Union Calendar No. 396
107TH CONGRESS
2D SESSION
H. R. 1701
[Report No. 107–590, Parts I and II]
To amend the Consumer Credit Protection Act to assure meaningful disclo-
sures 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
JULY 18, 2002
Reported with an amendment and referred to the Committee on the Judiciary
for a period ending not later than September 9, 2002, for consideration
of such provisions of the bill and amendment as fall within the jurisdic-
tion of that committee pursuant to clause 1(K), rule X
[Strike out all after the enacting clause and insert the part printed in italic]
SEPTEMBER 9, 2002
Additional sponsors: Mr. SHOWS, Mr. TURNER, Mr. HILLEARY, Mr.
NETHERCUTT, Mr. CLEMENT, Mr. SIMPSON, Mr. HOLDEN, Mr. DUNCAN,
Mr. HUTCHINSON, Mr. BEREUTER, Ms. PRYCE of Ohio, Mr. SKELTON,
Mr. RYUN of Kansas, Mr. COSTELLO, Mr. BARTLETT of Maryland, Mr.
COOKSEY, Mrs. EMERSON, Mr. POMBO, Mr. DICKS, Ms. HOOLEY of Or-
egon, Mr. BRYANT, Mr. SPRATT, Mr. TIAHRT, Mr. MORAN of Kansas,
Mr. OSBORNE, Mr. HULSHOF, Mr. CLYBURN, Mr. SHERMAN, Mr. REYES,
Mr. SHAYS, Mr. MEEKS of New York, Mr. NEY, Mr. CARSON of Okla-
homa, Mr. GOODLATTE, Mr. GILLMOR, Mr. JOHN, Mr. LUCAS of Ken-
tucky, Mrs. KELLY, Mr. LARSON of Connecticut, Mr. ROYCE, Mr.
SHIMKUS, Mr. SWEENEY, Mr. MCINTYRE, Mr. MCCRERY, Mr. ENGLISH,
Mr. PHELPS, Mr. TERRY, Mr. LINDER, Mr. HALL of Texas, Mr.
PORTMAN, Ms. JACKSON-LEE of Texas, Mr. KINGSTON, Mr. THORN-
BERRY, Mr. LATOURETTE, Mr. BALLENGER, Mr. OTTER, Mr. DEAL of
Georgia, Mr. GOODE, Mr. VITTER, Mr. BARTON of Texas, Mr. LATHAM,
Mr. BONILLA, Ms. HART, Mrs. JO ANN DAVIS of Virginia, Mr. TIBERI,
Mr. LAMPSON, Mr. KIRK, Mr. WILSON of South Carolina, Mr. TOWNS,
and Mr. JENKINS
SEPTEMBER 9, 2002
Reported from the Committee on the Judiciary with an amendment, com-
mitted to the Committee of the Whole House on the State of the Union,
and ordered to be printed
[Omit the part struck through in italic and insert the part printed in boldface roman]
[For text of introduced bill, see copy of bill as introduced on May 3, 2001]
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 con-
sumers under such agreements, to provide certain sub-
stantive rights to consumers under such agreements, and
for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Consumer Rental Pur-
chase Agreement Act’’.
SEC. 2. FINDINGS AND DECLARATION OF PURPOSE.
(a) FINDINGS.—The Congress finds as follows:
(1) The rental-purchase industry provides a serv-
ice that meets and satisfies the demands of many con-
sumers.
(2) Each year, approximately 2,300,000 United
States households enter into rental-purchase trans-
actions and over a 5-year period approximately
4,900,000 United States households will do so.
(3) Competition among the various firms en-
gaged in the extension of rental-purchase transactions
would be strengthened by informed use of rental-pur-
chase transactions.
(4) The informed use of rental-purchase trans-
actions 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 as-
sure simple, meaningful, and consistent disclosure of rental-
purchase terms so that consumers will be able to more read-
ily compare the available rental-purchase terms and avoid
uninformed use of rental-purchase transactions, and to pro-
tect 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 ‘advertise-
ment’ means a commercial message in any medium
that promotes, directly or indirectly, a rental-pur-
chase agreement but does not include price tags, win-
dow signs, or other in-store merchandising aids.
‘‘(2) AGRICULTURAL PURPOSE.—The term ‘agri-
cultural purpose’ includes—
‘‘(A) the production, harvest, exhibition,
marketing, transformation, processing, or manu-
facture 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 farm-
ing.
‘‘(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 con-
sumer becomes contractually obligated under a rental-
purchase agreement.
‘‘(7) INITIAL PAYMENT.—The term ‘initial pay-
ment’ 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, in-
cluding the rental payment; service, processing, or ad-
ministrative charges; delivery fee; refundable security
deposit; taxes; mandatory fees or charges; and any op-
tional 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 peri-
odic payments and the total number of all periodic
payments that the consumer will make if the con-
sumer 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 pay-
ment, including the rental payment, taxes, manda-
tory 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 pay-
ment’ 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 pe-
riod’ means a week, month, or other specific period of
time, during which the consumer has a right to pos-
sess 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-pur-
chase 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 prop-
erty.
‘‘(B) EXCLUSIONS.—The term ‘rental-pur-
chase 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 busi-
ness 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 man-
datory 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 administra-
tive 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 de-
termining 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 pay-
ments in the payment schedule to be paid by the con-
sumer 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 agree-
ments primarily for business, commercial, or agricultural
purposes, or those made with Government agencies or in-
strumentalities.
‘‘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 re-
quired 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 in-
formation 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, read-
able, and comprehensible to an ordinary consumer.
‘‘SEC. 1004. RENTAL-PURCHASE DISCLOSURES.
‘‘(a) IN GENERAL.—For each rental-purchase agree-
ment, the merchant shall disclose to the consumer the fol-
lowing, to the extent applicable:
‘‘(1) The date of the consummation of the rental-
purchase transaction and the identities of the mer-
chant 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 con-
sumer 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 prop-
erty 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 prop-
erty that is the subject of the rental-purchase agree-
ment, 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 pay-
ments, 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 ter-
minate the agreement without paying any fee or
charge not previously due under the agreement by vol-
untarily surrendering or returning the property in
good repair upon expiration of any lease term.
‘‘(10) Substantially the following statement:
‘OTHER IMPORTANT TERMS: See your rent-
al-purchase agreement for additional important infor-
mation on early termination procedures, purchase op-
tion rights, responsibilities for loss, damage or de-
struction of the property, warranties, maintenance re-
sponsibilities, 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 IN-
SURANCE PREMIUMS AND LIABILITY WAIVERS.—
‘‘(1) IN GENERAL.—A merchant shall clearly and
conspicuously disclose in writing to the consumer be-
fore the consummation of a rental-purchase agreement
that the purchase of leased property insurance or li-
ability 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 insur-
ance or liability waiver coverage, directly or indi-
rectly, in connection with a rental-purchase trans-
action only if—
‘‘(A) the merchant clearly and conspicu-
ously discloses to the consumer the cost of each
component of such coverage before the con-
summation 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 infor-
mation available to the merchant.
‘‘(2) INFORMATION
SUBSEQUENTLY
RENDERED
INACCURATE.—If information required to be disclosed
under subsection (a) is subsequently rendered inac-
curate as a result of any agreement between the mer-
chant 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 main-
taining 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 pre-
viously due under the agreement by voluntarily sur-
rendering or returning the property that is the subject
of the agreement upon expiration of any rental pe-
riod;
‘‘(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 agree-
ment, 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 pay-
ment if the consumer pays more frequently than
monthly;
‘‘(B) if the consumer returns or voluntarily
surrenders the property covered by the agree-
ment, other than through judicial process, during
the applicable reinstatement period set forth in
subparagraph (A), permits the consumer to rein-
state 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 appli-
cable fees, and a payment for the next rental pe-
riod;
‘‘(C) if the consumer has paid 50 percent or
more of the total cost necessary to acquire owner-
ship 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 pre-
viously due under the agreement, any applicable
fees, and a payment for the next rental period;
and
‘‘(D) permits the consumer, upon reinstate-
ment of the agreement to receive the same prop-
erty, if available, that was the subject of the rent-
al-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 regula-
tion 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 rein-
statement period provided in subparagraph (C),
if the Board determines, taking into account
such standards as the Board determines to be ap-
propriate, 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 ac-
quire 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 descrip-
tion 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 PE-
RIOD.—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 con-
sumer’s right to reinstate.
‘‘SEC. 1006. RIGHT TO ACQUIRE OWNERSHIP.
‘‘(a) IN GENERAL.—The consumer shall acquire own-
ership of the property that is the subject of the rental-pur-
chase agreement, and the rental-purchase agreement shall
terminate, upon compliance by the consumer with the re-
quirements of subsection (b) or any early payment option
provided in the rental purchase agreement, and upon pay-
ment 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 con-
sumer 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 addi-
tion to, or in excess of, the regular periodic payments re-
quired by subsection (b), or any early purchase option
amount provided in the rental-purchase agreement, as ap-
plicable. 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 ad-
ditional fee or charge for purposes of this subsection.
‘‘(d) TRANSFER OF OWNERSHIP RIGHTS.—Upon pay-
ment by the consumer of all payments necessary to acquire
ownership under subsection (b) or any early purchase op-
tion 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 con-
sumer of the property acquired pursuant to the rent-
al-purchase agreement; and
‘‘(2) transfer to the consumer the unexpired por-
tion 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 prohib-
ited 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 appro-
priate;
‘‘(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 obtain-
ing 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 insur-
ance 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 delin-
quent 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 re-
quests 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 renego-
tiation requires new disclosures, except as provided in sub-
section (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 re-
negotiation or an extension:
‘‘(1) A reduction in payments.
‘‘(2) A deferment of 1 or more payments.
‘‘(3) The extension of a rental-purchase agree-
ment.
‘‘(4) The substitution of property with property
that has a substantially equivalent or greater eco-
nomic 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 rent-
al-purchase cost does not increase.
‘‘(7) An agreement resulting from a court pro-
ceeding.
‘‘(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 mer-
chant 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 nec-
essary 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 con-
sumer at the point of rental if the merchandise is not
displayed in the merchant’s showroom or if dis-
playing 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 com-
prehensible 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 conspicu-
ously state in the advertisement the following for the item,
or set of items, advertised:
‘‘(1) The transaction advertised is a rental-pur-
chase 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 ap-
plicable 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 re-
quired 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 or-
dinary consumer.
‘‘(2) REGULATORY GUIDANCE.—The Board shall
prescribe regulations on principles and factors to
meet the clear and conspicuous standard as appro-
priate to print, video, audio, and computerized adver-
tising, reflecting the principles and factors typically
applied in each medium by the Federal Trade Com-
mission.
‘‘(3) LIMITATION.—Nothing contrary to, incon-
sistent with, or in mitigation of, the required disclo-
sures shall be used in any advertisement in any me-
dium, and no audio, video, or print technique shall
be used that is likely to obscure or detract signifi-
cantly 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 sec-
tion 1001.
‘‘(b) JURISDICTION OF COURTS; LIMITATION ON AC-
TIONS.—
‘‘(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 aris-
ing 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 Fed-
eral 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 prac-
tices; 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 as-
signee 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 agree-
ment to which it relates.
‘‘(2) APPARENT VIOLATION DEFINED.—For pur-
poses of this subsection, a violation that is apparent
on the face of a rental-purchase agreement includes
includes, but is not limited to, 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 mer-
chant assigning a rental-purchase agreement.
‘‘(b) PROOF OF DISCLOSURE.—In an action by or
against an assignee, the consumer’s written acknowledg-
ment of receipt of a disclosure, made as part of the rental-
purchase agreement, shall be conclusive proof that the dis-
closure 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 regula-
tions 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 con-
sumer 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 con-
strued to require a merchant to use any such model form
or clause prescribed by the Board under this section. A mer-
chant shall be deemed to be in compliance with the require-
ment 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 mer-
chant does not affect the substance, clarity, or
meaningful sequence of the disclosure.
‘‘(c) EFFECTIVE DATE OF REGULATIONS.—Any regu-
lation prescribed by the Board, or any amendment or inter-
pretation 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 dis-
cretion 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, mer-
chants 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 im-
posed 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 com-
merce or meets any other jurisdictional test in the Federal
Trade Commission Act.
‘‘(b) STATE ENFORCEMENT.—
‘‘(1) IN GENERAL.—An action to enforce the re-
quirements imposed by this title may also be brought
by the appropriate State attorney general in any ap-
propriate United States district court, or any other
court of competent jurisdiction.
‘‘(2) PRIOR WRITTEN NOTICE.—
‘‘(A) IN GENERAL.—The State attorney gen-
eral shall provide prior written notice of any
such civil action to the Federal Trade Commis-
sion 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 appro-
priate 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 KNOW-
ING VIOLATION.
‘‘Whoever willfully and knowingly gives false or inac-
curate 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 provi-
sion 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 inter-
ested 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 provi-
sion 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, not-
withstanding 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 pur-
poses 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 ben-
efit 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 sub-
section (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 per-
centage rate.
‘‘(c) RELATION
TO FEDERAL TRADE COMMISSION
ACT.—No provision of this title shall be construed as lim-
iting, 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 depart-
ments 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.’’.
Union Calendar No. 396
107TH CONGRESS
2D SESSION
H. R. 1701
[Report No. 107–590, Parts I and II]
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 con-
sumers under such agreements, and for other
purposes.
SEPTEMBER 9, 2002
Reported from the Committee on the Judiciary with an
amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be
printed