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[House Report 107-590]
[From the U.S. Government Publishing Office]

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
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 rental-purchase 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.
          ``(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 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 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 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 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;
          ``(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.
          ``(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 
        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.
          ``(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.

``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 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.''.

                          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 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 rental-purchase 
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.

                            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
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
                                    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
                                    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 aproduct, 
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.

                    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 
``rent-to-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 
Federal 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 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).

                  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.
    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 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 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.
          (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.--
                  (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 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 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 
                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 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;
          (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.
          (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 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.
          (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.

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 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.

               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 rent-to-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.
    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.

            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-to-own 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-to-own 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 rental-purchase 
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 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-in-Lending 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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