Overview

For years the Rent-to-Own (RTO) industry has preyed upon low-income consumers by selling goods on credit at inflated prices, with triple-digit interest rates and excessive fees. These practices are illegal under New Jersey’s consumer protection laws governing credit sales, which cap interest rates at 30 percent and provide other protections. Nonetheless, the RTO industry continued doing business as usual, claiming it was above the law because it “leased” goods, not sold them.

Perhaps aware that its claim wouldn’t hold up in court, the RTO industry repeatedly tried to get special legislation passed that would legitimize its abusive practices, most recently in early 2006. Each time NJPIRG has defeated them by organizing a powerful coalition of consumer and anti-poverty organizations.

We also fought the industry in the courts, arguing as a “friend of the court” that New Jersey’s existing consumer protections applied, and in March 2006, the New Jersey Supreme Court ruled that the RTO’s practices were illegal. The following January,  the U.S. Supreme Court rejected the industry’s appeal, bringing that case to a close.

Nonetheless, the fight isn’t over; the battleground has simply shifted. The RTO industry asked the 109th Congress to pass its special law and invalidate New Jersey’s protections. When NJPIRG learned of the RTO industry’s efforts in Congress, we reached out to Senators Menendez and Lautenberg. The two senators stood up for New Jersey’s laws, and NJPIRG helped defeat the RTO industry for the third time in a year.

With the inauguration of the 110th Congress, the RTO industry is trying again. It’s persuaded legislators to introduce its special legislation in both houses. However, this time pro-consumer legislation is also in play. Senator Schumer is working to provide New Jersey-style protections to consumers nationwide.