I
107TH CONGRESS
1ST SESSION
H. R. 1701
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
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
service that meets and satisfies the demands of
many consumers.
(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 trans-
actions would be strengthened by informed use of
rental-purchase 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 rent-
al-purchase terms so that consumers will be able to more
readily compare the available rental-purchase terms and
avoid uninformed use of rental-purchase transactions, and
to protect consumers against unfair rental-purchase prac-
tices.
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.
‘‘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,
window signs, or other in-store merchandising aids.
‘‘(2) AGRICULTURAL PURPOSE.—The term ‘ag-
ricultural purpose’ includes—
‘‘(A) the production, harvest, exhibition,
marketing, transformation, processing, or man-
ufacture 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 ordi-
nary 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 rent-
al-purchase agreement.
‘‘(6) DATE
OF
CONSUMMATION.—The term
‘date of consummation’ means the date on which a
consumer becomes contractually obligated under a
rental-purchase agreement.
‘‘(7) 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 pay-
ment under the agreement is payable.
‘‘(8) PERIODIC PAYMENT.—The term ‘periodic
payment’ means the total payment a consumer will
make for a specific rental period, including the rent-
al payment, taxes, and fees or charges that may be
excluded from the rental-purchase cost.
‘‘(9) 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.
‘‘(10) RENTAL
PAYMENT.—The term ‘rental
payment’ means a payment required to be made by
a consumer for the possession and use of property
for a specific rental period, but does not include
taxes that may be imposed on such payment.
‘‘(11) 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
possess and use property that is the subject of a
rental-purchase agreement after paying the rental
payment and any applicable taxes for such period.
‘‘(12) 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 property.
‘‘(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.
‘‘(13) 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.
‘‘SEC. 1002. DETERMINATION OF RENTAL-PURCHASE COST.
‘‘(a) IN GENERAL.—
‘‘(1) BASIS FOR DETERMINATION.—Except as
otherwise provided in this section, the amount of the
rental-purchase cost in connection with a rental-pur-
chase transaction shall be determined as the sum of
all charges that are payable directly or indirectly by
the person to whom the rental-purchase transaction
is extended, and are imposed directly or indirectly by
the merchant as a condition of entering into a rent-
al-purchase agreement or acquiring ownership of
property under a rental-purchase agreement.
‘‘(2) TAXES
AND
OTHER
COSTS
NOT
IN-
CLUDED.—The amount of any charge, cost, or fee of
a type that is imposed on or otherwise payable by,
a consumer in a cash transaction for comparable
property shall not be taken into account for pur-
poses of the determination under paragraph (1) with
respect to any rental-purchase transaction.
‘‘(3) EXAMPLES
OF
CHARGES, COSTS, AND
FEES TAKEN INTO ACCOUNT.—The following are ex-
amples of charges, costs, and fees that shall be
taken into account in determining in the rental-pur-
chase cost with respect to any rental-purchase trans-
action:
‘‘(A) Rental payment.
‘‘(B) Service, processing, or administrative
charge.
‘‘(C) Fee for an investigation or credit re-
port.
‘‘(D) Charge for delivery required by the
merchant.
‘‘(2) MANNER
OF
DISCLOSURE.—The disclo-
sures required under paragraph (1) with respect to
rental-purchase transaction may be included in the
rental-purchase agreement or made on a separate
form that the consumer may keep.
‘‘(c) 
RESTATEMENT
OF
CERTAIN
EXCLUDED
ITEMS.—The following fees or charges shall not be taken
into account in determining the rental-purchase cost with
respect to a rental-purchase transaction:
‘‘(1) Fees and charges prescribed by law, which
actually are or will be paid to public officials or gov-
ernment entities need not be included in the com-
putation of the rental-purchase cost, such as sales
tax.
‘‘(2) Fees and charges for optional products
and services made available in connection with a
rental-purchase agreement.
‘‘SEC. 1003. 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. 1004. GENERAL DISCLOSURE REQUIREMENTS.
‘‘(a) RECIPIENT OF DISCLOSURE.—A merchant shall
disclose to the person who will be obligated on a rental-
purchase agreement the information required by sections
1005 and 1006. In a transaction involving more than 1
person who will be obligated on a rental-purchase agree-
ment, a merchant need not disclose to more than 1 of such
persons.
‘‘(b) TIMING OF DISCLOSURE.—The disclosures re-
quired under sections 1005 and 1006 shall be made at
or before the date of consummation of the rental-purchase
agreement and clearly and conspicuously in writing and
in a form that the consumer may keep.
‘‘(c) INFORMATION SUBSEQUENTLY RENDERED IN-
ACCURATE.—If information disclosed in accordance with
this title is subsequently rendered inaccurate as a result
of any act, occurrence, or agreement subsequent to the
delivery of the required disclosures, the resulting inaccu-
racy does not constitute a violation of this title.
‘‘SEC. 1005. 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 consummation of the trans-
action and the identities of the merchant and con-
sumer.
‘‘(2) A description of the property and a state-
ment indicating whether the property is new or used,
except a statement indicating that new property is
used property is not a violation of this title.
‘‘(3) A statement of the rental payment for
each item of property and the total rental payment
if multiple items are rented. If 2 or more items are
rented as a set, a statement of the aggregate rental
payment of all items satisfies this requirement.
‘‘(4) A statement of the cash price of each item
of property and the total cash price if multiple items
are rented. If 2 or more items are rented as a set,
a statement of the aggregate cash price of all items
satisfies this requirement.
‘‘(5) The amount to be paid before or at the
consummation of the agreement or the delivery of
the property, using the phrase ‘initial payment’. The
merchant shall itemize each component of the initial
payment by type and amount, including any service,
processing, or administrative charge, delivery fee, re-
fundable security deposit, rental payment, and fees
or charges that may be excluded from the rental-
purchase cost.
‘‘(6) A statement of the amount of the periodic
payment including an itemization of each component
of the periodic payment by type and amount, using
the phrase ‘periodic payment’. If the final periodic
payment is less than the regular periodic payments,
the components of the final periodic payment need
not be itemized. A merchant may disclose alternative
periodic payments based on different rental periods.
‘‘(7) The ‘rental-purchase cost’, using that
term, and a brief description such as ‘The amount
you will pay the merchant to acquire ownership of
the property. This amount excludes taxes and other
charges not imposed by the merchant as a condition
of acquiring ownership.’
‘‘(8) The difference between the cash price and
the rental-purchase cost, using the term ‘cost of
rental services’, and a brief description such as ‘the
difference between the cash price and the rental-pur-
chase cost’.
‘‘(9) Substantially the following statement in
boldface, uppercase letters: ‘YOU ARE RENTING
THE PROPERTY. TO ACQUIRE OWNERSHIP
OF THE PROPERTY YOU MUST MAKE ALL
PAYMENTS NECESSARY TO ACQUIRE OWN-
ERSHIP.’
‘‘(10) Substantially the following statement:
‘Other Important Terms. See your rental-purchase
agreement for additional important information on
termination, purchase option rights, reinstatement
rights, warranties, maintenance responsibilities, your
liability for loss, theft, damage, or destruction of the
property, and other charges and fees you may incur.’
‘‘(11) Using the term ‘payment schedule’, the
amount, number, and timing of all periodic pay-
ments the consumer will make if the consumer ac-
quires ownership of the property by making all peri-
odic payments, the total of the initial payment and
all periodic payments, and a brief description such
as ‘This is the amount you will have paid, including
the rental-purchase cost, taxes, and charges for
other products or services you may have elected to
purchase, if you make all Periodic Payments as
scheduled.’ A merchant may disclose alternative pay-
ment schedules based on different rental periods.
‘‘(b) FORM OF DISCLOSURE.—The disclosures re-
quired by paragraphs (5) through (11) of subsection (a)
shall be segregated from other information and shall con-
tain only directly related information, and shall be identi-
fied in boldface, uppercase letters as ‘RENTAL-PUR-
CHASE DISCLOSURES’.
‘‘SEC. 1006. 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 sub-
ject of the agreement upon expiration of any rental
period;
‘‘(4) contain a provision for reinstatement of
the agreement, which at a minimum—
‘‘(A) permits a consumer who fails to make
a timely rental payment to reinstate the agree-
ment, without losing any rights or options
which exist under the agreement, by the pay-
ment of all past due rental payments and any
other charges then due under the agreement
and a payment for the next rental period within
7 business days after failing to make a timely
rental payment if the consumer pays monthly,
or within 3 business days after failing to make
a timely rental payment if the consumer pays
more frequently than monthly;
‘‘(B) if the consumer returns or voluntarily
surrenders the property covered by the agree-
ment, other than through judicial process, dur-
ing the applicable reinstatement period set forth
in subparagraph (A), permits the consumer to
reinstate the agreement during a period of at
least 30 days after the date of the return or
surrender of the property by the payment of all
amounts previously due under the agreement,
any applicable fees, and a payment for the next
rental period; and
‘‘(C) if the consumer has paid 60 percent
or more of the rental-purchase cost and returns
or voluntarily surrenders the property, other
than through judicial process, during the appli-
cable reinstatement period set forth in subpara-
graph (A), permits the consumer to reinstate
the agreement during a period of at least 90
days after the date of the return of the property
by the payment of all amounts previously due
under the agreement, any applicable fees, and a
payment for the next rental period;
‘‘(5) if the merchant offers a purchase option,
provide a statement of the consumer’s purchase op-
tion rights under the agreement, including the meth-
od of determining the purchase price at any point in
time if the property is acquired through the exercise
of the purchase option;
‘‘(6) provide a statement disclosing that if any
part of a manufacturer’s express warranty covers
the property at the time the consumer acquires own-
ership of the property, the warranty will be trans-
ferred to the consumer if allowed by the terms of the
warranty; and
‘‘(7) provide, to the extent applicable, a state-
ment of any payment grace period, the amount of
any late payment fee, any additional fees or require-
ments for reinstatement, and the amount of any
other charges and fees the consumer may incur.
‘‘(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. Upon reinstatement, the mer-
chant shall provide the consumer with the same property,
if available; if it is not available, the merchant shall sub-
stitute property of comparable quality and condition.
‘‘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 pursu-
ant to the agreement;
‘‘(4) a wage assignment;
‘‘(5) a waiver by the consumer of a claim or de-
fense; or
‘‘(6) a provision requiring the consumer to pay
in excess of the lesser of the fair market value, any
purchase option amount, remaining rent, or cost of
repair if the property is lost, stolen, damaged, or de-
stroyed.
‘‘SEC. 1008. STATEMENT OF ACCOUNTS.
‘‘Upon request of a consumer, a merchant shall pro-
vide a statement of the consumer’s account. If a consumer
requests a statement for an individual account more than
4 times in any 12-month period, the merchant may charge
a reasonable fee for the additional statements.
‘‘SEC. 1009. RENEGOTIATIONS AND EXTENSIONS.
‘‘(a) RENEGOTIATIONS.—A renegotiation occurs
when a rental-purchase agreement is satisfied and re-
placed by a new agreement undertaken by the same con-
sumer. A renegotiation requires new disclosures, except as
provided in subsection (c).
‘‘(b) EXTENSIONS.—An extension is an agreement by
the consumer and the merchant, to continue an existing
rental-purchase agreement beyond the original end of the
payment schedule, but does not include a continuation
that is the result of a renegotiation.
‘‘(c) EXCEPTIONS.—New disclosures are not required
for the following, even if they meet the definition of a 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
rental-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 the 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.—A merchant may make
the disclosure required by subsection (a) in the form of
a list or catalog which is readily available to the consumer
at the point of rental if the merchandise is not displayed
in the merchant’s showroom or if displaying a card, tag,
or label would be impractical due to the size of the mer-
chandise.
‘‘SEC. 1011. RENTAL-PURCHASE ADVERTISING.
‘‘(a) IN GENERAL.—If an advertisement refers to or
states the amount of any payment for any specific item
or set of items, the merchant making the advertisement
shall also clearly and conspicuously state in the advertise-
ment the following:
‘‘(1) The transaction advertised is a rental-pur-
chase agreement.
‘‘(2) The amount, timing, and total number of
rental payments necessary to acquire ownership.
‘‘(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 advertised rental-purchase
cost is for new or used property.
‘‘(b) RADIO AND TELEVISION ADVERTISING.—
(1) IN
GENERAL.—An advertisement made
through television or radio, which states the amount
of any payment for any specific item or set of items,
complies with this section if the advertisement lists
a toll-free telephone number along with a reference
that such number may be used by consumers to ob-
tain the additional information required by sub-
section (a).