If it sounds too good to be true, it probably is.
That’s a familiar adage that parents offer to their children or teachers share with students. The advice can easily be given to consumers who fall for the marketing pitches delivered by rent-to-own (RTO) companies.
It goes like this: Get brand-new, brand-name furniture, electronics or appliances with no down payment for as little as $19.99 a week. While the amount seems reasonable, the interest fees on the loan are exorbitant (as high as 200 to 400 percent). If you miss a payment or fall behind, the company can quickly repossess the merchandise and send your name to a collection agency.
Those most susceptible to these offers are often people who can least afford the merchandise, but are swayed by company sales pitches. That is why regulations on these companies help to prevent economic tragedies. When lawmakers move to strip these regulations, they betray their constituents. That, however, is exactly what happened in Madison last week.
On Tuesday, Feb. 20, the Wisconsin Assembly passed legislation loosening regulations on the rent-to-own industry. The Assembly’s vote, which would give special treatment to an industry that preys on the poor, was strongly opposed by the Wisconsin Catholic bishops.
The Wisconsin Catholic Conference (WCC), the public policy arm of Wisconsin’s Catholic bishops, offered three reasons for opposing the Assembly Bill 759. In a statement Feb. 19, one day before the Assembly vote, the WCC said the bill:
- Exempts RTOs from the Wisconsin Consumer Act and the Uniform Commercial Code, both of which provide many consumer protections, including those involving RTO fraud or misrepresentation.
- Removes federal Truth-in-Lending Act disclosures, including interest rate disclosures, that enable consumers to make wise financial decisions.
- Entitles RTOs immediate possession of the property if customers are late on payments. The Wisconsin Consumer Act currently requires 15 days before repossession and the opportunity to cure the default.
Why allow these regulations to be dismantled, permitting an industry with a checkered history of harmful and unfair business practices to expand in Wisconsin? Republican supporters say it would expand this industry into the state and offer more options to consumers. “(Rent to own) is kind of the way of the future,” Assembly Speaker Robin Vos (R-Rochester) told the Milwaukee Journal Sentinel Feb. 20.
A similar campaign to cut back consumer protections for RTO transactions in Wisconsin happened in 2013. In challenging the 2013 bill, Milwaukee Archbishop Jerome Listecki said it encouraged bad business practices.
“Our agencies educate clients to compare prices and interest rates — a task made more difficult if the government allows businesses to conceal the true cost of an item by not disclosing the annual percentage rate,” Archbishop Listecki said. “Simply put, public policies should not encourage businesses that depend on financial ignorance and debilitating debt.”
People of faith, good will and conscience must not allow this disastrous bill to be signed into law. The State Senate may take up their proposal (Senate Bill 637) as early as March 13. The time is now to contact lawmakers and tell them not to bring this bill to the floor for consideration. Visit the Wisconsin State Legislature website at http://legis.wisconsin.gov and click on “Find My Legislators,” or call the State Legislative Hotline, 800-362-9472.