Brenda Brown of East Montpelier at the Senate Economic Development Committee
Three years ago, Brenda Brown rented a couch from Aaron's, Inc. She's paid $46-a-month ever since, totaling roughly $1,600 — but she still doesn't own the couch.
The East Montpelier woman said she now knows the deal was a mistake. At the time, though, she only knew she wanted a couch and the price seemed manageable, she told the Senate Economic Development Committee on Tuesday.
“There’s some things I didn’t understand,” Brown said, adding that she now plans to save up money to buy household needs up front and in cash.
The Senate committee is looking into whether the state can do more to keep people like Brown from getting lured into deals they don’t quite understand for rent-to-own furniture and electronics.
Committee Chair Kevin Mullin (R-Rutland) said he’s long been bothered by seeing people — typically those who can least afford it — pay more than they might realize for such products. He’s considering legislation that would limit the amount of interest rent-to-own stores can charge and require them to more clearly state how much a customer will end up paying.
Rental-store representatives successfully fought similar legislation in 2011. They were back Tuesday to fight again.
Two district managers from Rent-A-Center sat through Tuesday's testimony in Mullin’s committee. During a break, they argued no such limits are necessary. The stores charge no interest and already make their terms clear, said Jay Fish, a district manager who oversees two stores in Vermont and eight in New Hampshire.
“Everything is on the contract,” Fish said.
But according to advocates for low-income Vermonters, not everything in such contracts is clear to all consumers. The contracts are typically long and complicated, the advocates said, and prey on people with limited literacy and poor credit ratings.
Store managers can call it something other than interest, said Christopher Curtis, a lawyer for Vermont Legal Aid, but it amounts to much the same. People are paying for an item over time at a higher cost than they would if they bought it up front, he noted.
Byron Stookey of Brattleboro Area Affordable Housing said he’s seen cases where people were effectively charged 200 percent interest. The proposed legislation would limit rates to 24 percent.
Such not-so-sweet deals happen repeatedly to people of limited means and education, said Upper Valley Haven social worker Tory Emery. Her White River Junction organization works with the homeless and helps them maintain a budget.
One of Emery's clients, who receives $535 through the state’s Reach Up program, paid $150 a month to lease a computer from a rental store. The same kind of computer was selling at other stores for $600.
“She would pay three times that for a computer she would still not own,” Emery said.
Upper Valley Haven was able to help the woman get out of the deal, with a penalty, she said.
“People in poverty are vulnerable,” Emery said. “Long-term thinking is not something that really exists.”
Stookey's group distributes a flyer that spells out the perils of rent-to-own shopping. "The catch," it says: "The total cost is likely to be two to four times the usual price. Until you finish the payments, the store owns the couch."
The flyer suggests people instead consider shopping at second-hand stores or saving until they can afford to pay cash. "Saving is faster and way cheaper," the flyer says.
Other states do a better job of limiting risks for customers, Curtis said. New York stipulates that the total amount to be paid must be clearly and conspicuously affixed to each item, while Vermont's existing law merely says that information must be disclosed, he said. The price paid over time in New York may not exceed 2.25 times the maximum cash price.
Vermont has no similar stipulation.
Kevin Wright, who manages five Vermont Rent-A-Center stores, said the company’s clerks explain the terms to customers. “There is no confusion as far as what payments could be,” he said. Customers may return items they can no longer afford and then pick up where they left off once they have money again, he said.
“If only my customers would tell me they were struggling to pay their rent," Fish said. "I can find them less expensive items."