Consumer Rental Purchase Agreement Act (H.R. 1701 (107th Cong.))

On September 18, 2002, the House passed H.R. 1701, the Consumer Rental Purchase Agreement Act, which would have established federal standards for the maximum disclosures a rent-to-own business must share with consumers and preempted stricter state laws. Rent-to-own businesses rent high-cost items under terms that allow the item to be owned by the renter upon payment of a previously specified amount. Because the transactions are defined as leases, rather than sales, the businesses are not obligated to disclose various fees or interest rates. This enables the rent-to-own outlets to charge up to double or triple the typical retail cash price.

Many states have taken the lead in regulating these businesses, with four states — Wisconsin, New Jersey, Minnesota, and Vermont — requiring disclosures equal to typical credit transactions. Under H.R. 1701, however, any state law which affords consumers the benefits of disclosures beyond those required by the bill would have been preempted. H.R. 1701 also would have prevented states from considering rent-to-own transactions as credit sales and thus applying credit-like regulations in the future.

Fifty-two state Attorneys General wrote to Congress explaining that consumer protection and consumer credit has historically been a matter of state regulation. They asked that Congress not “bar the States from responding to local conditions and concerns… [so that the] goal of protecting consumers can be advanced within a federalist framework.”

After stalling in the Senate in the 107th Congress, the bill was reintroduced in the House in the 108th and 109th Congress. A similar bill was also introduced in the Senate in the 108th and 109th Congresses.

Sources:
* H.R. 1701, 107th Cong. (2002) § 1018.
* Letter from 52 State Attorney Generals to the House Committee on Financial Institutions (Sept. 5, 2001).
* H.R. 1651; H.R. 996, 108th Cong. (2003).
* S. 603; S. 884, 108th Cong. (2003).