Court Opinion

ID: 6454156
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:37:37.256595+00
Date Added: 2024-06-11T15:53:10.638013
License: Public Domain

Ireland, J.
(concurring). I write separately because, although *683I concur with the court’s conclusion that the Retail Instalment Sales Act, G. L. c. 255D, does not apply to the type of rent-to-own agreement at issue here and that, if the agreements involve renting items for personal, family, or household use, the Consumer Lease Act, G. L. c. 93, §§ 90-92 (CLA), does apply, ante at 669-670,1 want to emphasize that the CLA does not offer any type of protection for those consumers who ultimately purchase the merchandise they rent.
According to a study done by two researchers at the University of Massachusetts at Dartmouth and cited by the defendants, of those consumers who sign contracts to rent merchandise, such as the ones at issue here, over thirty-eight per cent result in an actual purchase either by renting for the term of the agreement or through an early purchase. Anderson, Rent-to-Own Agreements: Purchases or Rentals?, 20 J. Applied Bus. Res. 13, 15 (2004). Although this means that a majority of rental agreements are terminated before purchase, the study also found that agreements ending with the customer in possession of merchandise had eight times the duration time of those that ended in the return of merchandise, and that the median percentage of the total contract time that elapsed before an early purchase occurred was eighty-one per cent.1 Id. at 20. The interest rate paid *684by this not insignificant number of customers who ultimately purchase the rented merchandise is extremely high. For example, one of the named plaintiffs in this putative class action, Jaaziel Costa, falls near the median of total contract time that elapsed before purchase that was found by the University of Massachusetts study. Costa exercised an early purchase option after approximately sixty-four weeks of an eighty-two week contract (i.e., approximately seventy-eight per cent of his contract time). He ended up paying slightly less than one hundred per cent interest for a computer that was used when he first rented it.2
I am aware, as the defendants argue, that many rent-to-own customers use this type of agreement because they cannot get credit elsewhere. However, because of the way the agreements are structured, it is clear that those consumers who ultimately purchase the merchandise fall outside the CLA’s statutory protection and can be subject to terms that the United States Department of Defense, as part of a 2006 report to Congress, called “predatory lending practices.” See Report on Predatory Lending Practices Directed at Members of the Armed Forces and Their Dependents 19-20 (Aug. 9, 2006). I am hopeful that the Legislature will consider whether, as a matter of public policy, a balance might be struck between allowing businesses that provide these rent-to-own services to make a profit and offering protection to those customers who end up purchasing rented merchandise at extremely high interest rates.3

I rely on the study most favorable to the defendants, but other studies cited present a very different picture of the rent-to-own consumer. According to a Federal Trade Commission (FTC) study published in 2000, rent-to-own customers are more likely to be African-American, younger, and less educated, have lower incomes, have children in their households, and live in the South and in nonsuburban areas. Executive Summary, Survey of Rent-to-Own Customers, Federal Trade Commission Bureau of Economics Staff Report. The FTC study found that seventy per cent of rent-to-own merchandise was ultimately purchased by the customer. In addition, a study commissioned by one of the amici, the National Consumer Law Center, found that only one of the sixty-nine Rent-A-Center stores in Massachusetts is located in a census tract where less than five per cent of the population falls below one hundred per cent of the Federal Poverty Level (as determined by the 2000 census), suggesting a targeting of poorer rather than wealthier areas of the Commonwealth.
The University of Massachusetts researchers posit that the methodology of the FTC study (i.e., interviews) was flawed. Their study instead analyzed transactional data made available from the Association of Progressive Rental Organizations. Whatever its alleged flaws, the United States Department of Defense relied, in part, on the FTC study, when it reported to Congress. See Report on Predatory Lending Practices Directed at Members of the Armed Forces and Their Dependents 19-20 (Aug. 9, 2006).

At the time Costa signed his agreement the purchase price of the used computer was listed as $1,434.59. The price he paid as an early purchaser was $2,718.34. The purchase price of an item that is listed in a rent-to-own agreement “most often is unrelated to fair market value. Consequently, the ‘total cost to own’ may be double the ‘cash price’ of the goods but effectively four times the true market value of the goods acquired.” Drysdale, The Two-Tiered Consumer Financial Services Marketplace: The Fringe Banking System and Its Challenge to Current Thinking About the Role of Usury Laws in Today’s Society, 51 S.C. L. Rev. 589, 615-616 & n.148 (2000).

Recently, the Congress has acted to reform credit card practices. In May, 2009, the president signed the Credit Card Accountability, Responsibility and Disclosure Act of 2009, a law protecting credit card holders by requiring, among other things, plain language disclosures and banning unfair interest rate increases and fee traps.