107TH CONGRESS

2D SESSION H. R. 1701

AN ACT

To amend the Consumer Credit Protection Act to

assure meaningful disclosures of the terms ofrental-purchase agreements, including disclosuresof all costs to consumers under such agreements,to provide certain substantive rights to consumers under such agreements, and for otherpurposes.

107TH CONGRESS

2D SESSION H. R. 1701

AN ACT

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Consumer Rental Pur5 chase Agreement Act’’.

6 SEC. 2. FINDINGS AND DECLARATION OF PURPOSE.

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

8 (1) The rental-purchase industry provides a

9 service that meets and satisfies the demands of

10 many consumers.

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

12 States households enter into rental-purchase trans13 actions and over a 5-year period approximately

14 4,900,000 United States households will do so.

15 (3) Competition among the various firms en16 gaged in the extension of rental-purchase trans17 actions would be strengthened by informed use of

18 rental-purchase transactions.

19 (4) The informed use of rental-purchase trans20 actions results from an awareness of the cost thereof

21 by consumers.

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

23 the availability of rental-purchase transactions and to as24 sure simple, meaningful, and consistent disclosure of rent25 al-purchase terms so that consumers will be able to more
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1 readily compare the available rental-purchase terms and

2 avoid uninformed use of rental-purchase transactions, and

3 to protect consumers against unfair rental-purchase prac4 tices.

5 SEC. 3. CONSUMER CREDIT PROTECTION ACT.

6 The Consumer Credit Protection Act is amended by

7 adding at the end the following new title:

8 ‘‘TITLE X—RENTAL-PURCHASE

9 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.

10 ‘‘SEC. 1001. DEFINITIONS.

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

12 shall apply:

13 ‘‘(1) ADVERTISEMENT.—The term ‘advertise14 ment’ means a commercial message in any medium

15 that promotes, directly or indirectly, a rental-pur-
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1 chase agreement but does not include price tags,

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

3 ‘‘(2) AGRICULTURAL PURPOSE.—The term ‘ag4 ricultural purpose’ includes—

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

6 marketing, transformation, processing, or man7 ufacture of agricultural products by a natural

8 person who cultivates plants or propagates or

9 nurtures agricultural products; and

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

11 property with a farm residence, or personal

12 property and services used primarily in farm13 ing.

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

15 Board of Governors of the Federal Reserve System.

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

17 means the price at which a merchant, in the ordi18 nary course of business, offers to sell for cash the

19 property that is the subject of the rental-purchase

20 transaction.

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

22 a natural person who is offered or enters into a rent23 al-purchase agreement.

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

25 ‘date of consummation’ means the date on which a
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1 consumer becomes contractually obligated under a

2 rental-purchase agreement.

3 ‘‘(7) INITIAL PAYMENT.—The term ‘initial pay4 ment’ means the amount to be paid before or at the

5 consummation of the agreement or the delivery of

6 the property if delivery occurs after consummation,

7 including the rental payment; service, processing, or

8 administrative charges; delivery fee; refundable secu9 rity deposit; taxes; mandatory fees or charges; and

10 any optional fees or charges agreed to by the con11 sumer.

12 ‘‘(8) MERCHANT.—The term ‘merchant’ means

13 a person who provides the use of property through

14 a rental-purchase agreement in the ordinary course

15 of business and to whom a consumer’s initial pay16 ment under the agreement is payable.

17 ‘‘(9) PAYMENT SCHEDULE.—The term ‘pay18 ment schedule’ means the amount and timing of the

19 periodic payments and the total number of all peri20 odic payments that the consumer will make if the

21 consumer acquires ownership of the property by

22 making all periodic payments.

23 ‘‘(10) PERIODIC PAYMENT.—The term ‘periodic

24 payment’ means the total payment a consumer will

25 make for a specific rental period after the initial
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1 payment, including the rental payment, taxes, man2 datory fees or charges, and any optional fees or

3 charges agreed to by the consumer.

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

5 property that is not real property under the laws of

6 the State where the property is located when it is

7 made available under a rental-purchase agreement.

8 ‘‘(12) RENTAL PAYMENT.—The term ‘rental

9 payment’ means rent required to be paid by a con10 sumer for the possession and use of property for a

11 specific rental period, but does not include taxes or

12 any fees or charges.

13 ‘‘(13) RENTAL PERIOD.—The term ‘rental pe14 riod’ means a week, month, or other specific period

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

16 possess and use property that is the subject of a

17 rental-purchase agreement after paying the rental

18 payment and any applicable taxes for such period.

19 ‘‘(14) RENTAL-PURCHASE AGREEMENT.—

20 ‘‘(A) IN GENERAL.—The term ‘rental-pur21 chase agreement’ means a contract in the form

22 of a bailment or lease for the use of property

23 by a consumer for an initial period of 4 months

24 or less, that is renewable with each payment by

25 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 ‘‘(15) RENTAL-PURCHASE COST.—

13 ‘‘(A) IN GENERAL.—For purposes of sec14 tions 1010 and 1011, the term ‘rental-purchase

15 cost’ means the sum of all rental payments and

16 mandatory fees or charges imposed by the mer17 chant as a condition of entering into a rental18 purchase agreement or acquiring ownership of

19 property under a rental-purchase agreement,

20 such as the following:

21 ‘‘(i) Service, processing, or adminis22 trative charge.

23 ‘‘(ii) Fee for an investigation or credit

24 report.
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1 ‘‘(iii) Charge for delivery required by

2 the merchant.

3 ‘‘(B) EXCLUDED ITEMS.—The following

4 fees or charges shall not be taken into account

5 in determining the rental-purchase cost with re6 spect to a rental-purchase transaction:

7 ‘‘(i) Fees and charges prescribed by

8 law, which actually are or will be paid to

9 public officials or government entities, such

10 as sales tax.

11 ‘‘(ii) Fees and charges for optional

12 products and services offered in connection

13 with a rental-purchase agreement.

14 ‘‘(16) STATE.—The term ‘State’ means any

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

16 any territory of the United States, Puerto Rico,

17 Guam, American Samoa, the Trust Territory of the

18 Pacific Islands, the Virgin Islands, and the Northern

19 Mariana Islands.

20 ‘‘(17) TOTAL COST.—The term ‘total cost’

21 means the sum of the initial payment and all peri22 odic payments in the payment schedule to be paid by

23 the consumer to acquire ownership of the property

24 that is the subject of the rental-purchase agreement.
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1 ‘‘SEC. 1002. EXEMPTED TRANSACTIONS.

2 ‘‘This title shall not apply to rental-purchase agree3 ments primarily for business, commercial, or agricultural

4 purposes, or those made with Government agencies or in5 strumentalities.

6 ‘‘SEC. 1003. GENERAL DISCLOSURE REQUIREMENTS.

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

8 disclose to any person who will be a signatory to a rental9 purchase agreement the information required by sections

10 1004 and 1005.

11 ‘‘(b) TIMING OF DISCLOSURE.—The disclosures re12 quired under sections 1004 and 1005 shall be made before

13 the consummation of the rental-purchase agreement and

14 clearly and conspicuously in writing as part of the rental15 purchase agreement to be signed by the consumer.

16 ‘‘(c) CLEARLY AND CONSPICUOUSLY.—As used in

17 this section, the term ‘clearly and conspicuously’ means

18 that information required to be disclosed to the consumer

19 shall be worded plainly and simply, and appear in a type

20 size, prominence, and location as to be readily noticeable,

21 readable, and comprehensible to an ordinary consumer.

22 ‘‘SEC. 1004. RENTAL-PURCHASE DISCLOSURES.

23 ‘‘(a) IN GENERAL.—For each rental-purchase agree24 ment, the merchant shall disclose to the consumer the fol25 lowing, to the extent applicable:
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1 ‘‘(1) The date of the consummation of the rent2 al-purchase transaction and the identities of the

3 merchant and the consumer.

4 ‘‘(2) A brief description of the rental property,

5 which shall be sufficient to identify the property to

6 the consumer, including an identification or serial

7 number, if applicable, and a statement indicating

8 whether the property is new or used.

9 ‘‘(3) A description of any fee, charge or penalty,

10 in addition to the periodic payment, that the con11 sumer may be required to pay under the agreement,

12 which shall be separately identified by type and

13 amount.

14 ‘‘(4) A clear and conspicuous statement that

15 the transaction is a rental-purchase agreement and

16 that the consumer will not obtain ownership of the

17 property until the consumer has paid the total dollar

18 amount necessary to acquire ownership.

19 ‘‘(5) The amount of any initial payment, which

20 includes the first periodic payment, and the total

21 amount of any fees, taxes, or other charges, required

22 to be paid by the consumer.

23 ‘‘(6) The amount of the cash price of the prop24 erty that is the subject of the rental-purchase agree25 ment, and, if the agreement involves the rental of 2
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1 or more items as a set (as may be defined by the

2 Board in regulation) a statement of the aggregate

3 cash price of all items shall satisfy this requirement.

4 ‘‘(7) The amount and timing of periodic pay5 ments, and the total number of periodic payments

6 necessary to acquire ownership of the property

7 under the rental-purchase agreement.

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

9 brief description, such as ‘This is the amount you

10 will pay the merchant if you make all periodic pay11 ments to acquire ownership of the property.’.

12 ‘‘(9) A statement of the consumer’s right to ter13 minate the agreement without paying any fee or

14 charge not previously due under the agreement by

15 voluntarily surrendering or returning the property in

16 good repair upon expiration of any lease term.

17 ‘‘(10) Substantially the following statement:

18 ‘OTHER IMPORTANT TERMS: See your

19 rental-purchase agreement for additional important

20 information on early termination procedures, pur21 chase option rights, responsibilities for loss, damage

22 or destruction of the property, warranties, mainte23 nance responsibilities, and other charges or penalties

24 you may incur.’.
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1 ‘‘(b) FORM OF DISCLOSURE.—The disclosures re2 quired by paragraphs (4) through (10) of subsection (a)

3 shall be segregated from other information at the begin4 ning of the rental-purchase agreement and shall contain

5 only directly related information, and shall be identified

6 in boldface, upper-case letters as follows: ‘‘IMPOR7 TANT RENTAL-PURCHASE DISCLOSURES’.

8 ‘‘(c) DISCLOSURE REQUIREMENTS RELATING TO IN9 SURANCE PREMIUMS AND LIABILITY WAIVERS.—

10 ‘‘(1) IN GENERAL.—A merchant shall clearly

11 and conspicuously disclose in writing to the con12 sumer before the consummation of a rental-purchase

13 agreement that the purchase of leased property in14 surance or liability waiver coverage is not required

15 as a condition for entering into the rental-purchase

16 agreement.

17 ‘‘(2) AFFIRMATIVE WRITTEN REQUEST AFTER

18 COST DISCLOSURE.—A merchant may provide insur19 ance or liability waiver coverage, directly or indi20 rectly, in connection with a rental-purchase trans21 action only if—

22 ‘‘(A) the merchant clearly and conspicu23 ously discloses to the consumer the cost of each

24 component of such coverage before the con-
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1 summation of the rental-purchase agreement;

2 and

3 ‘‘(B) the consumer signs an affirmative

4 written request for such coverage after receiving

5 the disclosures required under subparagraph

6 paragraph (A) of this paragraph and paragraph

7 (1).

8 ‘‘(d) ACCURACY OF DISCLOSURE.—

9 ‘‘(1) IN GENERAL.—The disclosures required to

10 be made under subsection (a) shall be accurate as of

11 the date the disclosures are made, based on the in12 formation available to the merchant.

13 ‘‘(2) INFORMATION SUBSEQUENTLY RENDERED

14 INACCURATE.—If information required to be dis15 closed under subsection (a) is subsequently rendered

16 inaccurate as a result of any agreement between the

17 merchant and the consumer subsequent to the deliv18 ery of the required disclosures, the resulting inaccu19 racy shall not constitute a violation of this title.

20 ‘‘SEC. 1005. OTHER AGREEMENT PROVISIONS.

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

22 shall—

23 ‘‘(1) provide a statement specifying whether the

24 merchant or the consumer is responsible for loss,

25 theft, damage, or destruction of the property;
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1 ‘‘(2) provide a statement specifying whether the

2 merchant or the consumer is responsible for main3 taining or servicing the property, together with a

4 brief description of the responsibility;

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

6 the agreement without paying any charges not pre7 viously due under the agreement by voluntarily sur8 rendering or returning the property that is the sub9 ject of the agreement upon expiration of any rental

10 period;

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

12 the agreement, which at a minimum—

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

14 a timely rental payment to reinstate the agree15 ment, without losing any rights or options

16 which exist under the agreement, by the pay17 ment of all past due rental payments and any

18 other charges then due under the agreement

19 and a payment for the next rental period within

20 7 business days after failing to make a timely

21 rental payment if the consumer pays monthly,

22 or within 3 business days after failing to make

23 a timely rental payment if the consumer pays

24 more frequently than monthly;
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1 ‘‘(B) if the consumer returns or voluntarily

2 surrenders the property covered by the agree3 ment, other than through judicial process, dur4 ing the applicable reinstatement period set forth

5 in subparagraph (A), permits the consumer to

6 reinstate the agreement during a period of at

7 least 60 days after the date of the return or

8 surrender of the property by the payment of all

9 amounts previously due under the agreement,

10 any applicable fees, and a payment for the next

11 rental period;

12 ‘‘(C) if the consumer has paid 50 percent

13 or more of the total cost necessary to acquire

14 ownership and returns or voluntarily surrenders

15 the property, other than through judicial proc16 ess, during the applicable reinstatement period

17 set forth in subparagraph (A), permits the con18 sumer to reinstate the agreement during a pe19 riod of at least 120 days after the date of the

20 return of the property by the payment of all

21 amounts previously due under the agreement,

22 any applicable fees, and a payment for the next

23 rental period; and

24 ‘‘(D) permits the consumer, upon rein25 statement of the agreement to receive the same
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1 property, if available, that was the subject of

2 the rental-purchase agreement, or if the same

3 property is not available, a substitute item of

4 comparable quality and condition may be pro5 vided to the consumer; except that, the Board

6 may, by regulation or order, exempt any inde7 pendent small business (as defined by the

8 Board by regulation) from the requirement of

9 providing the same or comparable product dur10 ing the extended reinstatement period provided

11 in subparagraph (C), if the Board determines,

12 taking into account such standards as the

13 Board determines to be appropriate, that the

14 reinstatement right provided in such subpara15 graph would provide excessive hardship for such

16 independent small business.

17 ‘‘(5) provide a statement specifying the terms

18 under which the consumer shall acquire ownership of

19 the property that is the subject of the rental-pur20 chase agreement either by payment of the total cost

21 to acquire ownership, as provided in section 1006, or

22 by exercise of any early purchase option provided in

23 the rental-purchase agreement;

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

25 part of a manufacturer’s express warranty covers
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1 the property at the time the consumer acquires own2 ership of the property, the warranty will be trans3 ferred to the consumer if allowed by the terms of the

4 warranty; and

5 ‘‘(7) provide, to the extent applicable, a descrip6 tion of any grace period for making any periodic

7 payment, the amount of any security deposit, if any,

8 to be paid by the consumer upon initiation of the

9 rental-purchase agreement, and the terms for refund

10 of such security deposit to the consumer upon re11 turn, surrender or purchase of the property.

12 ‘‘(b) REPOSSESSION DURING REINSTATEMENT PE13 RIOD.—Subsection (a)(4) shall not be construed so as to

14 prevent a merchant from attempting to repossess property

15 during the reinstatement period pursuant to subsection

16 (a)(4)(A), but such a repossession does not affect the con17 sumer’s right to reinstate.

18 ‘‘SEC. 1006. RIGHT TO ACQUIRE OWNERSHIP.

19 ‘‘(a) IN GENERAL.—The consumer shall acquire own20 ership of the property that is the subject of the rental21 purchase agreement, and the rental-purchase agreement

22 shall terminate, upon compliance by the consumer with the

23 requirements of subsection (b) or any early payment op24 tion provided in the rental purchase agreement, and upon
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1 payment of any past due payments and fees, as permitted

2 in regulation by the Board.

3 ‘‘(b) PAYMENT OF TOTAL COST.—The consumer

4 shall acquire ownership of the rental property upon pay5 ment of the total cost of the rental-purchase agreement,

6 as such term is defined in section 1001(17), and as dis7 closed to the consumer in the rental-purchase agreement

8 pursuant to section 1004(a).

9 ‘‘(c) ADDITIONAL FEES PROHIBITED.—A merchant

10 shall not require the consumer to pay, as a condition for

11 acquiring ownership of the property that is the subject of

12 the rental-purchase agreement, any fee or charge in addi13 tion to, or in excess of, the regular periodic payments re14 quired by subsection (b), or any early purchase option

15 amount provided in the rental-purchase agreement, as ap16 plicable. A requirement that the consumer pay an unpaid

17 late charge or other fee or charge which the merchant has

18 previously billed to the consumer shall not constitute an

19 additional fee or charge for purposes of this subsection.

20 ‘‘(d) TRANSFER OF OWNERSHIP RIGHTS.—Upon

21 payment by the consumer of all payments necessary to ac22 quire ownership under subsection (b) or any early pur23 chase option amount provided in the rental-purchase

24 agreement, as appropriate, the merchant shall—
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1 ‘‘(1) deliver, or mail to the consumer’s last

2 known address, such documents or other instru3 ments, which the Board has determined by regula4 tion, are necessary to acknowledge full ownership by

5 the consumer of the property acquired pursuant to

6 the rental-purchase agreement; and

7 ‘‘(2) transfer to the consumer the unexpired

8 portion of any warranties provided by the manufac9 turer, distributor, or seller of the property, which

10 shall apply as if the consumer were the original pur11 chaser of the property, except where such transfer is

12 prohibited by the terms of the warranty.

13 ‘‘SEC. 1007. PROHIBITED PROVISIONS.

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

15 ‘‘(1) a confession of judgment;

16 ‘‘(2) a negotiable instrument;

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

18 property interest in any goods, except those goods

19 the use of which is provided by the merchant pursu20 ant to the agreement;

21 ‘‘(4) a wage assignment;

22 ‘‘(5) a provision requiring the waiver of any

23 legal claim or remedy created by this title or other

24 provision of Federal or State law;
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1 ‘‘(6) a provision requiring the consumer, in the

2 event the property subject to the rental-purchase

3 agreement is lost, stolen, damaged, or destroyed, to

4 pay an amount in excess of the least of—

5 ‘‘(A) the fair market value of the property,

6 as determined by the Board in regulation;

7 ‘‘(B) any early purchase option amount

8 provided in the rental-purchase agreement; or

9 ‘‘(C) the actual cost of repair, as appro10 priate;

11 ‘‘(7) a provision authorizing the merchant, or a

12 person acting on behalf of the merchant, to enter the

13 consumer’s dwelling or other premises without ob14 taining the consumer’s consent or to commit any

15 breach of the peace in connection with the reposses16 sion of the rental property or the collection of any

17 obligation or alleged obligation of the consumer aris18 ing out of the rental-purchase agreement;

19 ‘‘(8) a provision requiring the purchase of in20 surance or liability damage waiver to cover the prop21 erty that is the subject of the rental-purchase agree22 ment, except as permitted by the Board in regula23 tion;

24 ‘‘(9) a provision requiring the consumer to pay

25 more than 1 late fee or charge for an unpaid or de-
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1 linquent periodic payment, regardless of the period

2 in which the payment remains unpaid or delinquent,

3 or to pay a late fee or charge for any periodic pay4 ment because a previously assessed late fee has not

5 been paid in full.

6 ‘‘SEC. 1008. STATEMENT OF ACCOUNTS.

7 ‘‘Upon request of a consumer, a merchant shall pro8 vide a statement of the consumer’s account. If a consumer

9 requests a statement for an individual account more than

10 4 times in any 12-month period, the merchant may charge

11 a reasonable fee for the additional statements.

12 ‘‘SEC. 1009. RENEGOTIATIONS AND EXTENSIONS.

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

14 when a rental-purchase agreement is satisfied and re15 placed by a new agreement undertaken by the same con16 sumer. A renegotiation requires new disclosures, except as

17 provided in subsection (c).

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

19 the consumer and the merchant, to continue an existing

20 rental-purchase agreement beyond the original end of the

21 payment schedule, but does not include a continuation

22 that is the result of a renegotiation.

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

24 for the following, even if they meet the definition of a re25 negotiation or an extension:
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1 ‘‘(1) A reduction in payments.

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

3 ‘‘(3) The extension of a rental-purchase agree4 ment.

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

6 that has a substantially equivalent or greater eco7 nomic value provided the rental-purchase cost does

8 not increase.

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

10 agreement.

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

12 rental-purchase cost does not increase.

13 ‘‘(7) An agreement resulting from a court pro14 ceeding.

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

16 prescribed by the Board.

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

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

19 of items displayed or offered for rental-purchase, the mer20 chant shall display on or next to the item or set of items

21 a card, tag, or label that clearly and conspicuously dis22 closes the following:

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

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

25 ‘‘(3) The cash price of the property.
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1 ‘‘(4) The amount of each rental payment.

2 ‘‘(5) The total number of rental payments nec3 essary to acquire ownership of the property.

4 ‘‘(6) The rental-purchase cost.

5 ‘‘(b) FORM OF DISCLOSURE.—

6 ‘‘(1) IN GENERAL.—A merchant may make the

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

8 a list or catalog which is readily available to the con9 sumer at the point of rental if the merchandise is

10 not displayed in the merchant’s showroom or if dis11 playing a card, tag, or label would be impractical

12 due to the size of the merchandise.

13 ‘‘(2) CLEARLY AND CONSPICUOUSLY.—As used

14 in this section, the term ‘clearly and conspicuously’

15 means that information required to be disclosed to

16 the consumer shall appear in a type size, promi17 nence, and location as to be noticeable, readable,

18 and comprehensible to an ordinary consumer.

19 ‘‘SEC. 1011. RENTAL-PURCHASE ADVERTISING.

20 ‘‘(a) IN GENERAL.—If an advertisement for a rental21 purchase transaction refers to or states the amount of any

22 payment for any specific item or set of items, the mer23 chant making the advertisement shall also clearly and con24 spicuously state in the advertisement the following for the

25 item, or set of items, advertised:
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1 ‘‘(1) The transaction advertised is a rental-pur2 chase agreement.

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

4 rental payments necessary to acquire ownership

5 under the rental-purchase agreement.

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

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

8 consumer must pay the rental-purchase cost plus ap9 plicable taxes.

10 ‘‘(5) Whether the stated payment amount and

11 advertised rental-purchase cost is for new or used

12 property.

13 ‘‘(b) PROHIBITION.—An advertisement for a rental14 purchase agreement shall not state or imply that a specific

15 item, or set of items, is available at specific amounts or

16 terms unless the merchant usually and customarily offers,

17 or will offer, the item or set of items at the stated amounts

18 or terms.

19 ‘‘(c) CLEARLY AND CONSPICUOUSLY.—

20 ‘‘(1) IN GENERAL.—For purposes of this sec21 tion, the term ‘clearly and conspicuously’ means that

22 required disclosures shall be presented in a type,

23 size, shade, contrast, prominence, location, and man24 ner, as applicable to different mediums for adver-
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1 tising, so as to be readily noticeable and comprehen2 sible to the ordinary consumer.

3 ‘‘(2) REGULATORY GUIDANCE.—The Board

4 shall prescribe regulations on principles and factors

5 to meet the clear and conspicuous standard as ap6 propriate to print, video, audio, and computerized

7 advertising, reflecting the principles and factors typi8 cally applied in each medium by the Federal Trade

9 Commission.

10 ‘‘(3) LIMITATION.—Nothing contrary to, incon11 sistent with, or in mitigation of, the required disclo12 sures shall be used in any advertisement in any me13 dium, and no audio, video, or print technique shall

14 be used that is likely to obscure or detract signifi15 cantly from the communication of the disclosures.

16 ‘‘SEC. 1012. CIVIL LIABILITY.

17 ‘‘(a) IN GENERAL.—Except as otherwise provided in

18 section 1013, any merchant who fails to comply with any

19 requirement of this title with respect to any consumer is

20 liable to such consumer as provided for leases in section

21 130. For purposes of this section, the term ‘creditor’ as

22 used in section 130 shall include a ‘merchant’, as defined

23 in section 1001.

24 ‘‘(b) JURISDICTION OF COURTS; LIMITATION ON AC25 TIONS.—
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1 ‘‘(1) IN GENERAL.—Notwithstanding section

2 130(e), any action under this section may be

3 brought in any United States district court, or in

4 any other court of competent jurisdiction, before the

5 end of the 1-year period beginning on the date the

6 last payment was made by the consumer under the

7 rental-purchase agreement.

8 ‘‘(2) RECOUPMENT OR SET-OFF.—This sub9 section shall not bar a consumer from asserting a

10 violation of this title in an action to collect an obli11 gation arising from a rental-purchase agreement,

12 which was brought after the end of the 1-year period

13 described in paragraph (1) as a matter of defense by

14 recoupment or set-off in such action, except as oth15 erwise provided by State law.

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

17 ‘‘(a) INDIVIDUAL CASES WITH ACTUAL DAMAGES.—

18 Any merchant who fails to comply with any requirements

19 imposed under section 1010 or 1011 with respect to any

20 consumer who suffers actual damage from the violation

21 shall be liable to such consumer as provided in section

22 130.

23 ‘‘(b) PATTERN OR PRACTICE OF VIOLATIONS.—If a

24 merchant engages in a pattern or practice of violating any

25 requirement imposed under section 1010 or 1011, the
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1 Federal Trade Commission or an appropriate State attor2 ney general, in accordance with section 1016, may initiate

3 an action to enforce sanctions against the merchant,

4 including—

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

6 practices; and

7 ‘‘(2) a civil money penalty of such amount as

8 the court may impose, based on such factors as the

9 court may determine to be appropriate.

10 ‘‘SEC. 1014. LIABILITY OF ASSIGNEES.

11 ‘‘(a) ASSIGNEES INCLUDED.—For purposes of sec12 tion 1013, and this section, the term ‘merchant’ includes

13 an assignee of a merchant.

14 ‘‘(b) LIABILITIES OF ASSIGNEES.—

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

16 section 1012 or 1013 for a violation of this title may

17 be brought against an assignee only if the violation

18 is apparent on the face of the rental-purchase agree19 ment to which it relates.

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

21 purposes of this subsection, a violation that is appar22 ent on the face of a rental-purchase agreement in23 cludes, but is not limited to, a disclosure that can

24 be determined to be incomplete or inaccurate from

25 the face of the agreement.
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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 or 1013 of a

7 merchant 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, made as part of the rental11 purchase agreement, shall be conclusive proof that the dis12 closure was made, if the assignee had no knowledge that

13 the disclosure had not been made when the assignee ac14 quired the rental-purchase agreement to which it relates.

15 ‘‘SEC. 1015. REGULATIONS.

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

18 to prevent its circumvention, and to facilitate compliance

19 with its requirements.

20 ‘‘(b) MODEL DISCLOSURE FORMS.—The Board may

21 publish model disclosure forms and clauses for common

22 rental-purchase agreements to facilitate compliance with

23 the disclosure requirements of this title and to aid the con24 sumer in understanding the transaction by utilizing read25 ily understandable language to simplify the technical na-
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1 ture of the disclosures. In devising such forms, the Board

2 shall consider the use by merchants of data processing or

3 similar automated equipment. Nothing in this title may

4 be construed to require a merchant to use any such model

5 form or clause prescribed by the Board under this section.

6 A merchant shall be deemed to be in compliance with the

7 requirement to provide disclosure under section 1003(a)

8 if the merchant—

9 ‘‘(1) uses any appropriate model form or clause

10 as published by the Board; or

11 ‘‘(2) uses any such model form or clause and

12 changes it by—

13 ‘‘(A) deleting any information which is not

14 required by this title; or

15 ‘‘(B) rearranging the format, if in making

16 such deletion or rearranging the format, the

17 merchant does not affect the substance, clarity,

18 or meaningful sequence of the disclosure.

19 ‘‘(c) EFFECTIVE DATE OF REGULATIONS.—Any reg20 ulation prescribed by the Board, or any amendment or in21 terpretation thereof, shall not be effective before the Octo22 ber 1 that follows the date of publication of the regulation

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

24 its discretion lengthen that period of time to permit mer25 chants to adjust to accommodate new requirements. The
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1 Board may also shorten that period of time, notwith2 standing the first sentence, if it makes a specific finding

3 that such action is necessary to comply with the findings

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

5 any case, merchants may comply with any newly pre6 scribed disclosure requirement prior to its effective date.

7 ‘‘SEC. 1016. ENFORCEMENT.

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

9 the requirements imposed under this title shall be enforced

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

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

12 under this title shall be deemed a violation of a require13 ment imposed under that Act. All of the functions and

14 powers of the Federal Trade Commission under the Fed15 eral Trade Commission Act are available to the Commis16 sion to enforce compliance by any person with the require17 ments of this title, irrespective of whether that person is

18 engaged in commerce or meets any other jurisdictional

19 test in the Federal Trade Commission Act.

20 ‘‘(b) STATE ENFORCEMENT.—

21 ‘‘(1) IN GENERAL.—An action to enforce the re22 quirements imposed by this title may also be

23 brought by the appropriate State attorney general in

24 any appropriate United States district court, or any

25 other court of competent jurisdiction.
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1 ‘‘(2) PRIOR WRITTEN NOTICE.—

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

3 general shall provide prior written notice of any

4 such civil action to the Federal Trade Commis5 sion and shall provide the Commission with a

6 copy of the complaint.

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

8 is not feasible, the State attorney general shall

9 provide notice to the Commission immediately

10 upon instituting the action.

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

12 may—

13 ‘‘(A) intervene in the action;

14 ‘‘(B) upon intervening—

15 ‘‘(i) remove the action to the appro16 priate United States district court, if it

17 was not originally brought there; and

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

19 the action; and

20 ‘‘(C) file a petition for appeal.

21 ‘‘SEC. 1017. CRIMINAL LIABILITY FOR WILLFUL AND KNOW22 ING VIOLATION.

23 ‘‘Whoever willfully and knowingly gives false or inac24 curate information or fails to provide information which

25 he is required to disclose under the provisions of this title
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1 or any regulation issued thereunder shall be subject to the

2 penalty provisions as provided in section 112.

3 ‘‘SEC. 1018. RELATION TO OTHER LAWS.

4 ‘‘(a) RELATION TO STATE LAW.—

5 ‘‘(1) NO EFFECT ON CONSISTENT STATE

6 LAWS.—Except as otherwise provided in subsection

7 (b), this title does not annul, alter, or affect in any

8 manner the meaning, scope or applicability of the

9 laws of any State relating to rental-purchase agree10 ments, except to the extent those laws are incon11 sistent with any provision of this title, and then only

12 to the extent of the inconsistency.

13 ‘‘(2) DETERMINATION OF INCONSISTENCY.—

14 Upon its own motion or upon the request of an in15 terested party, which is submitted in accordance

16 with procedures prescribed in regulations of the

17 Board, the Board shall determine whether any such

18 inconsistency exists. If the Board determines that a

19 term or provision of a State law is inconsistent, mer20 chants located in that State need not follow such

21 term or provision and shall incur no liability under

22 the law of that State for failure to follow such term

23 or provision, notwithstanding that such determina24 tion is subsequently amended, rescinded, or deter-
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1 mined by judicial or other authority to be invalid for

2 any reason.

3 ‘‘(3) GREATER PROTECTION UNDER STATE

4 LAW.—Except as provided in subsection (b), for pur5 poses of this section, a term or provision of a State

6 law is not inconsistent with the provisions of this

7 title if the term or provision affords greater protec8 tion and benefit to the consumer than the protection

9 and benefit provided under this title as determined

10 by the Board, on its own motion or upon the peti11 tion of any interested party.

12 ‘‘(b) STATE LAWS RELATING TO CHARACTERIZATION

13 OF TRANSACTION.—Notwithstanding the provisions of

14 subsection (a), this title shall supersede any State law to

15 the extent that such law—

16 ‘‘(1) regulates a rental-purchase agreement as a

17 security interest, credit sale, retail installment sale,

18 conditional sale or any other form of consumer cred19 it, or that imputes to a rental-purchase agreement

20 the creation of a debt or extension of credit, or

21 ‘‘(2) requires the disclosure of a percentage rate

22 calculation, including a time-price differential, an

23 annual percentage rate, or an effective annual per24 centage rate.
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1 ‘‘(c) RELATION TO FEDERAL TRADE COMMISSION

2 ACT.—No provision of this title shall be construed as lim3 iting, superseding, or otherwise affecting the applicability

4 of the Federal Trade Commission Act to any merchant

5 or 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.’’.

Passed the House of Representatives September 18,

2002.

Attest:

Clerk.