June 23, 2010

Assembly Shields Consumers from Unfair Debt Collection Practices, Increases Protections for Rent-To-Own Customers

Assembly Speaker Sheldon Silver and Consumer Affairs and Protection Committee Chair Audrey I. Pheffer today announced the passage of legislation to increase consumer protections by strengthening regulations in the rent-to-own industry and requiring third party debt collectors to obtain a license from the Department of State.

"Although most rent-to-own companies and third party debt collection agencies are ethical, honest businesses, there are some entities which look to take advantage of cash-strapped families, especially during these tough economic times," said Silver (D-Manhattan). "The legislation will help ensure that consumers are aware of the contracts that they are entering into and protect them from unscrupulous debt collectors."

"Rent-to-own companies offer a unique product that is popular with many New Yorkers. However, we must ensure that consumers pay fair prices and are aware of the terms and conditions of these agreements," said Pheffer (D-Queens). "Increasing disclosure requirements on rental agreements and establishing well-defined price controls will inevitably protect individuals from being taken advantage of financially. Legislation passed yesterday would require third party debt collectors to obtain licenses, which will help to protect consumers from the unfair and abusive practices suffered at the hands of some unlicensed debt collection agencies."

The bill (A.3083-E) approved by the Assembly today would enhance disclosure requirements on rent-to-own agreements and ensure that consumers pay fair prices. The legislation would significantly enhance the existing rent-to-own law by adding several important consumer protections, which would:

Rent-to-own merchants would be required to provide consumers with a layman's explanation of the nature of the rent-to-own transaction on each rental agreement. Additionally, merchants would be required to offer consumers who suffer from an interruption or reduction in income the option of paying temporarily reduced rental payments.

A measure approved by the Assembly yesterday would protect consumers from unfair debt collection practices by requiring third party debt collectors to obtain a license from the Department of State by October 1, 2011 (A.3926-D).

The legislation would also require license applicants to submit detailed information about how they propose to conduct business, including a summary of methods used to confirm the validity of the debts it seeks to collect, their recordkeeping policy and whether the applicant intends to sell debts.

In addition, the legislation would: