Rent-a-Center
"A lot of people don't really understand just how significant a role Rent-A-Center plays in families' lives...In teaming with Magic Johnson, we have found the ideal partner to help get the word out. He's living proof of how, with hard work and determination, you can get the best things in life - which is exactly what Rent-A-Center is all about.” - Ann Davids, Rent-a-Center senior vice president and chief marketing officer.
But Magic, what are you and Rent-a-Center really all about?
Overpriced Household Products for Low-Income Families
Rent-a-Center encourages customers to “rent-to-own” a variety of household goods, targeting people who don’t have immediate cash to make these necessary purchases. Their services advertise that no credit is required to rent the goods, but by entering into an agreement, people often find themselves paying far more for a product than it's worth. A television worth less than $400 can easily cost a customer $900 by the time it's finally paid off.
This was the trap that caught Hilda Perez and other New Jersey residents, who later sued Rent-a-Center, claiming they charged interest in violation of NJ law. Ms. Perez, a single mother of seven, rented furniture and appliances from the store with a retail value of $9,301. If she had made her payments through the end of her contract, she would have ended up paying $18,613 for the products. In 2007, Ms. Perez’s lawsuit sought class-action status, and although it denied any liability, Rent-a-Center decided to settle with thousands of New Jersey customers instead of going to trial. Ultimately they agreed to pay over $109 million dollars to approximately 100,000 claimants, including fees and costs.
Rent-a-Center's Recent History of Legal Settlements
Although Rent-a-Center always denies liability, it has paid out several multi-million dollar settlements to avoid potentially costly verdicts, apparently calculating that it’s cheaper to pay off the few than to face the scrutiny of the many.
Ongoing Lawsuits
There is a $5 Million class action lawsuit currently being heard by the Massachusetts Supreme Judicial Court charging that the company did not provide disclosures required by the Massachusetts Retail Installment Sales Act and for charging a higher interest than permitted by the Act.
City Action
Rent-a-Center’s reprehensible practice of effectively price-gouging people who are trying to provide their families with household appliances has led legislators around the country, and here in New York City, to fight for tougher regulation of the rental industry.
The New York City Council is considering adopting a resolution which urges the state legislature to adopt more stringent regulations for the rent-to-own industry.
In the News in NY
Activists Protest Rent-a-Center's Fees
Daily News, November 29, 2008
Residents Protest Two Rent-a-Centers Over Fees
Daily News, November 29, 2008