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This Week's Attitude
At a Wal-Mart a store in the Green Acres mall, several miles east of Canarsie, a security guard was trampled to death in a stampede of frenzied shoppers on Black Friday — the hectic shopping day after Thanksgiving. The incident, in which a police officer said, "…all hell broke loose," was reportedly sparked by the chain's reduced price of a particular big ticket item this holiday buying season — a big screen flat-panel television. When these innovative TVs — ranging in screen size from 27 to more than 50 inches — debuted a few years ago they were quite expensive, but prices have gradually come down, making them more affordable for most families. Those with poor financial histories have limited access to credit — especially in these tough economic times — yet despite the lowly fiscal status, they still covet the latest consumer products. Therefore, with few or no options they occasionally resort to the rent-to-own (RTO) industry and Rent-A-Center stores. For the uninitiated, RACs offer a number of items, from all kinds of electronics to furniture to refrigerators and other household appliances, mostly to consumers with no access to credit. Based in Texas, the 35-year-old company has over 3,300 stores in the U.S. and controls over 50 percent of the RTO market. Rent-A-Centers typically operate in economically depressed urban communities where, critics maintain, the company takes advantage of the poor to bolster profits with exorbitant prices and hidden fees that can add as much as 300 percent to the price of an item. Some people use RAC to get access to a high-tech electronic item they can't afford to buy and wind up renting an item for a brief period, like a big screen TV for Super Bowl weekend, for instance. In a New York City Department of Consumer Affairs study several years ago, the average price of an item at local RACs was 55 percent above the retail price, and over 200 percent for a 32-inch Sony television. The chain was consequently charged with over 300 violations. It continues to operate more than three dozen stores across the city. Senior New York senator Chuck Schumer has been fighting for years for federal laws and price guidelines to control the RTO industry, pointing out that "like highway bandits they milk financially strapped consumers out of hundreds, and sometimes thousands of dollars using deceitful lease agreements." Over the years, the RTO industry has aggressively lobbied sufficient Congressional support to delay effectual legislation that would make its policies more consumer-friendly. Rent-A-Center asserts that there are many misconceptions about its practices, and its charges are no worse than credit card companies, while it offers a valuable service to those who lack the means to buy certain products. But opponents equate it with loan sharking. Despite its defense of its policies, a few Internet sites, like ripoffreport.com and consumer affairs.com, contain plenty of complaints from disgruntled RAC customers from across the country with horror stories about their experiences, including an onslaught of harassing phone calls and company employees personally hassling them with visits to their homes and places of work. Granted, no one is forced to sign a contract at any RTO store, but their pitches tend to entice poor, unsuspecting consumers on limited budgets. Though the business is not legally permitted to charge interest on item it "rents," its weekly fee is often a lot more than the highest credit card interest. For instance, a RAC advertisement may read: "For ONLY 78 weekly payments of $10, you can own (this or that)." The hitch — there's always a hitch in this type of commerce — is that the final cost, $780 in this case, can be more than $500 in interest. A typically uneducated buyer with big eyes for an item doesn't bother to read the fine print before signing on the dotted line and you can bet that no RAC employee fills them in on the nifty little deceit or the final cost. Last week, several Brooklyn residents protested at a Bed-Stuy Rent-A-Center after activists learned a local church group discovered a rent-to-buy contract was nothing more than a "rip-off." When the group went to rent a 50-inch screen TV for two nights to watch election night coverage last month, the pastor was bothered by the terms of the deal if he had wanted to own it. According to Daily News columnist Errol Louis, the retail cost was $1,849.50 and the store wanted a $1,500 security deposit and a rental charge of $36.99 for 97 weeks, which made the total cost over $4,000, if a customer signed a rent-to-own contract. Scam, loan sharking, usury, whatever you call it, the rent-to-own business needs to be brought under control with guidelines that eliminate its unfair practices that target those who can least afford it. As they did in the prime mortgage crisis, where banks liberally, but recklessly, helped many undeserving buyers acquire their first homes, legislators, at all levels of government need to address this issue as soon as possible.
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