I

107TH CONGRESS

1ST SESSION 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.

IN THE HOUSE OF REPRESENTATIVES

MAY 3, 2001

Mr. JONES of North Carolina (for himself, Mr. MALONEY of Connecticut, Mr.

FROST, Mr. BOEHNER, Mr. JEFFERSON, Mr. KANJORSKI, Mr. WATTS of

Oklahoma, Mr. ROSS, Mr. FORD, Mr. SESSIONS, Mr. SANDLIN, Mr.

WAMP, Mr. BAKER, and Mr. ISAKSON) introduced the following bill;

which was referred to the Committee on Financial Services

A BILL

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.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Consumer Rental Pur3 chase Agreement Act’’.

4 SEC. 2. FINDINGS AND DECLARATION OF PURPOSE.

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

6 (1) The rental-purchase industry provides a

7 service that meets and satisfies the demands of

8 many consumers.

9 (2) Each year, approximately 2,300,000 United

10 States households enter into rental-purchase trans11 actions and over a 5-year period approximately

12 4,900,000 United States households will do so.

13 (3) Competition among the various firms en14 gaged in the extension of rental-purchase trans15 actions would be strengthened by informed use of

16 rental-purchase transactions.

17 (4) The informed use of rental-purchase trans18 actions results from an awareness of the cost thereof

19 by consumers.

20 (b) PURPOSE.—The purpose of this title is to assure

21 the availability of rental-purchase transactions and to as22 sure simple, meaningful, and consistent disclosure of rent23 al-purchase terms so that consumers will be able to more

24 readily compare the available rental-purchase terms and

25 avoid uninformed use of rental-purchase transactions, and
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1 to protect consumers against unfair rental-purchase prac2 tices.

3 SEC. 3. CONSUMER CREDIT PROTECTION ACT.

4 The Consumer Credit Protection Act is amended by

5 adding at the end the following new title:

6 ‘‘TITLE X—RENTAL-PURCHASE

7 TRANSACTIONS

8 ‘‘SEC. 1001. DEFINITIONS.

9 ‘‘For purposes of this title, the following definitions

10 shall apply:

11 ‘‘(1) ADVERTISEMENT.—The term ‘advertise12 ment’ means a commercial message in any medium

13 that promotes, directly or indirectly, a rental-pur14 chase agreement but does not include price tags,

15 window signs, or other in-store merchandising aids.

16 ‘‘(2) AGRICULTURAL PURPOSE.—The term ‘ag17 ricultural purpose’ includes—

18 ‘‘(A) the production, harvest, exhibition,

19 marketing, transformation, processing, or man20 ufacture of agricultural products by a natural

21 person who cultivates plants or propagates or

22 nurtures agricultural products; and

23 ‘‘(B) the acquisition of farmlands, real

24 property with a farm residence, or personal
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1 property and services used primarily in farm2 ing.

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

4 Board of Governors of the Federal Reserve System.

5 ‘‘(4) CASH PRICE.—The term ‘cash price’

6 means the price at which a merchant, in the ordi7 nary course of business, offers to sell for cash the

8 property that is the subject of the rental-purchase

9 transaction.

10 ‘‘(5) CONSUMER.—The term ‘consumer’ means

11 a natural person who is offered or enters into a rent12 al-purchase agreement.

13 ‘‘(6) DATE OF CONSUMMATION.—The term

14 ‘date of consummation’ means the date on which a

15 consumer becomes contractually obligated under a

16 rental-purchase agreement.

17 ‘‘(7) MERCHANT.—The term ‘merchant’ means

18 a person who provides the use of property through

19 a rental-purchase agreement in the ordinary course

20 of business and to whom a consumer’s initial pay21 ment under the agreement is payable.

22 ‘‘(8) PERIODIC PAYMENT.—The term ‘periodic

23 payment’ means the total payment a consumer will

24 make for a specific rental period, including the rent-
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1 al payment, taxes, and fees or charges that may be

2 excluded from the rental-purchase cost.

3 ‘‘(9) PROPERTY.—The term ‘property’ means

4 property that is not real property under the laws of

5 the State where the property is located when it is

6 made available under a rental-purchase agreement.

7 ‘‘(10) RENTAL PAYMENT.—The term ‘rental

8 payment’ means a payment required to be made by

9 a consumer for the possession and use of property

10 for a specific rental period, but does not include

11 taxes that may be imposed on such payment.

12 ‘‘(11) RENTAL PERIOD.—The term ‘rental pe13 riod’ means a week, month, or other specific period

14 of time, during which the consumer has a right to

15 possess and use property that is the subject of a

16 rental-purchase agreement after paying the rental

17 payment and any applicable taxes for such period.

18 ‘‘(12) RENTAL-PURCHASE AGREEMENT.—

19 ‘‘(A) IN GENERAL.—The term ‘rental-pur20 chase agreement’ means a contract in the form

21 of a bailment or lease for the use of property

22 by a consumer for an initial period of 4 months

23 or less, that is renewable with each payment by

24 the consumer, and that permits but does not
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1 obligate the consumer to become the owner of

2 the property.

3 ‘‘(B) EXCLUSIONS.—The term ‘rental-pur4 chase agreement’ does not include—

5 ‘‘(i) a credit sale (as defined in section

6 103(g) of the Truth in Lending Act);

7 ‘‘(ii) a consumer lease (as defined in

8 section 181(1) of such Act); or

9 ‘‘(iii) a transaction giving rise to a

10 debt incurred in connection with the busi11 ness of lending money or a thing of value.

12 ‘‘(13) STATE.—The term ‘State’ means any

13 State of the United States, the District of Columbia,

14 any territory of the United States, Puerto Rico,

15 Guam, American Samoa, the Trust Territory of the

16 Pacific Islands, the Virgin Islands, and the Northern

17 Mariana Islands.

18 ‘‘SEC. 1002. DETERMINATION OF RENTAL-PURCHASE COST.

19 ‘‘(a) IN GENERAL.—

20 ‘‘(1) BASIS FOR DETERMINATION.—Except as

21 otherwise provided in this section, the amount of the

22 rental-purchase cost in connection with a rental-pur23 chase transaction shall be determined as the sum of

24 all charges that are payable directly or indirectly by

25 the person to whom the rental-purchase transaction
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1 is extended, and are imposed directly or indirectly by

2 the merchant as a condition of entering into a rent3 al-purchase agreement or acquiring ownership of

4 property under a rental-purchase agreement.

5 ‘‘(2) TAXES AND OTHER COSTS NOT IN6 CLUDED.—The amount of any charge, cost, or fee of

7 a type that is imposed on or otherwise payable by,

8 a consumer in a cash transaction for comparable

9 property shall not be taken into account for pur10 poses of the determination under paragraph (1) with

11 respect to any rental-purchase transaction.

12 ‘‘(3) EXAMPLES OF CHARGES, COSTS, AND

13 FEES TAKEN INTO ACCOUNT.—The following are ex14 amples of charges, costs, and fees that shall be

15 taken into account in determining in the rental-pur16 chase cost with respect to any rental-purchase trans17 action:

18 ‘‘(A) Rental payment.

19 ‘‘(B) Service, processing, or administrative

20 charge.

21 ‘‘(C) Fee for an investigation or credit re22 port.

23 ‘‘(D) Charge for delivery required by the

24 merchant.
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1 ‘‘(E) Charge for waiver of the consumer’s

2 liability in the event of loss, damage, or de3 struction of the property.

4 ‘‘(F) Premium or other charge for insur5 ance.

6 ‘‘(b) INSURANCE PREMIUMS AND CHARGES FOR LI7 ABILITY WAIVER.—

8 ‘‘(1) INCLUSION IN RENTAL-PURCHASE COST.—

9 Charges or premiums for insurance or liability waiv10 er written in connection with any rental-purchase

11 agreement shall be included in determining the rent12 al-purchase cost with respect to any rental-purchase

13 transaction unless—

14 ‘‘(A) coverage of the consumer by the in15 surance or liability waiver is not a factor in the

16 merchant’s approval of the rental-purchase

17 transaction, and this fact is clearly disclosed in

18 writing to the consumer at or before con19 summation of the rental-purchase transaction;

20 and

21 ‘‘(B) before obtaining the insurance or li22 ability waiver, the consumer has initialed or

23 signed an affirmative written request for the in24 surance or liability waiver after receiving a writ25 ten disclosure of the cost thereof.
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1 ‘‘(2) MANNER OF DISCLOSURE.—The disclo2 sures required under paragraph (1) with respect to

3 rental-purchase transaction may be included in the

4 rental-purchase agreement or made on a separate

5 form that the consumer may keep.

6 ‘‘(c) RESTATEMENT OF CERTAIN EXCLUDED

7 ITEMS.—The following fees or charges shall not be taken

8 into account in determining the rental-purchase cost with

9 respect to a rental-purchase transaction:

10 ‘‘(1) Fees and charges prescribed by law, which

11 actually are or will be paid to public officials or gov12 ernment entities need not be included in the com13 putation of the rental-purchase cost, such as sales

14 tax.

15 ‘‘(2) Fees and charges for optional products

16 and services made available in connection with a

17 rental-purchase agreement.

18 ‘‘SEC. 1003. EXEMPTED TRANSACTIONS.

19 ‘‘This title shall not apply to rental-purchase agree20 ments primarily for business, commercial, or agricultural

21 purposes, or those made with Government agencies or in22 strumentalities.

23 ‘‘SEC. 1004. GENERAL DISCLOSURE REQUIREMENTS.

24 ‘‘(a) RECIPIENT OF DISCLOSURE.—A merchant shall

25 disclose to the person who will be obligated on a rental-
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1 purchase agreement the information required by sections

2 1005 and 1006. In a transaction involving more than 1

3 person who will be obligated on a rental-purchase agree4 ment, a merchant need not disclose to more than 1 of such

5 persons.

6 ‘‘(b) TIMING OF DISCLOSURE.—The disclosures re7 quired under sections 1005 and 1006 shall be made at

8 or before the date of consummation of the rental-purchase

9 agreement and clearly and conspicuously in writing and

10 in a form that the consumer may keep.

11 ‘‘(c) INFORMATION SUBSEQUENTLY RENDERED IN12 ACCURATE.—If information disclosed in accordance with

13 this title is subsequently rendered inaccurate as a result

14 of any act, occurrence, or agreement subsequent to the

15 delivery of the required disclosures, the resulting inaccu16 racy does not constitute a violation of this title.

17 ‘‘SEC. 1005. RENTAL-PURCHASE DISCLOSURES.

18 ‘‘(a) IN GENERAL.—For each rental-purchase agree19 ment, the merchant shall disclose to the consumer the fol20 lowing, to the extent applicable:

21 ‘‘(1) The date of consummation of the trans22 action and the identities of the merchant and con23 sumer.

24 ‘‘(2) A description of the property and a state25 ment indicating whether the property is new or used,
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1 except a statement indicating that new property is

2 used property is not a violation of this title.

3 ‘‘(3) A statement of the rental payment for

4 each item of property and the total rental payment

5 if multiple items are rented. If 2 or more items are

6 rented as a set, a statement of the aggregate rental

7 payment of all items satisfies this requirement.

8 ‘‘(4) A statement of the cash price of each item

9 of property and the total cash price if multiple items

10 are rented. If 2 or more items are rented as a set,

11 a statement of the aggregate cash price of all items

12 satisfies this requirement.

13 ‘‘(5) The amount to be paid before or at the

14 consummation of the agreement or the delivery of

15 the property, using the phrase ‘initial payment’. The

16 merchant shall itemize each component of the initial

17 payment by type and amount, including any service,

18 processing, or administrative charge, delivery fee, re19 fundable security deposit, rental payment, and fees

20 or charges that may be excluded from the rental21 purchase cost.

22 ‘‘(6) A statement of the amount of the periodic

23 payment including an itemization of each component

24 of the periodic payment by type and amount, using

25 the phrase ‘periodic payment’. If the final periodic
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1 payment is less than the regular periodic payments,

2 the components of the final periodic payment need

3 not be itemized. A merchant may disclose alternative

4 periodic payments based on different rental periods.

5 ‘‘(7) The ‘rental-purchase cost’, using that

6 term, and a brief description such as ‘The amount

7 you will pay the merchant to acquire ownership of

8 the property. This amount excludes taxes and other

9 charges not imposed by the merchant as a condition

10 of acquiring ownership.’

11 ‘‘(8) The difference between the cash price and

12 the rental-purchase cost, using the term ‘cost of

13 rental services’, and a brief description such as ‘the

14 difference between the cash price and the rental-pur15 chase cost’.

16 ‘‘(9) Substantially the following statement in

17 boldface, uppercase letters: ‘YOU ARE RENTING

18 THE PROPERTY. TO ACQUIRE OWNERSHIP

19 OF THE PROPERTY YOU MUST MAKE ALL

20 PAYMENTS NECESSARY TO ACQUIRE OWN21 ERSHIP.’

22 ‘‘(10) Substantially the following statement:

23 ‘Other Important Terms. See your rental-purchase

24 agreement for additional important information on

25 termination, purchase option rights, reinstatement
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1 rights, warranties, maintenance responsibilities, your

2 liability for loss, theft, damage, or destruction of the

3 property, and other charges and fees you may incur.’

4 ‘‘(11) Using the term ‘payment schedule’, the

5 amount, number, and timing of all periodic pay6 ments the consumer will make if the consumer ac7 quires ownership of the property by making all peri8 odic payments, the total of the initial payment and

9 all periodic payments, and a brief description such

10 as ‘This is the amount you will have paid, including

11 the rental-purchase cost, taxes, and charges for

12 other products or services you may have elected to

13 purchase, if you make all Periodic Payments as

14 scheduled.’ A merchant may disclose alternative pay15 ment schedules based on different rental periods.

16 ‘‘(b) FORM OF DISCLOSURE.—The disclosures re17 quired by paragraphs (5) through (11) of subsection (a)

18 shall be segregated from other information and shall con19 tain only directly related information, and shall be identi20 fied in boldface, uppercase letters as ‘RENTAL-PUR21 CHASE DISCLOSURES’.

22 ‘‘SEC. 1006. OTHER AGREEMENT PROVISIONS.

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

24 shall—
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1 ‘‘(1) provide a statement specifying whether the

2 merchant or the consumer is responsible for loss,

3 theft, damage, or destruction of the property;

4 ‘‘(2) provide a statement specifying whether the

5 merchant or the consumer is responsible for main6 taining or servicing the property, together with a

7 brief description of the responsibility;

8 ‘‘(3) provide that the consumer may terminate

9 the agreement without paying any charges not pre10 viously due under the agreement by voluntarily sur11 rendering or returning the property that is the sub12 ject of the agreement upon expiration of any rental

13 period;

14 ‘‘(4) contain a provision for reinstatement of

15 the agreement, which at a minimum—

16 ‘‘(A) permits a consumer who fails to make

17 a timely rental payment to reinstate the agree18 ment, without losing any rights or options

19 which exist under the agreement, by the pay20 ment of all past due rental payments and any

21 other charges then due under the agreement

22 and a payment for the next rental period within

23 7 business days after failing to make a timely

24 rental payment if the consumer pays monthly,

25 or within 3 business days after failing to make
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1 a timely rental payment if the consumer pays

2 more frequently than monthly;

3 ‘‘(B) if the consumer returns or voluntarily

4 surrenders the property covered by the agree5 ment, other than through judicial process, dur6 ing the applicable reinstatement period set forth

7 in subparagraph (A), permits the consumer to

8 reinstate the agreement during a period of at

9 least 30 days after the date of the return or

10 surrender of the property by the payment of all

11 amounts previously due under the agreement,

12 any applicable fees, and a payment for the next

13 rental period; and

14 ‘‘(C) if the consumer has paid 60 percent

15 or more of the rental-purchase cost and returns

16 or voluntarily surrenders the property, other

17 than through judicial process, during the appli18 cable reinstatement period set forth in subpara19 graph (A), permits the consumer to reinstate

20 the agreement during a period of at least 90

21 days after the date of the return of the property

22 by the payment of all amounts previously due

23 under the agreement, any applicable fees, and a

24 payment for the next rental period;
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1 ‘‘(5) if the merchant offers a purchase option,

2 provide a statement of the consumer’s purchase op3 tion rights under the agreement, including the meth4 od of determining the purchase price at any point in

5 time if the property is acquired through the exercise

6 of the purchase option;

7 ‘‘(6) provide a statement disclosing that if any

8 part of a manufacturer’s express warranty covers

9 the property at the time the consumer acquires own10 ership of the property, the warranty will be trans11 ferred to the consumer if allowed by the terms of the

12 warranty; and

13 ‘‘(7) provide, to the extent applicable, a state14 ment of any payment grace period, the amount of

15 any late payment fee, any additional fees or require16 ments for reinstatement, and the amount of any

17 other charges and fees the consumer may incur.

18 ‘‘(b) REPOSSESSION DURING REINSTATEMENT PE19 RIOD.—Subsection (a)(4) shall not be construed so as to

20 prevent a merchant from attempting to repossess property

21 during the reinstatement period pursuant to subsection

22 (a)(4)(A), but such a repossession does not affect the con23 sumer’s right to reinstate. Upon reinstatement, the mer24 chant shall provide the consumer with the same property,
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1 if available; if it is not available, the merchant shall sub2 stitute property of comparable quality and condition.

3 ‘‘SEC. 1007. PROHIBITED PROVISIONS.

4 ‘‘A rental-purchase agreement may not contain—

5 ‘‘(1) a confession of judgment;

6 ‘‘(2) a negotiable instrument;

7 ‘‘(3) a security interest or any other claim of a

8 property interest in any goods, except those goods

9 the use of which is provided by the merchant pursu10 ant to the agreement;

11 ‘‘(4) a wage assignment;

12 ‘‘(5) a waiver by the consumer of a claim or de13 fense; or

14 ‘‘(6) a provision requiring the consumer to pay

15 in excess of the lesser of the fair market value, any

16 purchase option amount, remaining rent, or cost of

17 repair if the property is lost, stolen, damaged, or de18 stroyed.

19 ‘‘SEC. 1008. STATEMENT OF ACCOUNTS.

20 ‘‘Upon request of a consumer, a merchant shall pro21 vide a statement of the consumer’s account. If a consumer

22 requests a statement for an individual account more than

23 4 times in any 12-month period, the merchant may charge

24 a reasonable fee for the additional statements.
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1 ‘‘SEC. 1009. RENEGOTIATIONS AND EXTENSIONS.

2 ‘‘(a) RENEGOTIATIONS.—A renegotiation occurs

3 when a rental-purchase agreement is satisfied and re4 placed by a new agreement undertaken by the same con5 sumer. A renegotiation requires new disclosures, except as

6 provided in subsection (c).

7 ‘‘(b) EXTENSIONS.—An extension is an agreement by

8 the consumer and the merchant, to continue an existing

9 rental-purchase agreement beyond the original end of the

10 payment schedule, but does not include a continuation

11 that is the result of a renegotiation.

12 ‘‘(c) EXCEPTIONS.—New disclosures are not required

13 for the following, even if they meet the definition of a re14 negotiation or an extension:

15 ‘‘(1) A reduction in payments.

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

17 ‘‘(3) The extension of a rental-purchase agree18 ment.

19 ‘‘(4) The substitution of property with property

20 that has a substantially equivalent or greater eco21 nomic value provided the rental-purchase cost does

22 not increase.

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

24 agreement.

25 ‘‘(6) A change in rental period provided the

26 rental-purchase cost does not increase.
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1 ‘‘(7) An agreement resulting from a court pro2 ceeding.

3 ‘‘(8) Any other event described in regulations

4 prescribed by the Board.

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

6 ‘‘(a) IN GENERAL.—For any item of property or set

7 of items displayed or offered for rental-purchase, the mer8 chant shall display on or next to the item or set of items

9 a card, tag, or label the clearly and conspicuously discloses

10 the following:

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

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

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

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

15 ‘‘(5) The total number of rental payments nec16 essary to acquire ownership of the property.

17 ‘‘(6) The rental-purchase cost.

18 ‘‘(b) FORM OF DISCLOSURE.—A merchant may make

19 the disclosure required by subsection (a) in the form of

20 a list or catalog which is readily available to the consumer

21 at the point of rental if the merchandise is not displayed

22 in the merchant’s showroom or if displaying a card, tag,

23 or label would be impractical due to the size of the mer24 chandise.
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1 ‘‘SEC. 1011. RENTAL-PURCHASE ADVERTISING.

2 ‘‘(a) IN GENERAL.—If an advertisement refers to or

3 states the amount of any payment for any specific item

4 or set of items, the merchant making the advertisement

5 shall also clearly and conspicuously state in the advertise6 ment the following:

7 ‘‘(1) The transaction advertised is a rental-pur8 chase agreement.

9 ‘‘(2) The amount, timing, and total number of

10 rental payments necessary to acquire ownership.

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

12 ‘‘(4) To acquire ownership of the property the

13 consumer must pay the rental-purchase cost plus ap14 plicable taxes.

15 ‘‘(5) Whether the advertised rental-purchase

16 cost is for new or used property.

17 ‘‘(b) RADIO AND TELEVISION ADVERTISING.—

18 (1) IN GENERAL.—An advertisement made

19 through television or radio, which states the amount

20 of any payment for any specific item or set of items,

21 complies with this section if the advertisement lists

22 a toll-free telephone number along with a reference

23 that such number may be used by consumers to ob24 tain the additional information required by sub25 section (a).
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1 ‘‘(2) AVAILABILITY OF NUMBER.—The toll-free

2 telephone number required under subsection what

3 shall be available beginning on the date of the

4 broadcast and continue until the earlier of—

5 ‘‘(A) the end of the 10-day period begin6 ning on the day of the last broadcast; or

7 ‘‘(B) if the offer expires before the end of

8 such 10-day period and the advertisement dis9 closes that the offer expires before the end of

10 such period, the date the offer expires.

11 ‘‘SEC. 1012. CIVIL LIABILITY.

12 ‘‘(a) INDIVIDUAL OR CLASS ACTION FOR DAMAGES;

13 AMOUNT OF AWARD; FACTORS DETERMINING AMOUNT

14 OF AWARD.—Except as otherwise provided in this section,

15 any merchant who fails to comply with any requirement

16 imposed by section 1004, 1005, 1006, 1007, or 1008, with

17 respect to any consumer is liable to such consumer in an

18 amount equal to the sum of—

19 ‘‘(1) any actual damage sustained by such con20 sumer as a result of the failure;

21 ‘‘(2)(A) in the case of an individual action, 25

22 percent of the rental-purchase cost under the rental23 purchase agreement, except that the liability under

24 this subparagraph shall not be less than $100 nor

25 greater than $1,000;
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1 ‘‘(B) in the case of a class action, such amount

2 as the court may allow, except that as to each mem3 ber of the class no minimum recovery shall be appli4 cable, and the total recovery under this subpara5 graph in any class action or series of class actions

6 arising out of the same failure to comply by the

7 same merchant shall not be more than the lesser of

8 $500,000 or 1 percent of the net worth of the mer9 chant; and

10 ‘‘(3) in the case of any successful action to en11 force the foregoing liability, the costs of the action,

12 together with a reasonable attorney’s fee as deter13 mined by the court.

14 ‘‘(b) FACTORS TO BE CONSIDERED IN CLASS AC15 TIONS.—In determining the amount of award in any class

16 action, the court shall consider, among other relevant fac17 tors, the amount of any actual damages awarded, the fre18 quency and persistence of failures of compliance by the

19 merchant, the resources of the merchant, the number of

20 persons adversely affected, and the extent to which the

21 merchant’s failure of compliance was intentional. With re22 spect to any failure to make disclosures required under

23 this title, liability shall be imposed only upon the merchant

24 required to make disclosure, except as provided in section

25 1014.
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1 ‘‘(c) CORRECTION OF ERRORS.—A merchant or as2 signee has no liability under this section or section 1016

3 or 1017 for any failure to comply with any requirement

4 imposed under this title, if within 60 days after discov5 ering an error, and prior to the institution of an action

6 under this section or the receipt of written notice of the

7 error from the consumer, the merchant or assignee notifies

8 the consumer concerned of the error and makes whatever

9 adjustments in the appropriate account are necessary to

10 assure that the person will not be required to pay an

11 amount in excess of the charge actually disclosed.

12 ‘‘(d) UNINTENTIONAL VIOLATIONS; BONA FIDE ER13 RORS.—

14 ‘‘(1) IN GENERAL.—A merchant or assignee

15 may not be held liable in any action brought under

16 this title for a violation of this title if the merchant

17 or assignee shows by a preponderance of evidence

18 that the violation was not intentional and resulted

19 from a bona fide error notwithstanding the mainte20 nance of procedures reasonably adapted to avoid any

21 such error.

22 ‘‘(2) EXAMPLES OF BONA FIDE ERRORS.—Ex23 amples of a bona fide error include clerical, calcula24 tion, computer malfunction and programming, and

25 printing errors, except that an error of legal judg-
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1 ment with respect to a person’s obligations under

2 this title is not a bona fide error.

3 ‘‘(e) LIABILITY IN TRANSACTIONS INVOLVING MUL4 TIPLE CONSUMERS.—When there are multiple consumers

5 in a single rental-purchase agreement there shall be no

6 more than 1 recovery of damages under subsection (a)(2)

7 of this section for a violation of this title.

8 ‘‘(f) JURISDICTION OF COURTS; LIMITATION OF AC9 TIONS.—Any action under this section may be brought in

10 any United States district court, or in any other court of

11 competent jurisdiction, within 1 year from the date of the

12 occurrence of the violation. This subsection shall not bar

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

14 action to collect an obligation arising from a rental-pur15 chase agreement, which was brought more than 1 year

16 from the date of the occurrence of the violation as a mat17 ter of defense by recoupment or set-off in such action, ex18 cept as otherwise provided by State law.

19 ‘‘(g) GOOD FAITH COMPLIANCE WITH RULE, REGU20 LATION, OR INTERPRETATION OF BOARD.—No provision

21 of this section or section 1016 or 1017 imposing any liabil22 ity shall apply to any act done or omitted in good faith

23 in conformity with any rule, regulation, or interpretation

24 thereof by the Board or in conformity with any interpreta25 tion or approval by an official or employee of the Board
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1 duly authorized by the Board to issue such interpretations

2 or approvals under such procedures as the Board may pre3 scribe therefor, notwithstanding that after such act or

4 omission has occurred, such rule, regulation, interpreta5 tion, or approval is amended, rescinded, or determined by

6 judicial or other authority to be invalid for any reason.

7 ‘‘(h) RECOVERY FOR MULTIPLE FAILURES TO DIS8 CLOSE.—The multiple failure to disclose to any person any

9 information required under this title in connection with

10 a single rental-purchase transaction shall entitle the per11 son to a single recovery under this section but continued

12 failure to disclose after a recovery has been granted shall

13 give rise to rights to additional recoveries.

14 ‘‘(i) OFFSET FROM AMOUNT OWED TO MERCHANT

15 OR ASSIGNEE; RIGHTS OF CONSUMER.—A person may not

16 take any action to offset any amount for which a merchant

17 or assignee is potentially liable to such person under sub18 section (a)(2) of this section against any amount owed by

19 such person, unless the amount of the merchant’s or as20 signee’s liability under this section has been determined

21 by judgment of a court of competent jurisdiction in an

22 action of which such person was a party. This subsection

23 does not bar a consumer from asserting a violation of this

24 title as an original action, or as a defense or counterclaim
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1 to an action to collect amounts owed by the consumer

2 brought by a person liable under this section.

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

4 ‘‘Any merchant who fails to comply with any require5 ments imposed under section 1010 or 1011 with respect

6 to any consumer who suffers actual damage from the vio7 lation is liable to such consumer as provided in section

8 1012.

9 ‘‘SEC. 1014. LIABILITY OF ASSIGNEES.

10 ‘‘(a) ASSIGNEES INCLUDED.—For purposes of sec11 tion 1012, and this section, the term ‘merchant’ includes

12 an assignee of a merchant.

13 ‘‘(b) LIABILITIES OF ASSIGNEES.—

14 ‘‘(1) APPARENT VIOLATION.—An action under

15 section 1012 for a violation of this title may be

16 brought against an assignee only if the violation is

17 apparent on the face of the rental-purchase agree18 ment to which it relates.

19 ‘‘(2) APPARENT VIOLATION DEFINED.—For

20 purposes of this subsection, a violation that is appar21 ent on the face of a rental-purchase agreement in22 cludes a disclosure that can be determined to be in23 complete or inaccurate from the face of the agree24 ment.
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1 ‘‘(3) INVOLUNTARY ASSIGNMENT.—An assignee

2 has no liability in a case in which the assignment is

3 involuntary.

4 ‘‘(4) RULE OF CONSTRUCTION.—No provision

5 of this section shall be construed as limiting or alter6 ing the liability under section 1012 of a merchant

7 assigning a rental-purchase agreement.

8 ‘‘(b) PROOF OF DISCLOSURE.—In an action by or

9 against an assignee, the consumer’s written acknowledg10 ment of receipt of a disclosure shall be conclusive proof

11 that the disclosure was made, if the assignee had no

12 knowledge that the disclosure had not been made when

13 the assignee acquired the rental-purchase agreement to

14 which it relates.

15 ‘‘SEC. 1015. REGULATIONS.

16 ‘‘(a) IN GENERAL.—The Board may prescribe regu17 lations to carry out the purposes of this title, to prevent

18 its circumvention, and to facilitate compliance with its re19 quirements.

20 ‘‘(b) EFFECTIVE DATE OF REGULATIONS.—Any reg21 ulation prescribed by the Board, or any amendment or in22 terpretation thereof, shall not be effective before the Octo23 ber 1 that follows the date of publication of the regulation

24 in final form by at least 6 months. The Board may at

25 its discretion lengthen that period of time to permit mer-
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1 chants to adjust to accommodate new requirements. The

2 Board may also shorten that period of time, notwith3 standing the first sentence, if it makes a specific finding

4 that such action is necessary to comply with the findings

5 of a court or to prevent unfair or deceptive practices. In

6 any case, merchants may comply with any newly pre7 scribed disclosure requirement prior to its effective date.

8 ‘‘SEC. 1016. ENFORCEMENT.

9 ‘‘(a) FEDERAL ENFORCEMENT.—Compliance with

10 the requirements imposed under this title shall be enforced

11 under the Federal Trade Commission Act (15 U.S.C. 41

12 et seq.), and a violation of any requirements imposed

13 under this title shall be deemed a violation of a require14 ment imposed under that Act. All of the functions and

15 powers of the Federal Trade Commission under the Fed16 eral Trade Commission Act are available to the Commis17 sion to enforce compliance by any person with the require18 ments of this title, irrespective of whether that person is

19 engaged in commerce or meets any other jurisdictional

20 test in the Federal Trade Commission Act.

21 ‘‘(b) STATE ENFORCEMENT.—

22 ‘‘(1) IN GENERAL.—An action to enforce the re23 quirements imposed by this title may also be

24 brought by the appropriate State attorney general in
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1 any appropriate United States district court, or any

2 other court of competent jurisdiction.

3 ‘‘(2) PRIOR WRITTEN NOTICE.—

4 ‘‘(A) IN GENERAL.—The State attorney

5 general shall provide prior written notice of any

6 such civil action to the Federal Trade Commis7 sion and shall provide the Commission with a

8 copy of the complaint.

9 ‘‘(B) EMERGENCY ACTION.—If prior notice

10 is not feasible, the State attorney general shall

11 provide notice to the Commission immediately

12 upon instituting the action.

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

14 may—

15 ‘‘(A) intervene in the action;

16 ‘‘(B) upon intervening—

17 ‘‘(i) remove the action to the appro18 priate United States district court, if it

19 was not originally brought there; and

20 ‘‘(ii) be heard on all matters arising in

21 the action; and

22 ‘‘(C) file a petition for appeal.
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1 ‘‘SEC. 1017. CRIMINAL LIABILITY FOR WILLFUL AND KNOW2 ING VIOLATION.

3 ‘‘Whoever willfully and knowingly gives false or inac4 curate information or fails to provide information which

5 he is required to disclose under the provisions of this title

6 or any regulation issued thereunder shall be fined not

7 more than $5,000 or imprisoned not more than one year,

8 or both.

9 ‘‘SEC. 1018. RELATION TO STATE LAW.

10 ‘‘(a) Except as provided in subsection (b), this title

11 shall not be construed as annulling, altering, or affecting

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

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

14 except to the extent that those laws are inconsistent with

15 any provision of this title, and then only to the extent of

16 the inconsistency. The Board is authorized to determine

17 whether such inconsistencies exist. Any State law that reg18 ulates a rental-purchase agreement as a security interest,

19 credit sale, retail installment sale, conditional sale, or

20 other form of credit or imputes to such agreements the

21 creation of a debt or extension of credit, or requires the

22 disclosure of a time-price differential, an annual percent23 age rate, an effective annual percentage rate or a percent24 age rate of any kind, or similar disclosure that might sug25 gest the existence of a debt, an extension of credit, or the

26 payment of interest, is inconsistent with this title.
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1 ‘‘(b) CERTAIN DISCLOSURE REQUIREMENTS SUPER2 SEDED.—The disclosures required by paragraphs (5), (6),

3 (7), (8), and (11) of subsection (a) of section 1005 shall

4 supersede any provisions of any State law relating to dis5 closure of the cost of a rental-purchase transaction.

6 ‘‘SEC. 1019. EFFECT ON GOVERNMENT AGENCIES.

7 ‘‘No civil liability or criminal penalty under this title

8 may be imposed on the United States or any of its depart9 ments or agencies, any State or political subdivision, or

10 any agency of a State or political subdivision.

11 ‘‘SEC. 1020. COMPLIANCE DATE.

12 ‘‘Compliance with this title shall not be required until

13 6 months after the date of the enactment of the Consumer

14 Rental Purchase Agreement Act. In any case, merchants

15 may comply with this title at any time after such date

16 of enactment.’’.

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