Rent-A-Center, one of the nation’s largest rent-to-own companies, will pay $15.5 million to settle California's allegations that it misled and overcharged tens of thousands of customers, Attorney General Rob Bonta said Tuesday.
An investigation of the company's “kiosk” business inside traditional retail furniture stores found that since 2014, it used what Bonta called an inflated “cash price” for products that was 15% higher than the true retail price, among other alleged violations.
The practice affected more than 100,000 contracts through the company's Preferred Lease line, previously known as AcceptanceNOW, although the company also has more than 2,000 standalone stores.
Many consumers seek rent-to-own options without realizing that “the total price they pay will end up being much higher” than if they bought outright, Bonta said. And with Rent-A-Center’s 15% “illegal upcharge,” he said, “that couch, that fridge or that washer potentially cost struggling families hundreds of extra dollars each.”
Such businesses rent things like furniture and appliances, often to low- or moderate-income customers who typically pay by the week or month. Usually after one to three years, they then own the product.
The company will return $13.5 million in restitution to California consumers under the settlement, pay $2 million in civil penalties and agree not to engage in misconduct in the future, Bonta said. Consumers who rented through the company's kiosk businesses are eligible for the restitution and should be sent a notice at their last known mailing address, he said.
Rent-A-Center did not immediately respond to repeated email messages seeking comment. It did not admit any violations, wrongdoing or liability under the settlement.
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Bonta said the items sold under such policies are often overvalued. He alleged that Rent-A-Center also failed to tell its customers that they could return the products at any time with no penalty.
Under the settlement, the company is prohibited from charging a cash-price markup, and its price must match the advertised price. The company also agreed to better inform customers of their rights, train its employees, and submit annual compliance reports to Bonta's office for three years.
Separately, Bonta announced the formation of a nationwide bipartisan Anti-Robocall Litigation Task Force that he said will investigate and take legal action against telecommunications companies he blamed for bringing a majority of foreign robocalls into the United States.
The task force already sent civil investigative demands to 20 providers, alleging that they are not doing enough to stop robocall traffic.