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Consumer Credit Regulation: 13.3.3 Privacy Concerns in the RTO Industry

Renting computers from an RTO company can bring an additional risk, other than losing the computer in the event of non-payment and the personal information it contains if not erased. A number of consumers have brought suit against Aspen Way, a franchisee of Aaron’s, Inc., which leases laptop computers.

Consumer Credit Regulation: 13.3.4.1 Most States Have Excluded RTO Transactions from the State RISA

State Retail Installment Sales Acts (RISAs), if they applied to RTO transactions, would impose a number of important consumer protections. For example, often state RISAs will cap the allowable interest rate and fees, limit late charges, and restrict unfair repossession. Many state RISAs provide that they apply to a lease that allows the consumer to acquire ownership of the property for no or only nominal additional consideration at the end of the lease term, so they could encompass RTO transactions.

Consumer Credit Regulation: 13.3.5.1 General RTO Pricing

There are four basic components of the price charged to purchase an item through an RTO contract: (1) the dealer’s actual cost for the item—the “wholesale price;” (2) the retail price that would be charged for the item if it were sold in a cash or traditional credit sale transaction—called the “cash price; (3) the cost of renting to own the item—which is the difference between the cash price and the total of payments the consumer must pay in order to achieve ownership of the item; and (4) additional fees that the consumer must pay before and during the tra

Consumer Credit Regulation: 13.3.5.4 Liability Damage Waivers in RTO Transactions

A widespread abuse involves the inclusion of so-called “optional fees,” such as liability damage waivers (LDW) in RTO contracts. LDW programs purport to relieve customers of any further responsibility for the fair market value of the property if the property is stolen or destroyed by certain specified acts.

The value of LDW is highly questionable.71 RTO dealers rarely, if ever, sue customers. They expect their customers to be judgment proof.

Consumer Credit Regulation: 13.3.6 Protections Against Loss of Equity—RTO Rights of Reinstatement

In RTO transactions, consumers do not obtain any ownership rights in the items until they complete the RTO contract. Regardless of whether the customer has made payment for one week or for seventy weeks on a seventy-two-week contract, the customer has the exact same ownership interest in the goods: none. The income levels of most RTO customers provide ample opportunity for bumps in the road that adversely affect their ability to consistently pay $19.99 a week to an RTO dealer over a period of eighteen to twenty-four months.

Consumer Credit Regulation: 13.3.11 Discrimination

There is some evidence that RTO dealers treat delinquent customers differently based on their race.134 African-American customers may experience more rapid repossession and may be less likely to have late fees waived than white customers.135

Consumer Credit Regulation: 13.4.1 Introduction

The distinction between a rent-to-own (RTO) transaction and a lease-to-own (LTO) transaction is that in an LTO transaction the consumer is obligated to make payments for a longer period of time.

Consumer Credit Regulation: 13.4.4 Application of UCC Articles 9 and 2A to Lease-to-Own Transactions

Article 9 of the Uniform Commercial Code governs secured transactions, and Article 2A governs leases. Both provide some protections against wrongful or abusive repossession, but Article 9 has far more protections when the lessor seeks to recover and sell the property, and also stronger remedies for consumers. If an LTO transaction is a security agreement rather than a true lease, then consumers who file bankruptcy also have greater rights under the Bankruptcy Code.156

Consumer Credit Regulation: 13.4.6 UDAP Statutes and Tort Claims

State UDAP statutes typically apply broadly to the sale or lease of goods or services. Their application to LTO transactions should be straightforward. The potential UDAP claims that are applicable to RTO transactions are discussed in § 13.3.8, supra, and are equally applicable to LTO transactions.

Consumer Credit Regulation: 13.4.7 Pet Leasing Through LTO Transactions: Special Issues

In case you thought you have heard everything, WAGS Pet Lending offers lease agreements, allowing consumers to lease pets with a purchase feature.166 The FAQ section of its website defines a lease as a “program with fixed monthly payments, and a fixed contract term, where a lessee has the option to buy out of the contract early, or purchase the property after the full lease term has been fulfilled.”167 The amount above the “financed amount” constitutes “rental fees” that can be “more than double

Consumer Credit Regulation: 13.4.8 Special Issues Regarding LTOs for Services

There are several companies engaged in LTO contracts that not only lease to own personal property, but purport to finance the purchase of services as well.181 In these situations, the retailer arranges the financing for services, such as auto repair. The fact that the creditor claims that the financing is a lease does not make it any less nonsensical.

Consumer Class Actions: 1.1.1 A Practical Guide to Litigating Class Actions

This treatise is a practical guide for plaintiffs’ attorneys who litigate consumer class actions. It provides step-by-step advice on every major aspect of handling a consumer class case, including pre-filing evaluation, the distribution of class benefits, and case management. In addition, the digital version of this treatise contains scores of class action litigation documents: co-counseling agreements; complaints; a client retainer form; discovery; class briefs; class notices; stipulations of proposed settlement; and objections to class settlements.

Consumer Class Actions: 1.1.3 Subjects Covered in This Treatise

Chapters cover the selection of a case for class treatment, obtaining the client’s authorization to sue, selecting legal claims and the proper forum, choosing the class definition, drafting the complaint, conducting discovery on class issues, preparing the named plaintiff for deposition, countering a defendant’s delaying tactics, and preventing the defendant from destroying class files or tampering with class members.

Consumer Class Actions: 1.7.1 Overview

Before filing any lawsuit, a plaintiff’s attorney must carefully estimate the potential for success by evaluating the facts, the viability of the legal claims, likely defenses, and other issues. A class action requires the same or greater care and consideration of a number of specialized issues. The following sections provide a guide for initial evaluation of class action claims. None of the issues identified below is necessarily a complete barrier to proceeding as a class action, but they certainly increase the difficulty and complexity of the case.

Student Loan Law: 1.4.1.1 Stafford Loans, Direct Subsidized and Unsubsidized Loans

The term “Stafford Loans” may refer to a (1) subsidized or unsubsidized Federal Stafford Loan that was previously made through the Federal Family Education Loan (FFEL) Program (FFEL Stafford Loan) and to a (2) Direct Subsidized Loan or Direct Unsubsidized Loan, which are the Direct Loan Program equivalents that continue to be issued today.