Like wood rot on a second-hand chair, bad legislation keeps popping up in the New Jersey legislature that would exempt the rent-to-own industry from normal consumer legal protections against usury credit rates.
And like a broken clock, this rotten legislation always seems to get posted for action late in the year - this time at the behest of Assembly Speaker Jack Collins, a South Jersey Republican.
The New Jersey Public Interest Research Group (NJPIRG), which earns its nonprofit keep at times like this, urged Mr. Collins and Senate President Donald DiFrancesco to ensure that these bills would not be posted without proper amendments to protect consumers. Regardless, the Assembly is scheduled to deal with this mess today.
"Time and time again the courts have spoken and found against the rent-to-own industry. And once again, the industry is supporting legislation that would codify their anti-consumer practices," said PIRG's consumer advocate Jerry Flannigan.
In late 1997 and 1998, the rent-to-own industry sought legislative help in its bad argument that renting furniture is unlike normal credit transactions that are subject to reasonable consumer protection against usury credit charges (a maximum annual percentage charge of 30 percent). A 1998 New Jersey PIRG survey found that the state's rent-to-own stores charged consumers an average of 125 percent - and as high as 200 percent - annual interest to finance a 14-cubic-foot refrigerator. A former Glassboro resident named Dawn Robinson has become an example of the excesses in this industry.
She paid a Camden County rental store $28.21 a week for 69 weeks to lease a used 25-inch color television, a stereo and a cabinet, she told The Inquirer in 1997. She was often assessed $5 per week late charges and her total payment rose to more than $2,000. It was a lease-purchase deal that would eventually allow her to buy the whole entertainment center for an additional $824.91, she said, even though she'd already been assessed twice that in rent.
Lawyers filed a class action suit on behalf of Ms. Robinson and about 100,000 rent-to-own customers in New Jersey. They secured a $60 million settlement agreement with three rent-to-own companies this week, ending a two-year appeals process.
The rent-to-own industry now wants legislators to gouge some holes in the state's consumer protection laws so they can rent more overpriced second-hand televisions.
They need to be stopped again before desperate low-income folks are forced into more usury deals during the ripe gift-giving season.