Governor Peter Shumlin today signed into law consumer protection legislation to crack down on rent-to-own enterprises that target lower and middle income Vermonters. Rent-to-own stores market to lower and middle income individuals with troubled credit histories by promising a no-interest, hassle-free way to own consumer electronics, furniture, and other household items. The rent-to-own model works by giving consumers products upfront in exchange for a small monthly rental fee, which, if paid for the duration of the contract period can result in ownership. That small monthly rental fee can add up, however, inflating the cost of some products by 300 to 400 percent. And with only 25 percent of rent-to-own transactions actually leading to ownership, many consumers may find themselves paying full price or more for a product they won’t own.
“I want to thank the many people who worked over many years to get this done,” Shumlin said. “There is doing business and then there is ripping people off. Some of these rent-to-own enterprises seem to be focused on the latter, and that is not the way we do business in Vermont. I’m proud to sign this common-sense legislation to ensure measures are in place to protect Vermonters from being ripped off.”
The bill, S.73, signed today by the governor limits these practices by setting a reasonable limit on what rent-to-own stores can charge, and by requiring merchants to charge consumers less for used items than new ones. The legislation also requires full disclosure of all contract terms so consumers are aware of the deal they are entering into and regulates the industry’s collection practices so no Vermonter is harassed simply because they cannot make a payment on time. At least 9 other states, including New York, have passed similar regulations. In Vermont, there are 14 rent-to-own stores in nine towns: Barre, Bennington, Brattleboro, Burlington, Morrisville, Rutland, Springfield, St. Albans, and St. Johnsbury.
The governor thanked key legislators who fought for S.73, including its sponsor Sen. Kevin Mullin, Sen. Becca Balint, House Speaker Shap Smith, and Senate President Pro Tem John Campbell. The Governor also thanked his Pathways from Poverty Council, especially its co-chair Chris Curtis, who made the Governor aware of the issue last fall and made it a priority this legislative session.
S.73 also makes other common sense reforms to help protect consumers, including creating a Financial Literacy Commission, chaired by the Treasurer, to recommend ways in which to improve Vermonters' ability to save money and build assets and requiring full disclosure of any fees for an automatic emergency dialing service in a home security system.