In late January, Georgia Attorney General Chris Carr reached a settlement with Rent-A-Center regarding a variety of alleged deceptive practices in its rent-to-own business, including in its debt collection and general disclosure practices. Maybe you’re thinking, “I’m not in the rent-to-own business, so why is this case important to me?” AG Carr’s settlement, which took the form of an Assurance of Voluntary Compliance (AVC), includes many important takeaways that you should think about no matter what industry you may be in, especially if you operate in multiple states. And with State AG consumer protection enforcement expected to increase in 2022 – knowing how AGs might approach an investigation is more important than ever.
So what can we glean from this Georgia settlement? A lot.
AVCs have their pros and cons. Assurances of Voluntary Compliance (or in some jurisdictions, Assurances of Discontinuance) are statutorily authorized in many states as a way to resolve Attorney General consumer protection investigations. Often seen as something lighter than a court ordered judgment and an appealing form of settlement in many cases, AVC statutes like Georgia’s may include express language that they cannot be used as admission. But know their limitations – depending on the state, AVCs may still be filed with the Court with violations punishable by contempt. Moreover, an AVC may not include a complete release – Georgia’s statute and settlement with Rent-A-Center allows the AG to reopen the matter in the event of a future breach of their agreement.
Even a regulated industry may be subject to UDAP laws. Navigating the varied exemptions in state unfair and deceptive act and practice laws may be challenging. It’s important not to assume that just because your industry is heavily regulated under another state law (like Georgia’s Lease-purchase Agreement Act) that it is exempt from general UDAP compliance. Moreover, conduct that is exempt in one state’s UDAP law may not be in another. Given that UDAP enforcement is the bread and butter of State AG consumer protection, make sure you know your exposure in any given state.
State AGs remain concerned about first-party debt collection practices. While the federal Fair Debt Collection Practices Act may largely exempt businesses collecting on their own debts, state laws may cover first-party debt collection practices. Even the absence of a specific state law may not absolve your practices – Georgia’s AVC alleged that Rent-A-Center’s practices, which included repeated phone calls and threatening consumers with criminal prosecution, constituted unfair and deceptive practices under their UDAP law.
State AGs will heavily scrutinize disclosures and consumer consent, especially for recurring charges. As we’ve previously reported, State AGs have been focusing on automatic renewals especially in response to new state laws requiring clear disclosure and express consent. The Georgia AVC focused on two recurring charges imposed by Rent-A-Center. First, the AG alleged that loss damage waivers were falsely offered as “insurance” or “warranty programs.” Second, the AG alleged that charges for club memberships continued after a rental purchase agreement concluded without adequate disclosure. The lack of clear and conspicuous disclosure of material terms calls into question the adequacy of the consumer’s consent, and is going to be an easy target for State AGs.
Enforcement actions may be costly, but there could be opportunity to save if you put your money where your mouth is. While the Georgia AVC calls for a payment of over $300,000 in penalties, fees, and costs, the agreement also provides that a final payment of over half of that amount can be waived if there is not a default in the next two years. Including a provision like this in a settlement allows a company to not only save money in the long run, but also to demonstrate its commitment to follow the detailed injunctive relief and hold itself out as a good corporate citizen to regulators.
Georgia’s AVC is a great reminder of how broad State AG authority is and the type of penalties you might face if you end up on their radar. Whether you’re currently subject of an investigation or not, it’s a good idea to take a close look at your business practices to ensure compliance.
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