Statement by Peter Skopec, WISPIRG Director: Oppose Rent-to-Own Giveaway in State Budget

Last updated: 6/29/2015

Statement by Peter Skopec, WISPIRG Director: Oppose Rent-to-Own Giveaway in State Budget

WISPIRG is a statewide, consumer advocacy organization that stands up to powerful special interests, like the rent-to-own industry and other predatory lenders.  We represent thousands of members across the state.

I’m here today with the backing of more than twenty faith groups, low-income advocates, community leaders, consumer advocates and public interest organizations. And our message is clear:

We’re here today to urge our legislators to stand up for a transparent and fair financial marketplace.

We’re calling on our state leaders to resist special interest pressure coming from predatory lenders in the rent-to-own industry.

And we’re here to call out the rent-to-own industry for once again resorting to last-minute, back-door tactics to weaken crucial consumer protections in Wisconsin and to make our marketplace less transparent.

The rent-to-own industry preys on low-income families; it deceptively markets its products, including to military families; and it seeks special treatment from state legislatures in order to make its predatory business model work.

We’ve seen these attacks in Wisconsin in the past, and we’re seeing them again now. Predatory lenders are trying to sneak anti-transparency provisions into our state budget that would exempt rent-to-own businesses from Wisconsin consumer protections and strip the market of the most basic transparency. 

There should be no misunderstanding about this rent-to-own exemption – it’s not designed to protect consumers, and it is not designed to allow the industry to operate in Wisconsin. Rent-to-own can and already does operate in Wisconsin. This is about a special interest group seeking unfair, special treatment.

Rent-to-own transactions are high-interest loans. Customers make weekly or monthly payments to immediately take home a product – usually furniture, appliances or consumer electronics like laptops or TVs. RTO customers have the option of owning the merchandise outright after a required number of payments -- but they come with astronomical interest rates.

A 2013 WISPIRG survey found that rent-to-own businesses routinely charge customers 1½ to 12 times what cash customers would pay in a traditional retail store for the same product. In other words, a rent-to-own customer will pay between $1,000 and $2,400 for a product that, in regular retail, would cost as little as $200 used or $600 new.

And that’s why it’s so important that the Wisconsin Consumer Act requires rent-to-own businesses to disclose interest rates. It’s a matter of basic transparency and fairness in our financial marketplace.

The industry wants to be exempt from the Wisconsin Consumer Act so that RTO businesses can leave their astronomical interest rates hidden, like they do in other states. That’s how the business model works.

And that’s also how rent-to-own businesses trap consumers in a cycle of high-cost, perpetual debt: By hiding the astronomical interest rates that come with RTO products.

So make no mistake: These special interest carve-outs would make the financial marketplace less transparent and less fair for consumers.

Wisconsin’s laws provide us with important protections from predatory financial practices, and the rent-to-own industry deserves no exception.

This is an issue that unites faith groups, the legal aid community, low-income advocates, consumer groups and public interest organizations.

And we’re standing here today to call on the legislature to resist the rent-to-own industry’s special interest tactics. Do the right thing: Keep our financial marketplace transparent.

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