The rent-to-own industry preys on low-income and military families according to Bruce Speight, Director of Wisconsin Public Interest Research Group (WISPIRG), and “traps consumers in a cycle of high-cost, perpetual debt.” He says, “Rent-to-own is a rip-off and we should not be giving special treatment to a predatory special interest in Wisconsin.”
State Senator Glenn Grothman (R-West Bend) is adamantly against a state budget provision that would exempt rent-to-own stores from consumer protection laws. The plan allows businesses to charge extremely high interest rates without having to disclose the effective APR to consumers who rent appliances, furniture, and other products from them.
Grothman sits on the powerful Joint Finance Committee, which is discussing Governor Scott Walker’s two-year budget proposal. “We sure hope Governor Walker changes his mind and removes his leadership position here, and we do hope the Republican legislators who have privately expressed concern here stick together and take this out of the budget.”
Grothman believes other Republicans on the budget panel oppose the rent-to-own exemption “in their heart,” but he’s not sure whether they would actually vote against their party.
Barbara Sella with the Wisconsin Catholic Conference says the industry encourages people to spend beyond their means. She calls that “unconscionable.” Though she says, “As much as we all dislike them, we’re not saying that they should be put out of business. What we’re saying is ‘You wanna operate? Follow the laws of the Wisconsin Consumer Act.'”
WISPIRG released a new report showing rent-to-own stores typically charge two to seven times the price consumers would pay for the same or similar product at other major retailers. The industry lures consumers with attractive items and then locks them into a contract which charges high interest rates and enormous fees. The report shows rent-to-own stores surveyed by WISPIRG charge effective annual percentage rates (APR) ranging from 138 percent to 370 percent for appliances, including televisions, washers and dryers, refrigerators, oven ranges, and laptops.
Despite the high interest rates on some credit cards, Speight says consumers would be better off purchasing the items with their plastic rather than getting gouged by rent-t0-own businesses, though he doesn’t recommend it. In addition to exempting the rent-to-own industry from disclosing their effective APR, the governor’s budget would limit the compensation consumers could seek in filing suit against the industry.
Sella says it’s important to urge lawmakers to “do the right thing.” She says right now they have “phenomenal pressure” on them to keep this measure in the 2013-2015 budget.
Grothman is still fuming about actions taken to help the pay-day loan industry in the previous budget and, he says, rent-to-own is even worse.