On November 28, Massachusetts Attorney General (AG) Campbell reached an $8.75 million settlement with Rent-A-Center (RAC), the nation’s largest rent-to-own company specializing in consumer goods leases. The settlement aimed to resolve allegations that the company engaged in a pattern of unfair and deceptive practices against consumers in violation of Massachusetts consumer protection laws.
Campbell alleged that RAC engaged in coercive and abusive techniques toward consumers who missed or otherwise failed to make rental payments under their leases. The company was accused of misapplying the state’s criminal processes, filing unwarranted applications for criminal theft and larceny against consumers who failed to “make timely payments or return property, even in circumstances where RAC lacked a reasonable basis for concluding that the Consumer intended to permanently retain the property.”
Along with the $8.75 million payment to Massachusetts, RAC agreed to institute significant changes to its business practices to ensure adherence to state consumer protection laws, including fair debt collection and repossession practices. This includes discontinuing the practice of filing criminal complaints against consumers for missing payments. RAC also agreed to discontinue excessively calling consumers’ residences, workplaces, and personal phones in violation of the Massachusetts AG’s Debt Collection regulations, which state that debt collection calls may only be made to consumers twice within a seven-day period.
Why It Matters
Although theft laws in many states empower prosecutors to file criminal charges against individuals, who fail to keep up with lease agreement payments and do not return the leased items, consumer advocates, regulators, and some state legislators recently have voiced concerns about rent-to-own companies exploiting the criminal system to force payments from consumers. Consumer advocates argue that using criminal courts to enforce contracts ultimately criminalizes financial distress, threatening severe criminal repercussions for those struggling to keep up with payments due to unfortunate circumstances like loss of income, rent increases, accidents, illnesses, divorce, or the need to care for a distressed family member.
Given the close observation and scrutiny from regulators, rent-to-own companies like RAC should exercise caution in filing criminal charges against consumers, and should assess their approach to debt collection and repossession strategies to avoid allegations like those brought forward by the Massachusetts AG.
*Senior Government Relations Manager
