Rent-to-Own Company’s Unclear Terms Lead to $175 Million FTC Settlement

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On April 20, 2020, a national lease-to-own company agreed to a $175 million settlement with the FTC over allegations that the company misrepresented the cost of its rent-to-own products by advertising the retail price of their products, but not explaining that after a series of fine-print disclosures, the consumer would ultimately pay more than the retail price for that product.

After receiving more than 15,000 complaints regarding this lease-to-own company in just over a year, the FTC filed a complaint alleging the company’s practice of misrepresenting the cost of its rent-to-own product violates bedrock principals of consumer protection.  The FTC allege that the lease-to-own company would advertise the retail cost of their products as the cost consumers would pay for an item by the end of their leasing period.  To the contrary, however, in the course of signing the company’s online leasing agreement, once a consumer signed the acknowledgment at the bottom of the disclosures page, the form would auto-roll to the last page of the agreement.  This auto-rolling feature would take consumers past several fine-print disclosures regarding the ultimate total cost and other terms of the agreement.  These consumers would be uninformed of the terms of what they just agreed to, unless they manually scrolled up and went through the terms, fine-print and hyperlinks the website had just bypassed for them.  Although the company’s agreements varied from state to state, the FTC found to be consistent a number of factors that “always resulted in the consumer paying more than the retail price” to purchase merchandise through the lease-to-own company. Further, the FTC alleged that the Company was aware of complaints from consumers regarding confusion over their disclosures and products.

In addition to the settlement amount, the company has been enjoined from misrepresenting the costs and terms of their payment plan and must obtain informed consent from consumers before billing them for anything, including the monthly leasing cost.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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