Civics Lesson
Courts rule rent to own illegal in New Jersey

Legislature attempts to legalize 100% interest

State Government, Attorney General Verniero, stand silent

Reform needed

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  Our civics lesson will compare and contrast the way a) the Courts, and B) the Legislature, have dealt with the subject of rent to own in New Jersey.

The Courts

Three lawsuits were filed in New Jersey. Each of the suits took approximately three years or more to develop the facts thoroughly. In each suit, many months were spent on the "discovery" process, in which both sides are permitted to obtain documents, and to question witnesses under oath. Written questionnaires and requests for admissions must be answered. At the end of the discovery process, there are briefs written which discuss which legal principles are to be applied to the facts found in discovery.

In a suit, for every paper which a litigant sends to the Court, a copy must be sent to one's adversary, for fairness and due process of law-- an equal opportunity to persuade the Judge.

Judges of the Superior Court then decided by a process called "summary judgment" that the facts which were not in dispute permitted the Judge to rule on the law. In the three cases, the Judges ruled either that rent to own was usurious (charging more than NJ's 30% criminal usury limit), or that RTO engaged in unconscionable practices, or that RTO violated NJ's Consumer Fraud Act, or NJ's Retail Installment Sales Act.

It is strictly illegal to give any money or present to a Judge, because that would be a bribe. New Jersey's Judges enjoy a fine reputation for honesty.

The Legislature

The unfortunate dynamic of the modern Legislature is that persons who wish the Legislature to pass laws may give Legislators money, directly, or indirectly by hiring lobbyists who are heavy contributers. What would be called a bribe if given to a Judge, is perfectly legal when given to a legislator, and is called a campaign contribution.

The rent to own industry hired several lobbyists, and according to the Associated Press, the RTO industry spent more than $100,000 spent on lobbyists (who contribute royally to candidates) or on campaign contributions. For example, RTO hired Dale Florio, a registered lobbyist, who was also Governor Whitman's fund raiser, and a county political leader.

Instead of an open process, lobbyists operate behind the scenes, talking to Senators and Assembly members beforehand to line up their votes. In this unfair process, the legislators get a one-sided view of things. Many legislators promise their votes before they hear the consumers' side.

When S.1343, the bill written by the RTO industry reached a Committee hearing in the Senate, Chairman Cardinale freely admitted that he knew next to nothing about rent to own, because he lived in wealthy Bergen county, which had no RTO stores. Senator Singer said that since consumers got a bad deal with car leases (an entirely different subject), they should not complain about a bad deal on rent to own! When the consumer representatives testified, Senators Lesniak, Cardinale and Singer gave us a hard time, because the lobbyists had reached them in one-sided meetings, and their minds were made up before the hearing. After a brief hearing of perhaps one hour, those three voted in favor of RTO industry bills which will legalize interest rates of over 100% Annual Percentage Rate, for the poor and urban customers of rent to own. The main purpose of these bills is to re-write the law, to nullify the court decisions which were rendered after three years of fact finding and legal research.

When legislators give so little consideration of the consequences of Legislative actions, seeming to vote to do favors for friends and fund raisers, one may wonder why any judge would give deference to the legislature.

The legislative process continues unfairly behind the scenes as the RTO lobbyists seek to influence high officials of the Whitman administration. For example, Attorney General Verniero from the Fall of 1997 to the present has not permitted Consumer Affairs to testify against RTO, although representatives from the Kean and Florio administrations testified and successfully opposed rent to own.

Campaign Finance Reform Needed

In short, the current Legislative process favors secrecy and money, and urgently needs campaign finance reform. For legislative accountability, please consult our "Heroes and Zeroes page to see how your representatives voted.

More information is available on the rent to own campaign page. CLNJ has a pamphlet, poster and Rap Song on rent to own!

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