Federal Consumer Rental Purchase Agreement Act Subject Of Hearing

A House Financial Services Subcommittee held a hearing July 26, 2011 on the Consumer Rental Purchase Agreement Act (H.R. 1588), legislation which would standardize existing laws in 47 states which require disclosures and place certain restrictions on rental purchase transactions of the type engaged in by many music dealers.

The bill has been introduced in Congress for many years and is strongly supported by Rent-a-Center and similar companies which rent appliances and consumer electronics products primarily to lower income customers.

As indicated, all states except Minnesota, New Jersey and Wisconsin have specific rental purchase laws and the pending federal bill would impose disclosure regimens in those three states where operating a rental purchase program is extremely difficult.

The bills would also declare that rental purchase transactions are not credit sales, thus pre-empting the possibility of litigation on that point, and would prevent states from requiring disclosure of an annual percentage rate on such transactions, something the supporting companies strongly support.

NAMM’s Washington Office is monitoring activity surrounding the legislation. A similar bill passed the House several years ago, but the Senate has always been an obstacle to enactment.