley to report the bill to the House with a favorable recommendation was agreed to by a record vote of 29 yeas and 9 nays (Record 

vote no. 51). The names of members voting for and against follow: 

YEAS NAYS 

Mr. Oxley Mr. Ferguson 

Mr. Leach Mr. LaFalce 

Mr. Bereuter Mr. Frank 

Mr. Bachus Ms. Waters 

Mr. Castle Mr. Sanders 

Mrs. Kelly Mrs. Maloney of New York 

Mr. Gillmor Mr. Watt of North Carolina 

Mr. Weldon of Florida Ms. Lee 

Mr. Ryun of Kansas Mr. Capuano 

Mr. LaTourette 

Mr. Jones of North Carolina 

Mrs. Biggert 

Mr. Shays 

Mr. Shadegg 

Mr. Fossella 

Mr. Gary G. Miller of California 

Mr. Cantor 

Mr. Grucci 

Ms. Hart 

Mr. Rogers of Michigan 

Mr. Tiberi 

Mr. Ackerman 

Mr. Maloney of Connecticut 

Ms. Hooley of Oregon 

Mr. Sherman 

Mr. Ford 

Mr. Lucas of Kentucky 

Mr. Shows 

Mr. Clay

The following amendments were considered by record vote. The 

names of Members voting for and against follow: 

An amendment to the amendment in the nature of a substitute 

by Ms. Waters, no. 1a, addressing the preemption of State law, was 

not agreed to by a record vote of 15 yeas and 33 nays (Record vote 

no. 46). 

YEAS NAYS 

Mr. Frank Mr. Oxley 

Ms. Waters Mr. Leach 

Mr. Sanders Mr. Bachus 

Mrs. Maloney of New York Mr. Royce 

Mr. Gutierrez Mr. Lucas of Oklahoma 

Mr. Watt of North Carolina Mrs. Kelly 

Mr. Bentsen Mr. Paul 

Ms. Lee Mr. Gillmor 

Mr. Mascara Mr. Cox 

13

Ms. Schakowsky Mr. Weldon of Florida 

Mr. Gonzalez Mr. Ryun of Kansas 

Mrs. Jones of Ohio Mr. LaTourette 

Mr. Capuano Mr. Manzullo 

Mr. Clay Mr. Jones of North Carolina 

Mr. Israel Mr. Ose 

Mrs. Biggert 

Mr. Toomey 

Mr. Shays 

Mr. Shadegg 

Mr. Fossella 

Mr. Gary G. Miller of California 

Mr. Cantor 

Mr. Grucci 

Ms. Hart 

Mrs. Capito 

Mr. Rogers of Michigan 

Mr. Tiberi 

Mr. Kanjorski 

Mr. Maloney of Connecticut 

Ms. Hooley of Oregon 

Mr. Sandlin 

Mr. Moore 

Mr. Lucas of Kentucky

An amendment to the amendment in the nature of a substitute 

by Mr. Sanders, 1b, grandfathering existing State laws, was not 

agreed to by a record vote of 15 yeas and 27 nays (Record vote no. 

47). 

YEAS NAYS 

Mr. Ferguson Mr. Oxley 

Mr. LaFalce Mr. Leach 

Ms. Waters Mr. Bereuter 

Mr. Sanders Mr. Bachus 

Mrs. Maloney of New York Mr. Castle 

Mr. Watt of North Carolina Mr. Royce 

Mr. Ackerman Mr. Lucas of Oklahoma 

Mr. Bentsen Mrs. Kelly 

Ms. Carson of Indiana Mr. Gillmor 

Ms. Lee Mr. Weldon of Florida 

Mr. Inslee Mr. Ryun of Kansas 

Ms. Schakowsky Mr. Jones of North Carolina 

Mrs. Jones of Ohio Mrs. Biggert 

Mr. Capuano Mr. Shays 

Mr. Crowley Mr. Fossella 

Mr. Cantor 

Mr. Grucci 

Ms. Hart 

Mrs. Capito 

Mr. Rogers of Michigan 

Mr. Tiberi 

Mr. Kanjorski 

Mr. Maloney of Connecticut 

Mr. Moore 

Mr. Lucas of Kentucky 

14

Mr. Shows 

Mr. Ross

An amendment to the amendment in the nature of a substitute 

by Ms. Waters, 1c, prohibiting unfair or deceptive acts or practices, 

was not agreed to by a record vote of 12 yeas and 20 nays (Record 

vote no. 48). 

YEAS NAYS 

Ms. Waters Mr. Oxley 

Mr. Sanders Mr. Bereuter 

Mrs. Maloney of New York Mr. Bachus 

Mr. Watt of North Carolina Mr. Royce 

Mr. Maloney of Connecticut Mrs. Kelly 

Ms. Carson of Indiana Mr. Weldon of Florida 

Ms. Lee Mr. LaTourette 

Mr. Inslee Mr. Jones of North Carolina 

Ms. Schakowsky Mrs. Biggert 

Mr. Moore Mr. Fossella 

Mrs. Jones of Ohio Mr. Gary G. Miller of California 

Mr. Capuano Mr. Cantor 

Mr. Grucci 

Ms. Hart 

Mr. Ferguson 

Mr. Rogers of Michigan 

Mr. Tiberi 

Mr. Lucas of Kentucky 

Mr. Shows 

Mr. Ross

An amendment to the amendment in the nature of a substitute 

by Ms. Waters, 1d, prohibiting rental-purchase merchants from 

contractually allocating the responsibility for due care of the rental 

merchandise to the consumer, was not agreed to by a record vote 

of 12 yeas and 22 nays (Record vote no. 49). 

YEAS NAYS 

Ms. Waters Mr. Leach 

Mr. Sanders Mr. Bereuter 

Mrs. Maloney of New York Mr. Baker 

Mr. Watt of North Carolina Mr. Bachus 

Ms. Carson of Indiana Mr. Castle 

Ms. Lee Mr. Royce 

Mr. Inslee Mrs. Kelly 

Ms. Schakowsky Mr. Weldon of Florida 

Mr. Moore Mr. LaTourette 

Mrs. Jones of Ohio Mr. Jones of North Carolina 

Mr. Capuano Mrs. Biggert 

Mr. Hinojosa Mr. Fossella 

Mr. Gary G. Miller of California 

Mr. Cantor 

Mr. Grucci 

Ms. Hart 

Mr. Ferguson 

Mr. Rogers of Michigan 

Mr. Tiberi 

Mr. Maloney of Connecticut 

15

Mr. Lucas of Kentucky 

Mr. Shows

An amendment to the amendment in the nature of a substitute 

by Ms. Waters, no. 1f, requiring the rent to own industry to disclose the manufacturer’s suggested retail price of a product, was 

not agreed to by a record vote of 10 yeas and 24 nays (Record vote 

no. 50). 

YEAS NAYS 

Mr. LaFalce Mr. Oxley 

Mr. Frank Mr. Leach 

Ms. Waters Mr. Bereuter 

Mr. Sanders Mr. Bachus 

Mrs. Maloney of New York Mr. Castle 

Mr. Watt of North Carolina Mrs. Kelly 

Ms. Carson of Indiana Mr. Gillmor 

Ms. Lee Mr. Weldon of Florida 

Mr. Capuano Mr. LaTourette 

Mr. Clay Mr. Jones of North Carolina 

Mrs. Biggert 

Mr. Shays 

Mr. Shadegg 

Mr. Fossella 

Mr. Gary G. Miller of California 

Mr. Cantor 

Mr. Grucci 

Ms. Hart 

Mr. Ferguson 

Mr. Rogers of Michigan 

Mr. Tiberi 

Mr. Maloney of Connecticut 

Mr. Lucas of Kentucky 

Mr. Shows

The following amendments were also considered by the Committee: 

An amendment in the nature of a substitute by Mr. Jones, of 

North Carolina, no. 1, making various substantive and technical 

changes to the bill, was agreed to by a voice vote, as amended. 

An amendment to the amendment in the nature of a substitute 

by Mr. Watt, no. 1e, clarifying the provision preempting any State 

law that treats a rental-purchase transaction as a credit sale, was 

agreed to by a voice vote. 

An amendment to the amendment in the nature of a substitute 

by Mr. LaFalce, no. 1g, making changes to the term ‘‘cash price’’

and the determination of cash price and making changes to the 

early purchase option section, was not agreed to by a voice vote. 

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee held a hearing and made findings that are reflected in this report. 

16

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee establishes the following performance related goals and objectives for this legislation: 

After enactment of this legislation, consumers will enjoy increased protections in rental-purchase transactions through the establishment of Federal minimum protections. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee finds that this legislation 

would result in no new budget authority, entitlement authority, or 

tax expenditures or revenues. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATE

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974:

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, July 10, 2002. 

Hon. MICHAEL G. OXLEY, 

Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 1701, the Consumer 

Rental Purchase Agreement Act. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contacts are Ken Johnson (for federal costs), Greg Waring (for the state and local impact), and Page 

Piper/Bach (for the private-sector impact). 

Sincerely, 

BARRY B. ANDERSON

(For Dan L. Crippen, Director). 

Enclosure. 

H.R. 1701—Consumer Rental Purchase Agreement Act 

Summary: H.R. 1701 would impose several restriction on ‘‘rentto-own’’ transactions, wherein a consumer rents an item for a short 

time and retains the option to buy the item at the end of the rental 

period. For example, sellers would be required to disclose certain 

information about the terms of the rent-to-own contract and would 

be prohibited from assessing most fees for such contracts. 

Regulations to implement H.R. 1701 would be developed by the 

Board of Governors of the Federal Reserve System. Also, the FedVerDate May 23 2002 06:13 Jul 20, 2002 Jkt 099006 PO 00000 Frm 00016 Fmt 6659 Sfmt 6602 E:\HR\OC\HR590P1.XXX pfrm12 PsN: HR590P1
17

eral Trade Commission (FTC) would enforce the bill’s provisions 

under the authority provided by the Federal Trade Commission 

Act, which allows the FTC to punish violations with civil penalties. 

Finally, H.R. 1701 would create new criminal penalties for merchants who knowingly fail to provide information to rent-to-own 

consumers as required under the bill. 

Assuming appropriation of the necessary amounts, CBO estimates that implementing H.R. 1701 would cost the FTC about 

$650,000 a year. Because the bill would create new civil and criminal penalties and would impose costs on the Federal Reserve, we 

also estimate that the bill would have negligible effects on both 

spending and revenues. Therefore, pay-as-you-go procedures would 

apply. 

H.R. 1701 contains intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA), but CBO estimates 

that complying with the mandates would result in no costs to state, 

local, or tribal governments. Therefore, the threshold established 

by UMRA ($58 million in 2002, adjusted annually for inflation) 

would not be exceeded. 

H.R. 1701 would impose private-sector mandates, as defined by 

UMRA, but CBO estimates that the direct cost of those mandates 

would fall before the annual threshold established by UMRA ($115 

million in 2002, adjusted annually for inflation).

Basis of estimate: According to the FTC, the agency would need 

to hire about five new attorneys and investigators to enforce the restrictions that would be imposed by H.R. 1701. CBO estimates that 

these new hires would cost about $650,000 a year, subject to the 

availability of appropriated funds. 

The regulations to implement this bill would be written by the 

Federal Reserve. Budgetary effects on the Federal Reserve are recorded in the budget as changes in revenues (governmental receipts). Based on information from the Federal Reserve, CBO estimates that enacting H.R. 1701 would reduce such revenues by less 

than $500,000 a year. 

Because those who violate the provisions of H.R. 1701 could be 

subject to civil and criminal fines, the federal government might 

collect additional fines if the bill is enacted. Collections of civil and 

criminal penalties are classified in the budget as governmental receipts (revenues). Based on information from the FTC, however, 

CBO estimates that any such increase in collections would be less 

than $500,000 per year. 

Collections of criminal fines are deposited in the Crime Victims 

Fund and spent in subsequent years. Because any increase in direct spending would equal the amount of fines collected (with a 

lag), the additional direct spending also would be negligible. 

Pay-as-you-go considerations: The Balanced Budget and Emergency Deficit Control Act sets up pay-as-you-go procedures for legislation affecting direct spending or receipts. Although H.R. 1701 

would affect both direct spending and receipts, CBO estimates that 

the net effects would be insignificant. 

Estimated impact on state, local, and tribal governments: H.R. 

1701 would annul state laws that are inconsistent with federal regulations for rental-purchase agreements. Merchants would be held 

harmless from liability under the state law in question. The bill 

also would supersede any state law that treats a rental-purchase 

18

agreement as a form of consumer credit or a creation of debt, and 

states would no longer be able to make an independent determination of the nature of the rental-purchase agreement. Such preemptions would be intergovernmental mandates as defined in UMRA. 

CBO estimates, however, that the preemptions would not affect the 

budgets of state, local, or tribal governments because they would 

impose no duty on states that would result in additional spending. 

Therefore, the threshold established by UMRA ($58 million in 

2002, adjusted annually for inflation) would not be exceeded. 

Estimated impact on the private sector: H.R. 1701 would impose 

private-sector mandates, as defined by UMRA, but CBO estimates 

that the direct cost of those mandates would fall below the annual 

threshold established by UMRA ($115 million in 2002, adjusted annually for inflation). 

The bill would require merchants who provide the use of property through a rental-purchase agreement to make certain disclosures to consumers in the rental-purchase agreements and in advertisements. Under the bill, such merchants also would be required to provide merchandise labeling and to furnish statements 

of account to customers. In addition, the bill would prohibit those 

merchants from charging certain additional fees and from entering 

the premises of customers to reclaim property without the customer’s permission. Currently, 47 states require some type of disclosure and labeling for such merchants. According to industry representatives, the additional cost for all such merchants to provide 

the required disclosures and adhere to the prohibitions in the bill 

would be small. Therefore, CBO estimates that the direct cost to 

comply with the mandates would fall below the annual threshold 

established by UMRA ($115 million in 2002, adjusted annually for 

inflation). 

Estimate prepared by: Federal costs: Ken Johnson; impact on the 

Federal Reserve: Andrew Shaw; impact on state, local, and tribal 

governments: Greg Waring; impact on the private sector: Paige 

Piper/Bach. 

Estimate approved by: Robert A. Sunshine, Assistant Director for 

Budget Analysis.

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee finds that the Constitutional 

Authority of Congress to enact this legislation is provided by Article 1, section 8, clause 1 (relating to the general welfare of the 

United States) and clause 3 (relating to the power to regulate interstate commerce). 

19

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

This section establishes the short title of the bill, the ‘‘Consumer 

Rental Purchase Agreement Act.’’

Section 2. Findings and declaration of purpose 

This section sets forth certain facts concerning the rental-purchase industry and also declares the purposes of the Act. 

Section 3. Consumer Credit Protection Act 

This section places the Act in The Consumer Credit Protection 

Act by adding a new Title X to The Consumer Credit Protection 

Act. 

TITLE X—RENTAL PURCHASE TRANSACTIONS

Section 1001. Definitions 

This section defines the following terms that are used in the Act: 

advertisement, agricultural purpose, board, cash price, consumer, 

date of consummation, initial payment, merchant, payment schedule, periodic payment, property, rental payment, rental period, 

rental purchase agreement, rental purchase cost, State, and total 

cost. 

Section 1002. Exempted transactions 

This section clarifies that the Act applies to consumer rental-purchase transactions, not transactions for business, commercial, agricultural purposes, or those involving the government. 

Section 1003. General disclosure requirements 

This section requires that the disclosures called for in the Act be 

made to any person who signs a rental-purchase agreement. It provides that the required disclosures be made before the consummation of the rental-purchase agreement and clearly and conspicuously in writing as part of the rental-purchase agreement to be 

signed by the consumer. 

Section 1004. Rental-purchase disclosures 

This section enumerates the 10 disclosures that must be made to 

consumers in a rental purchase agreement. It also requires that 

the financial disclosures must be segregated from the other disclosures and labeled ‘‘Important Rental Purchase Disclosures’’ in boldface and uppercase. 

In addition, the section requires a disclosure that insurance or liability damage waiver is not mandatory. However, a merchant may 

offer insurance or liability damage waiver if the merchant discloses 

the cost of the coverage and the consumer agrees to the coverage 

in writing after receiving the disclosure. 

20

This section provides that a disclosure that becomes inaccurate 

in the future is not a violation unless it is the result of merchant 

conduct without the consumer’s consent and not otherwise allowed 

by the rental-purchase agreement. 

Section 1005. Other agreement provisions 

This section enumerates additional items that must be included 

in each rental-purchase agreement, including termination terms, 

reinstatement rights, manufacturers warranty and disclosure of 

late fees.

Section 1006. Right to acquire ownership 

This section provides that if certain conditions are met, the consumer shall acquire ownership of the property that is the subject 

of the rental-purchase agreement. A merchant is prohibited from 

requiring the consumer to pay additional fees as a condition for acquiring ownership. Upon payment by the consumer of all amounts 

necessary to acquire ownership, the merchant shall transfer ownership rights. 

Section 1007. Prohibited provisions 

This section prohibits a rental-purchase agreement from containing: a confession of judgment; a negotiable instrument; a security interest in other property; a wage assignment; a waiver of any 

claims or defenses. This section also prohibits provisions requiring 

the consumer, in the event the rental-purchase property is lost, stolen, damaged, or destroyed, to pay an amount in excess of the least 

of: the fair market value of the property; the early purchase-option 

amount; or the actual cost of repair. 

This section also prohibits a rental-purchase agreement from 

containing provisions that: authorize the merchant, or a person acting on behalf of the merchant, to enter the consumer’s dwelling 

without obtaining the consumer’s consent or to commit any breach 

of the peace in connection with the repossession of the rental property or the collection of any obligation or alleged obligation of the 

consumer arising out of the rental-purchase agreement; require the 

purchase of insurance or liability damage waiver to cover the property that is the subject of the rental-purchase agreement; require 

the consumer to pay more than 1 late fee or charge for an unpaid 

or delinquent periodic payment, regardless of the period in which 

the payment remains unpaid or delinquent, or to pay a late fee or 

charge for any periodic payment because a previously assessed late 

fee has not been paid in full. 

Section 1008. Statement of accounts 

This section requires the merchant to give the consumer a statement of account four times every 12 months, without charge, upon 

the consumer’s request. 

Section 1009. Renegotiations and extensions 

This section provides that a renegotiation of a rental-purchase 

agreement requires new disclosures. It also defines the term ‘‘extension’’ to be an agreement by the consumer and the merchant to 

continue an existing rental-purchase agreement beyond the original 

end of the payment schedule. The section also provides exceptions 

21

to the requirement that new disclosures be made as a result of a 

renegotiation or extension. 

Section 1010. Point-of-rental disclosures 

This section requires certain disclosures on price tags in the 

store. It also allows disclosures to be made in the form of a list or 

catalog if the rental-purchase merchandise is not displayed in the 

store or if displaying a card, tag, or label would be impractical due 

to the size of the merchandise. 

Section 1011. Rental-purchase advertising 

This section enumerates certain disclosures that are required to 

be made in rental-purchase advertising if the amount of any payment for any specific item appears in the advertisement. 

Section 1012. Civil liability 

This section adopts criminal and civil liability provisions modeled 

after the Truth in Lending Act’s liability provisions. 

Section 1013. Additional grounds for civil liability 

This section provides that a merchant is liable for price tag and 

advertising violations, if a consumer suffers actual damages. In instances where a merchant engages in a pattern or practice of price 

tag or advertising violations, the FTC and State Attorney’s General 

are authorized to enforce sanctions against such merchant. 

Section 1014. Liability of assignees 

This section provides that the term ‘‘merchant,’’ includes an assignee, but limits an assignee’s liability to violations apparent on 

the face of a rental-purchase agreement, and provides that there is 

no liability when the assignment is involuntary. 

Section 1015. Regulations 

This section directs the Federal Reserve Board to prescribe regulations as necessary to carry out the purposes of the Act, including 

publishing model forms. This section provides that a merchant 

shall be deemed in compliance with the disclosure requirements of 

the Act if the merchant uses the FRB’s model forms. The section 

establishes an effective date for any FRB regulations. 

Section 1016. Enforcement 

This section provides that the FTC has enforcement authority 

and declares that a violation of the Act is also a violation of the 

FTC Act. It also allows States’ Attorneys General to enforce the Act 

in State or Federal court. In addition, it allows the Federal Reserve 

Board to intervene in any suit filed by a State Attorney General. 

Section 1017. Criminal liability for willful and knowing violation 

This section provides criminal liability for willful and knowing 

violations of the Act. 

Section 1018. Relation to other laws 

This section provides a ‘‘Federal floor.’’ This Act does not supersede any State laws relating to rental-purchase agreements, except 

to the extent that they are inconsistent with the provisions of this 

22

Act, and then only to the extent of the inconsistency. A term or provision of a State law is not inconsistent with the provisions of this 

Act if the protection and benefit such law affords any consumer is 

greater than the protection and benefit provided under this Act. It 

allows State rental-purchase laws to provide greater consumer protection, provided that no State law can characterize a rental-purchase transaction as a credit sale, security interest, retail installment sale, conditional sale, or any other form of consumer credit, 

or require the disclosure of an interest rate or similar calculation. 

Section 1019. Effect on government agencies 

This section provides that no civil liabilities shall arise under 

this Act for Federal or State government entities. 

Section 1020. Compliance date 

This section requires compliance with the Act six months after 

enactment.

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (new matter is printed in italic 

and existing law in which no change is proposed is shown in 

roman): 

TITLE X OF THE CONSUMER CREDIT PROTECTION ACT

TITLE X—RENTAL-PURCHASE 

TRANSACTIONS

Sec. 1001. Definitions. 

Sec. 1002. Exempted transactions. 

Sec. 1003. General disclosure requirements. 

Sec. 1004. Rental-purchase disclosures. 

Sec. 1005. Other agreement provisions. 

Sec. 1006. Right to acquire ownership. 

Sec. 1007. Prohibited provisions. 

Sec. 1008. Statement of accounts. 

Sec. 1009. Renegotiations and extensions. 

Sec. 1010. Point-of-rental disclosures. 

Sec. 1011. Rental-purchase advertising. 

Sec. 1012. Civil liability. 

Sec. 1013. Additional grounds for civil liability. 

Sec. 1014. Liability of assignees. 

Sec. 1015. Regulations. 

Sec. 1016. Enforcement. 

Sec. 1017. Criminal liability for willful and knowing violation. 

Sec. 1018. Relation to other laws. 

Sec. 1019. Effect on government agencies. 

Sec. 1020. Compliance date.

SEC. 1001. DEFINITIONS. 

For purposes of this title, the following definitions shall apply: 

(1) ADVERTISEMENT.—The term ‘‘advertisement’’ means a 

commercial message in any medium that promotes, directly or 

indirectly, a rental-purchase agreement but does not include 

price tags, window signs, or other in-store merchandising aids. 

23

(2) AGRICULTURAL PURPOSE.—The term ‘‘agricultural purpose’’ includes— (A) the production, harvest, exhibition, marketing, transformation, processing, or manufacture of agricultural products by a natural person who cultivates plants or propagates or nurtures agricultural products; and 

(B) the acquisition of farmlands, real property with a 

farm residence, or personal property and services used primarily in farming. 

(3) BOARD.—The term ‘‘Board’’ means the Board of Governors 

of the Federal Reserve System. 

(4) CASH PRICE.—The term ‘‘cash price’’ means the price at 

which a merchant, in the ordinary course of business, offers to 

sell for cash the property that is the subject of the rental-purchase transaction. 

(5) CONSUMER.—The term ‘‘consumer’’ means a natural person who is offered or enters into a rental-purchase agreement. 

(6) DATE OF CONSUMMATION.—The term ‘‘date of consummation’’ means the date on which a consumer becomes contractually obligated under a rental-purchase agreement. 

(7) INITIAL PAYMENT.—The term ‘‘initial payment’’ means the 

amount to be paid before or at the consummation of the agreement or the delivery of the property if delivery occurs after consummation, including the rental payment; service, processing, 

or administrative charges; delivery fee; refundable security deposit; taxes; mandatory fees or charges; and any optional fees 

or charges agreed to by the consumer. 

(8) MERCHANT.—The term ‘‘merchant’’ means a person who 

provides the use of property through a rental-purchase agreement in the ordinary course of business and to whom a consumer’s initial payment under the agreement is payable. 

(9) PAYMENT SCHEDULE.—The term ‘‘payment schedule’’

means the amount and timing of the periodic payments and the 

total number of all periodic payments that the consumer will 

make if the consumer acquires ownership of the property by 

making all periodic payments. 

(10) PERIODIC PAYMENT.—The term ‘‘periodic payment’’ means 

the total payment a consumer will make for a specific rental period after the initial payment, including the rental payment, 

taxes, mandatory fees or charges, and any optional fees or 

charges agreed to by the consumer. 

(11) PROPERTY.—The term ‘‘property’’ means property that is 

not real property under the laws of the State where the property 

is located when it is made available under a rental-purchase 

agreement. 

(12) RENTAL PAYMENT.—The term ‘‘rental payment’’ means 

rent required to be paid by a consumer for the possession and 

use of property for a specific rental period, but does not include 

taxes or any fees or charges. 

(13) RENTAL PERIOD.—The term ‘‘rental period’’ means a 

week, month, or other specific period of time, during which the 

consumer has a right to possess and use property that is the 

subject of a rental-purchase agreement after paying the rental 

payment and any applicable taxes for such period. 

(14) RENTAL-PURCHASE AGREEMENT.—

24

(A) IN GENERAL.—The term ‘‘rental-purchase agreement’’

means a contract in the form of a bailment or lease for the 

use of property by a consumer for an initial period of 4 

months or less, that is renewable with each payment by the 

consumer, and that permits but does not obligate the consumer to become the owner of the property. 

(B) EXCLUSIONS.—The term ‘‘rental-purchase agreement’’

does not include—

(i) a credit sale (as defined in section 103(g) of the 

Truth in Lending Act); 

(ii) a consumer lease (as defined in section 181(1) of 

such Act); or 

(iii) a transaction giving rise to a debt incurred in 

connection with the business of lending money or a 

thing of value. 

(15) RENTAL-PURCHASE COST.—

(A) IN GENERAL.—For purposes of sections 1010 and 

1011, the term ‘‘rental-purchase cost’’ means the sum of all 

rental payments and mandatory fees or charges imposed by 

the merchant as a condition of entering into a rental-purchase agreement or acquiring ownership of property under 

a rental-purchase agreement, such as the following: 

(i) Service, processing, or administrative charge. 

(ii) Fee for an investigation or credit report. 

(iii) Charge for delivery required by the merchant. 

(B) EXCLUDED ITEMS.—The following fees or charges 

shall not be taken into account in determining the rentalpurchase cost with respect to a rental-purchase transaction: 

(i) Fees and charges prescribed by law, which actually are or will be paid to public officials or government entities, such as sales tax. 

(ii) Fees and charges for optional products and services offered in connection with a rental-purchase agreement. 

(16) STATE.—The term ‘‘State’’ means any State of the United 

States, the District of Columbia, any territory of the United 

States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, and the Northern 

Mariana Islands. 

(17) TOTAL COST.—The term ‘‘total cost’’ means the sum of the 

initial payment and all periodic payments in the payment 

schedule to be paid by the consumer to acquire ownership of the 

property that is the subject of the rental-purchase agreement. 

SEC. 1002. EXEMPTED TRANSACTIONS. 

This title shall not apply to rental-purchase agreements primarily 

for business, commercial, or agricultural purposes, or those made 

with Government agencies or instrumentalities. 

SEC. 1003. GENERAL DISCLOSURE REQUIREMENTS.

(a) RECIPIENT OF DISCLOSURE.—A merchant shall disclose to any 

person who will be a signatory to a rental-purchase agreement the 

information required by sections 1004 and 1005. 

(b) TIMING OF DISCLOSURE.—The disclosures required under sections 1004 and 1005 shall be made before the consummation of the 

rental-purchase agreement and clearly and conspicuously in writing 

25

as part of the rental-purchase agreement to be signed by the consumer.

(c) CLEARLY AND CONSPICUOUSLY.—As used in this section, the 

term ‘‘clearly and conspicuously’’ means that information required 

to be disclosed to the consumer shall be worded plainly and simply, 

and appear in a type size, prominence, and location as to be readily 

noticeable, readable, and comprehensible to an ordinary consumer. 

SEC. 1004. RENTAL-PURCHASE DISCLOSURES. 

(a) IN GENERAL.—For each rental-purchase agreement, the merchant shall disclose to the consumer the following, to the extent applicable: 

(1) The date of the consummation of the rental-purchase 

transaction and the identities of the merchant and the consumer. 

(2) A brief description of the rental property, which shall be 

sufficient to identify the property to the consumer, including an 

identification or serial number, if applicable, and a statement 

indicating whether the property is new or used. 

(3) A description of any fee, charge or penalty, in addition to 

the periodic payment, that the consumer may be required to pay 

under the agreement, which shall be separately identified by 

type and amount. 

(4) A clear and conspicuous statement that the transaction is 

a rental-purchase agreement and that the consumer will not obtain ownership of the property until the consumer has paid the 

total dollar amount necessary to acquire ownership. 

(5) The amount of any initial payment, which includes the 

first periodic payment, and the total amount of any fees, taxes, 

or other charges, required to be paid by the consumer. 

(6) The amount of the cash price of the property that is the 

subject of the rental-purchase agreement, and, if the agreement 

involves the rental of 2 or more items as a set (as may be defined by the Board in regulation) a statement of the aggregate 

cash price of all items shall satisfy this requirement. 

(7) The amount and timing of periodic payments, and the 

total number of periodic payments necessary to acquire ownership of the property under the rental-purchase agreement. 

(8) The total cost, using that term, and a brief description, 

such as ‘‘This is the amount you will pay the merchant if you 

make all periodic payments to acquire ownership of the property.’’. (9) A statement of the consumer’s right to terminate the agreement without paying any fee or charge not previously due under 

the agreement by voluntarily surrendering or returning the 

property in good repair upon expiration of any lease term. 

(10) Substantially the following statement: ‘‘OTHER IMPORTANT TERMS: See your rental-purchase agreement for 

additional important information on early termination procedures, purchase option rights, responsibilities for loss, damage 

or destruction of the property, warranties, maintenance responsibilities, and other charges or penalties you may incur.’’. 

(b) FORM OF DISCLOSURE.—The disclosures required by paragraphs (4) through (10) of subsection (a) shall be segregated from 

other information at the beginning of the rental-purchase agreement 

and shall contain only directly related information, and shall be 

26

identified in boldface, upper-case letters as follows: ‘‘IMPORTANT 

RENTAL-PURCHASE DISCLOSURES’’.

(c) DISCLOSURE REQUIREMENTS RELATING TO INSURANCE PREMIUMS AND LIABILITY WAIVERS.—

(1) IN GENERAL.—A merchant shall clearly and conspicuously 

disclose in writing to the consumer before the consummation of 

a rental-purchase agreement that the purchase of leased property insurance or liability waiver coverage is not required as a 

condition for entering into the rental-purchase agreement. 

(2) AFFIRMATIVE WRITTEN REQUEST AFTER COST DISCLOSURE.—A merchant may provide insurance or liability waiver 

coverage, directly or indirectly, in connection with a rental-purchase transaction only if—

(A) the merchant clearly and conspicuously discloses to 

the consumer the cost of each component of such coverage 

before the consummation of the rental-purchase agreement; 

and 

(B) the consumer signs an affirmative written request for 

such coverage after receiving the disclosures required under 

subparagraph paragraph (A) of this paragraph and paragraph (1).

(d) ACCURACY OF DISCLOSURE.—

(1) IN GENERAL.—The disclosures required to be made under 

subsection (a) shall be accurate as of the date the disclosures 

are made, based on the information available to the merchant. 

(2) INFORMATION SUBSEQUENTLY RENDERED INACCURATE.—If 

information required to be disclosed under subsection (a) is subsequently rendered inaccurate as a result of any agreement between the merchant and the consumer subsequent to the delivery of the required disclosures, the resulting inaccuracy shall 

not constitute a violation of this title. 

SEC. 1005. OTHER AGREEMENT PROVISIONS. 

(a) IN GENERAL.—Each rental-purchase agreement shall—

(1) provide a statement specifying whether the merchant or 

the consumer is responsible for loss, theft, damage, or destruction of the property; 

(2) provide a statement specifying whether the merchant or 

the consumer is responsible for maintaining or servicing the 

property, together with a brief description of the responsibility; 

(3) provide that the consumer may terminate the agreement 

without paying any charges not previously due under the agreement by voluntarily surrendering or returning the property that 

is the subject of the agreement upon expiration of any rental period; 

(4) contain a provision for reinstatement of the agreement, 

which at a minimum—

(A) permits a consumer who fails to make a timely rental 

payment to reinstate the agreement, without losing any 

rights or options which exist under the agreement, by the 

payment of all past due rental payments and any other 

charges then due under the agreement and a payment for 

the next rental period within 7 business days after failing 

to make a timely rental payment if the consumer pays 

monthly, or within 3 business days after failing to make a 

27

timely rental payment if the consumer pays more frequently 

than monthly; 

(B) if the consumer returns or voluntarily surrenders the 

property covered by the agreement, other than through judicial process, during the applicable reinstatement period set 

forth in subparagraph (A), permits the consumer to reinstate the agreement during a period of at least 60 days 

after the date of the return or surrender of the property by 

the payment of all amounts previously due under the agreement, any applicable fees, and a payment for the next rental period; 

(C) if the consumer has paid 50 percent or more of the 

total cost necessary to acquire ownership and returns or 

voluntarily surrenders the property, other than through judicial process, during the applicable reinstatement period 

set forth in subparagraph (A), permits the consumer to reinstate the agreement during a period of at least 120 days 

after the date of the return of the property by the payment 

of all amounts previously due under the agreement, any applicable fees, and a payment for the next rental period; and

(D) permits the consumer, upon reinstatement of the 

agreement to receive the same property, if available, that 

was the subject of the rental-purchase agreement, or if the 

same property is not available, a substitute item of comparable quality and condition may be provided to the consumer; except that, the Board may, by regulation or order, 

exempt any independent small business (as defined by the 

Board by regulation) from the requirement of providing the 

same or comparable product during the extended reinstatement period provided in subparagraph (C), if the Board determines, taking into account such standards as the Board 

determines to be appropriate, that the reinstatement right 

provided in such subparagraph would provide excessive 

hardship for such independent small business;

(5) provide a statement specifying the terms under which the 

consumer shall acquire ownership of the property that is the 

subject of the rental-purchase agreement either by payment of 

the total cost to acquire ownership, as provided in section 1006, 

or by exercise of any early purchase option provided in the rental-purchase agreement; 

(6) provide a statement disclosing that if any part of a manufacturer’s express warranty covers the property at the time the 

consumer acquires ownership of the property, the warranty will 

be transferred to the consumer if allowed by the terms of the 

warranty; and

(7) provide, to the extent applicable, a description of any 

grace period for making any periodic payment, the amount of 

any security deposit, if any, to be paid by the consumer upon 

initiation of the rental-purchase agreement, and the terms for 

refund of such security deposit to the consumer upon return, 

surrender or purchase of the property. 

(b) REPOSSESSION DURING REINSTATEMENT PERIOD.—Subsection 

(a)(4) shall not be construed so as to prevent a merchant from attempting to repossess property during the reinstatement period purVerDate May 23 2002 06:13 Jul 20, 2002 Jkt 099006 PO 00000 Frm 00027 Fmt 6659 Sfmt 6603 E:\HR\OC\HR590P1.XXX pfrm12 PsN: HR590P1
28

suant to subsection (a)(4)(A), but such a repossession does not affect 

the consumer’s right to reinstate.

SEC. 1006. RIGHT TO ACQUIRE OWNERSHIP. 

(a) IN GENERAL.—The consumer shall acquire ownership of the 

property that is the subject of the rental-purchase agreement, and 

the rental-purchase agreement shall terminate, upon compliance by 

the consumer with the requirements of subsection (b) or any early 

payment option provided in the rental purchase agreement, and 

upon payment of any past due payments and fees, as permitted in 

regulation by the Board. 

(b) PAYMENT OF TOTAL COST.—The consumer shall acquire ownership of the rental property upon payment of the total cost of the 

rental-purchase agreement, as such term is defined in section 

1001(17), and as disclosed to the consumer in the rental-purchase 

agreement pursuant to section 1004(a). 

(c) ADDITIONAL FEES PROHIBITED.—A merchant shall not require 

the consumer to pay, as a condition for acquiring ownership of the 

property that is the subject of the rental-purchase agreement, any fee 

or charge in addition to, or in excess of, the regular periodic payments required by subsection (b), or any early purchase option 

amount provided in the rental-purchase agreement, as applicable. A 

requirement that the consumer pay an unpaid late charge or other 

fee or charge which the merchant has previously billed to the consumer shall not constitute an additional fee or charge for purposes 

of this subsection. 

(d) TRANSFER OF OWNERSHIP RIGHTS.—Upon payment by the consumer of all payments necessary to acquire ownership under subsection (b) or any early purchase option amount provided in the 

rental-purchase agreement, as appropriate, the merchant shall—

(1) deliver, or mail to the consumer’s last known address, 

such documents or other instruments, which the Board has determined by regulation, are necessary to acknowledge full ownership by the consumer of the property acquired pursuant to the 

rental-purchase agreement; and 

(2) transfer to the consumer the unexpired portion of any warranties provided by the manufacturer, distributor, or seller of 

the property, which shall apply as if the consumer were the 

original purchaser of the property, except where such transfer is 

prohibited by the terms of the warranty. 

SEC. 1007. PROHIBITED PROVISIONS. 

A rental-purchase agreement may not contain—

(1) a confession of judgment; 

(2) a negotiable instrument; 

(3) a security interest or any other claim of a property interest 

in any goods, except those goods the use of which is provided 

by the merchant pursuant to the agreement; 

(4) a wage assignment;

(5) a provision requiring the waiver of any legal claim or 

remedy created by this title or other provision of Federal or 

State law; 

(6) a provision requiring the consumer, in the event the property subject to the rental-purchase agreement is lost, stolen, 

damaged, or destroyed, to pay an amount in excess of the least 

of—

29

(A) the fair market value of the property, as determined 

by the Board in regulation; 

(B) any early purchase option amount provided in the 

rental-purchase agreement; or 

(C) the actual cost of repair, as appropriate; 

(7) a provision authorizing the merchant, or a person acting 

on behalf of the merchant, to enter the consumer’s dwelling or 

other premises without obtaining the consumer’s consent or to 

commit any breach of the peace in connection with the repossession of the rental property or the collection of any obligation or 

alleged obligation of the consumer arising out of the rental-purchase agreement; 

(8) a provision requiring the purchase of insurance or liability damage waiver to cover the property that is the subject of 

the rental-purchase agreement, except as permitted by the 

Board in regulation; 

(9) a provision requiring the consumer to pay more than 1 

late fee or charge for an unpaid or delinquent periodic payment, 

regardless of the period in which the payment remains unpaid 

or delinquent, or to pay a late fee or charge for any periodic 

payment because a previously assessed late fee has not been 

paid in full. 

SEC. 1008. STATEMENT OF ACCOUNTS. 

Upon request of a consumer, a merchant shall provide a statement of the consumer’s account. If a consumer requests a statement 

for an individual account more than 4 times in any 12-month period, the merchant may charge a reasonable fee for the additional 

statements. 

SEC. 1009. RENEGOTIATIONS AND EXTENSIONS. 

(a) RENEGOTIATIONS.—A renegotiation occurs when a rental-purchase agreement is satisfied and replaced by a new agreement undertaken by the same consumer. A renegotiation requires new disclosures, except as provided in subsection (c). 

(b) EXTENSIONS.—An extension is an agreement by the consumer 

and the merchant, to continue an existing rental-purchase agreement beyond the original end of the payment schedule, but does not 

include a continuation that is the result of a renegotiation. 

(c) EXCEPTIONS.—New disclosures are not required for the following, even if they meet the definition of a renegotiation or an extension: 

(1) A reduction in payments. 

(2) A deferment of 1 or more payments. 

(3) The extension of a rental-purchase agreement. 

(4) The substitution of property with property that has a substantially equivalent or greater economic value provided the 

rental-purchase cost does not increase. 

(5) The deletion of property in a multiple-item agreement. 

(6) A change in rental period provided the rental-purchase 

cost does not increase. 

(7) An agreement resulting from a court proceeding. 

(8) Any other event described in regulations prescribed by the 

Board. 

30

SEC. 1010. POINT-OF-RENTAL DISCLOSURES. 

(a) IN GENERAL.—For any item of property or set of items displayed or offered for rental-purchase, the merchant shall display on 

or next to the item or set of items a card, tag, or label that clearly 

and conspicuously discloses the following: 

(1) A brief description of the property. 

(2) Whether the property is new or used. 

(3) The cash price of the property. 

(4) The amount of each rental payment. 

(5) The total number of rental payments necessary to acquire 

ownership of the property. 

(6) The rental-purchase cost. 

(b) FORM OF DISCLOSURE.— (1) IN GENERAL.—A merchant may make the disclosure required by subsection (a) in the form of a list or catalog which 

is readily available to the consumer at the point of rental if the 

merchandise is not displayed in the merchant’s showroom or if 

displaying a card, tag, or label would be impractical due to the 

size of the merchandise.

(2) CLEARLY AND CONSPICUOUSLY.—As used in this section, 

the term ‘‘clearly and conspicuously’’ means that information required to be disclosed to the consumer shall appear in a type 

size, prominence, and location as to be noticeable, readable, and 

comprehensible to an ordinary consumer. 

SEC. 1011. RENTAL-PURCHASE ADVERTISING. 

(a) IN GENERAL.—If an advertisement for a rental-purchase transaction refers to or states the amount of any payment for any specific 

item or set of items, the merchant making the advertisement shall 

also clearly and conspicuously state in the advertisement the following for the item, or set of items, advertised: 

(1) The transaction advertised is a rental-purchase agreement. 

(2) The amount, timing, and total number of rental payments 

necessary to acquire ownership under the rental-purchase agreement. 

(3) The amount of the rental-purchase cost. 

(4) To acquire ownership of the property the consumer must 

pay the rental-purchase cost plus applicable taxes. 

(5) Whether the stated payment amount and advertised rental-purchase cost is for new or used property. 

(b) PROHIBITION.—An advertisement for a rental-purchase agreement shall not state or imply that a specific item, or set of items, 

is available at specific amounts or terms unless the merchant usually and customarily offers, or will offer, the item or set of items at 

the stated amounts or terms. 

(c) CLEARLY AND CONSPICUOUSLY.—

(1) IN GENERAL.—For purposes of this section, the term ‘‘clearly and conspicuously’’ means that required disclosures shall be 

presented in a type, size, shade, contrast, prominence, location, 

and manner, as applicable to different mediums for advertising, 

so as to be readily noticeable and comprehensible to the ordinary consumer. 

(2) REGULATORY GUIDANCE.—The Board shall prescribe regulations on principles and factors to meet the clear and conspicuous standard as appropriate to print, video, audio, and 

31

computerized advertising, reflecting the principles and factors 

typically applied in each medium by the Federal Trade Commission. 

(3) LIMITATION.—Nothing contrary to, inconsistent with, or in 

mitigation of, the required disclosures shall be used in any advertisement in any medium, and no audio, video, or print technique shall be used that is likely to obscure or detract significantly from the communication of the disclosures. 

SEC. 1012. CIVIL LIABILITY.

(a) IN GENERAL.—Except as otherwise provided in section 1013, 

any merchant who fails to comply with any requirement of this title 

with respect to any consumer is liable to such consumer as provided 

for leases in section 130. For purposes of this section, the term ‘‘creditor’’ as used in section 130 shall include a ‘‘merchant’’, as defined 

in section 1001. 

(b) JURISDICTION OF COURTS; LIMITATION ON ACTIONS.—

(1) IN GENERAL.—Notwithstanding section 130(e), any action 

under this section may be brought in any United States district 

court, or in any other court of competent jurisdiction, before the 

end of the 1-year period beginning on the date the last payment 

was made by the consumer under the rental-purchase agreement. 

(2) RECOUPMENT OR SET-OFF.—This subsection shall not bar 

a consumer from asserting a violation of this title in an action 

to collect an obligation arising from a rental-purchase agreement, which was brought after the end of the 1-year period described in paragraph (1) as a matter of defense by recoupment 

or set-off in such action, except as otherwise provided by State 

law. 

SEC. 1013. ADDITIONAL GROUNDS FOR CIVIL LIABILITY.

(a) INDIVIDUAL CASES WITH ACTUAL DAMAGES.—Any merchant 

who fails to comply with any requirements imposed under section 

1010 or 1011 with respect to any consumer who suffers actual damage from the violation shall be liable to such consumer as provided 

in section 130. 

(b) PATTERN OR PRACTICE OF VIOLATIONS.—If a merchant engages 

in a pattern or practice of violating any requirement imposed under 

section 1010 or 1011, the Federal Trade Commission or an appropriate State attorney general, in accordance with section 1016, may 

initiate an action to enforce sanctions against the merchant, including—

(1) an order to cease and desist from such practices; and 

(2) a civil money penalty of such amount as the court may 

impose, based on such factors as the court may determine to be 

appropriate. 

SEC. 1014. LIABILITY OF ASSIGNEES. 

(a) ASSIGNEES INCLUDED.—For purposes of section 1013, and this 

section, the term ‘‘merchant’’ includes an assignee of a merchant. 

(b) LIABILITIES OF ASSIGNEES.—

(1) APPARENT VIOLATION.—An action under section 1012 or 

1013 for a violation of this title may be brought against an assignee only if the violation is apparent on the face of the rentalpurchase agreement to which it relates. 

32

(2) APPARENT VIOLATION DEFINED.—For purposes of this subsection, a violation that is apparent on the face of a rental-purchase agreement includes a disclosure that can be determined 

to be incomplete or inaccurate from the face of the agreement. 

(3) INVOLUNTARY ASSIGNMENT.—An assignee has no liability 

in a case in which the assignment is involuntary. 

(4) RULE OF CONSTRUCTION.—No provision of this section 

shall be construed as limiting or altering the liability under section 1012 or 1013 of a merchant assigning a rental-purchase 

agreement. 

(b) PROOF OF DISCLOSURE.—In an action by or against an assignee, the consumer’s written acknowledgment of receipt of a disclosure, made as part of the rental-purchase agreement, shall be conclusive proof that the disclosure was made, if the assignee had no 

knowledge that the disclosure had not been made when the assignee 

acquired the rental-purchase agreement to which it relates. 

SEC. 1015. REGULATIONS. 

(a) IN GENERAL.—The Board shall prescribe regulations as necessary to carry out the purposes of this title, to prevent its circumvention, and to facilitate compliance with its requirements. 

(b) MODEL DISCLOSURE FORMS.—The Board may publish model 

disclosure forms and clauses for common rental-purchase agreements to facilitate compliance with the disclosure requirements of 

this title and to aid the consumer in understanding the transaction 

by utilizing readily understandable language to simplify the technical nature of the disclosures. In devising such forms, the Board 

shall consider the use by merchants of data processing or similar 

automated equipment. Nothing in this title may be construed to require a merchant to use any such model form or clause prescribed 

by the Board under this section. A merchant shall be deemed to be 

in compliance with the requirement to provide disclosure under section 1003(a) if the merchant—

(1) uses any appropriate model form or clause as published 

by the Board; or 

(2) uses any such model form or clause and changes it by—

(A) deleting any information which is not required by 

this title; or 

(B) rearranging the format, if in making such deletion or 

rearranging the format, the merchant does not affect the 

substance, clarity, or meaningful sequence of the disclosure. 

(c) EFFECTIVE DATE OF REGULATIONS.—Any regulation prescribed 

by the Board, or any amendment or interpretation thereof, shall not 

be effective before the October 1 that follows the date of publication 

of the regulation in final form by at least 6 months. The Board may 

at its discretion lengthen that period of time to permit merchants to 

adjust to accommodate new requirements. The Board may also 

shorten that period of time, notwithstanding the first sentence, if it 

makes a specific finding that such action is necessary to comply 

with the findings of a court or to prevent unfair or deceptive practices. In any case, merchants may comply with any newly prescribed 

disclosure requirement prior to its effective date. 

SEC. 1016. ENFORCEMENT. 

(a) FEDERAL ENFORCEMENT.—Compliance with the requirements 

imposed under this title shall be enforced under the Federal Trade 

33

Commission Act (15 U.S.C. 41 et seq.), and a violation of any requirements imposed under this title shall be deemed a violation of 

a requirement imposed under that Act. All of the functions and powers of the Federal Trade Commission under the Federal Trade Commission Act are available to the Commission to enforce compliance 

by any person with the requirements of this title, irrespective of 

whether that person is engaged in commerce or meets any other jurisdictional test in the Federal Trade Commission Act. 

(b) STATE ENFORCEMENT.—

(1) IN GENERAL.—An action to enforce the requirements imposed by this title may also be brought by the appropriate State 

attorney general in any appropriate United States district court, 

or any other court of competent jurisdiction. 

(2) PRIOR WRITTEN NOTICE.—

(A) IN GENERAL.—The State attorney general shall provide prior written notice of any such civil action to the Federal Trade Commission and shall provide the Commission 

with a copy of the complaint. 

(B) EMERGENCY ACTION.—If prior notice is not feasible, 

the State attorney general shall provide notice to the Commission immediately upon instituting the action. 

(3) FTC INTERVENTION.—The Commission may—

(A) intervene in the action; 

(B) upon intervening—

(i) remove the action to the appropriate United States 

district court, if it was not originally brought there; 

and 

(ii) be heard on all matters arising in the action; and 

(C) file a petition for appeal. 

SEC. 1017. CRIMINAL LIABILITY FOR WILLFUL AND KNOWING VIOLATION. 

Whoever willfully and knowingly gives false or inaccurate information or fails to provide information which he is required to disclose under the provisions of this title or any regulation issued 

thereunder shall be subject to the penalty provisions as provided in 

section 112.

SEC. 1018. RELATION TO OTHER LAWS. 

(a) RELATION TO STATE LAW.—

(1) NO EFFECT ON CONSISTENT STATE LAWS.—Except as otherwise provided in subsection (b), this title does not annul, alter, 

or affect in any manner the meaning, scope or applicability of 

the laws of any State relating to rental-purchase agreements, 

except to the extent those laws are inconsistent with any provision of this title, and then only to the extent of the inconsistency. 

(2) DETERMINATION OF INCONSISTENCY.—Upon its own motion or upon the request of an interested party, which is submitted in accordance with procedures prescribed in regulations 

of the Board, the Board shall determine whether any such inconsistency exists. If the Board determines that a term or provision of a State law is inconsistent, merchants located in that 

State need not follow such term or provision and shall incur no 

liability under the law of that State for failure to follow such 

term or provision, notwithstanding that such determination is 

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subsequently amended, rescinded, or determined by judicial or 

other authority to be invalid for any reason. 

(3) GREATER PROTECTION UNDER STATE LAW.—Except as provided in subsection (b), for purposes of this section, a term or 

provision of a State law is not inconsistent with the provisions 

of this title if the term or provision affords greater protection 

and benefit to the consumer than the protection and benefit provided under this title as determined by the Board, on its own 

motion or upon the petition of any interested party. 

(b) STATE LAWS RELATING TO CHARACTERIZATION OF TRANS- ACTION.—Notwithstanding the provisions of subsection (a), this title 

shall supersede any State law to the extent that such law— (1) regulates a rental-purchase agreement as a security interest, credit sale, retail installment sale, conditional sale or any 

other form of consumer credit, or that imputes to a rental-purchase agreement the creation of a debt or extension of credit, or 

(2) requires the disclosure of a percentage rate calculation, including a time-price differential, an annual percentage rate, or 

an effective annual percentage rate.

(c) RELATION TO FEDERAL TRADE COMMISSION ACT.—No provision of this title shall be construed as limiting, superseding, or otherwise affecting the applicability of the Federal Trade Commission 

Act to any merchant or rental-purchase transaction. 

SEC. 1019. EFFECT ON GOVERNMENT AGENCIES. 

No civil liability or criminal penalty under this title may be imposed on the United States or any of its departments or agencies, 

any State or political subdivision, or any agency of a State or political subdivision. 

SEC. 1020. COMPLIANCE DATE. 

Compliance with this title shall not be required until 6 months 

after the date of the enactment of the Consumer Rental Purchase 

Agreement Act. In any case, merchants may comply with this title 

at any time after such date of enactment.

(35)

SUPPLEMENTAL VIEWS OF HON. JOHN J. LAFALCE 

The Consumer Rental Purchase Agreement Act adopted by the 

Financial Services Committee differs significantly from the industry drafted bill introduced in Committee and reflects serious movement in a pro-consumer direction. The bill is an important first 

step toward providing a uniform national standard for regulation 

of rent-to-own transactions. 

The Rent-to-Own industry has had a somewhat troubled history. 

But it is an important industry that, in many cases, offers a service 

to consumers that they want and need, and many have no other 

way to obtain. While a few states offer rent-to-own consumers some 

important protections, the vast majority of states offer no, or minimal, protection. This industry has become too important to lack 

uniform national regulation. For that reason, I support the development of a Federal standard. But it must be a strong standard. And 

it must provide only a floor, allowing states to be more protective 

if they choose to be. 

As amended by the Committee, H.R. 1701 comes much closer to 

meeting that standard. However, I am reluctant to support a bill 

that the consumer groups and attorneys general continue to oppose. It is unfortunate that we have not had the opportunity to get 

the views of both of these groups on what is now a substantially 

different draft. 

While I understand the desire of supporters of the bill to move 

the legislative process along, we need to recognize that the Senate 

calendar is such that there will be little time for the Senate Committee to initiate a legislative process on this matter, nor is the 

Senate Banking Committee leadership disposed to do so. The only 

way we can hope to enact legislation is if the House product has 

such broad bipartisan support that the Senate might seriously consider taking up the House bill. Unfortunately, this product does not 

yet take us to that point. 

The amendments adopted in Full Committee make a number of 

important and needed improvements to the bill. The amended bill 

provides for clearer and more relevant disclosure of costs to consumers, particularly the total to the consumer of acquiring ownership of rented merchandise. It adds a number of new substantive 

protections for consumers and it enhances enforcement by eliminating a number of legal loopholes that would have permitted rentto-own merchants to avoid liability for violations. 

However, other problems remain unresolved. The bill does not 

provide adequate ownership rights for consumers. It does nothing 

to limit the exorbitant costs that some consumers must pay over 

time to acquire rental-purchase merchandise. And it continues to 

preempt states from applying the legal principles and cost standards that they consider most appropriate for rent-to-own transactions. 

36

H.R. 1701 is an important first step in providing uniform protections for rent-to-own customers. But we need to do more before 

H.R. 1701 constitutes a suitable Federal standard.

JOHN J. LAFALCE.

(37)

SUPPLEMENTAL VIEWS OF HON. MAXINE WATERS ET AL. 

The Consumer Rental Purchase Agreement Act is special interest 

legislation at its very worst. The bill is falsely presented by its industry proponents as pro-consumer and as not pre-emptive of state 

law. Neither is true. The bill has one purpose and one purpose 

only: to circumvent stronger consumer protections in the Federal 

Truth-in-Lending Act and in the statutes of a handful of States 

that the rent-to-own industry has not been able to overturn. 

As originally introduced, H.R. 1701 sought to preempt all inconsistent State laws. This included all current or future State laws 

that attempt to regulate rent-to-own transactions as credit or installment sales, as well as any industry-enacted State rent-to-own 

statutes that provide stronger, but inconsistent protections for consumers. Although the amended Committee bill has narrowed the 

scope of the bill’s preemption, the bill would still preempt the best 

of the State laws in New Jersey, Minnesota, Wisconsin, and 

Vermont that seek to provide meaningful protections against unfair 

predatory practices. And it would still prevent these and other 

states from strengthening consumer protections in the future by 

treating rent-to-own transactions as credit sales. 

What is behind this bill? Not a desire to create a ‘‘Federal floor’’

of consumer protections for rent-to-own customers, as the majority 

views allege. It is an effort to avoid hundreds of millions of dollars 

in legal penalties imposed by courts in precisely those States whose 

laws would be preempted. Since 1997, legal actions responding to 

State consumer law violations have produced legal judgments or 

settlements against the nation’s largest rent-to-own chain, Rent-A- Center, Inc., amounting to $30 million in Minnesota, $16 million in 

Wisconsin and more than $60 million in New Jersey. Unable to win 

under these State laws, or to overturn them at the State level, the 

rent-to-own industry is simply calling on Congress to preempt 

them. 

All national consumer organizations oppose H.R. 1701 as an inadequate standard to protect vulnerable consumers from misleading lease arrangements that really mask installment sales at 

exorbitant rates of interest. Consumer advocates object to rent-toown operations as enticing vulnerable consumers to acquire electronic equipment, appliances, furniture and other household items 

with promises to no credit checks, no qualification and low payments that disguise the true cost of the transaction. Most rent-toown stores encourage consumers to focus only on the affordability 

of the low weekly or monthly lease payment and ignore the total 

cost of actually acquiring merchandise over the term of the rentalpurchase contract. 

Every market comparison done by consumer organizations of the 

cost of acquiring comparable merchandise under rent-to-own contracts and alternative credit or installment sales typically show the 

38

total rent-to-own cost as averaging three to five times higher than 

both the retain price of the merchandise and the comparable credit 

price. This imposes an excessive cost burden on low-income families 

who have no other means of acquiring basic household items other 

than local rent-to-own stores. 

Rent-to-own merchants are not the only ones targeting this same 

group of vulnerable consumers. Low-income communities are besieged by predatory mortgage companies, payday lenders, check 

cashiers, pawnshops and other quasi-financial companies that are 

all trying to rob the same families of their merger dollars. The results have been devastating for struggling families and for entire 

neighborhoods. 

H.R. 1701 does nothing to restrict the exorbitant costs of acquiring merchandise for rent-to-own contracts. Moreover, it fails to 

meet the basic standard for full cost disclosure under the Truth-inLending Act by preventing consumers from using annual percentage rate (APR) calculations or other common market measures of 

total costs to compare the total cost of rent-to-own transactions 

with alternative credit and installment sales options. 

The Consumer Rental Puchase Agreement Act should be defeated for several important reasons. It contradicts all arguments 

of States’ rights and denies States the opportunity to regulation 

commercial transactions as they think best. It promotes and encourages business transactions that target and prey upon our most 

vulnerable citizens. And, it seeks to impose an industry-approved 

standard of consumer protection in place of long-established principles of Federal and State laws that have proven effective over 

four decades.

MAXINE WATERS. 

JANICE D. SCHAKOWSKY. 

STEPHANIE TUBBS-JONES. 

CAROLYN B. MALONEY. 

BARBARA LEE. 

BERNARD SANDERS. 

JULIA CARSON.

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