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Rent-to-Own May Escape State Consumer Act Regulations

The rent-to-own industry has fought for decades to free itself from some provisions of Wisconsin law, spending money on campaign donations and lobbying to do so—and it appears the work may be paying off.

For more than two decades, the rent-to-own industry, which leases such goods as televisions, appliances and furniture, has been fighting to free itself from certain provisions of Wisconsin law. Throughout, it has lubricated the gears of change with campaign donations and lobbying outlays.

“It’s something you have to do — what everybody does,” says Jeff Lebakken, president of the Wisconsin Rental Dealers Association, the main group pushing this change.

Lebakken, the owner of an Eau Claire-based rent-to-own company with 11 state stores, has given more than $33,000 to Wisconsin political candidates since 1999, according to the Wisconsin Democracy Campaign’s searchable database.

Overall, an analysis shows $235,000 in donations of $100 or more over the past 20 years from individuals associated with the rent-to-own industry. Employees of Ashley Furniture, which leases goods to rent-to-own companies, led the pack at about $148,000, followed by Lebakken Rent to Own at $40,000 and a Texas company called Rent-A-Center at $39,000.

Top recipients include former Gov. Tommy Thompson, $42,700; former Gov. Jim Doyle, $22,500; and Gov. Scott Walker, $14,800.

But, as Lebakken notes, giving does not always translate into getting: “We put money with Gov. Doyle, and he vetoed our bill.” 

Doyle, a Democrat, did this in 2006. The desired changes were also axed in 2001 by Gov. Scott McCallum, a Republican who received at least $13,550 from affiliated donors.

In the 2003-04 and 2005-06 legislative sessions, culminating in the bill Doyle vetoed, Lebakken’s group spent a total of $600,000 on lobbying. These efforts cooled for several years but resumed in 2011-12, when the long-sought bill passed the Assembly but died in the Senate.

That brings us to the present, in which Walker has proposed to change the law in his budget. Walker spokesman Cullen Werwie points to a one-sentence explanation in the governor’s budget summary: “Revise state statutes related to rental-purchase agreements to create more choices for Wisconsin consumers.” He declines to elaborate.

The rent-to-own industry seeks to get out from under the thumb of the Wisconsin Consumer Act. Of particular concern is the requirement that it disclose fees in terms of annual interest rate, which can run as high as 300 percent.

“The industry knows that consumers will balk at entering these agreements, if they know how much they interest they’ll be paying,” says Bob Andersen, an attorney with Legal Action of Wisconsin, a federally funded nonprofit law firm that opposes the change.

There is opposition even from within Walker’s Republican Party. State Sen. Glenn Grothman, R-West Bend, recently called rent-to-own “a sleazy industry that preys on the poor by giving them contracts that no mathematically literate person would sign.”

Industry reps insist they’re helping people who can’t afford to buy goods or only need them temporarily. They say it’s not fair to apply the credit disclosure rule because their fees include such services as delivery and because the rental agreements can be terminated by the customer at will, by buying or returning products.

“We’re offering extraordinary flexibility and access,” says Rent-A-Center spokesman Xavier Dominicis. “We are not a credit transaction and that’s what the Wisconsin Consumer Act is designed to regulate.”

Dominicis says the changes will bring Wisconsin into line with 47 other states, which don’t treat rent-to-own as credit transactions, and allow the industry to expand its presence in the Badger State. While estimates vary, the national Association of Progressive Rental Organizations says there are 15 rent-to-own stores in Wisconsin; Colorado, with a similar population, has 95.

If the change goes through, says Lebakken, “I’d likely have more stores and also more business.” He believes the entry of other, competing rent-to-own businesses will benefit his own, through increased advertising and product awareness.

Rent-A-Center currently has no rent-to-own stores in Wisconsin. But if the law were changed, Dominicis says it would open “as many as the market would accommodate.”

Bill Lueders is the Money and Politics Project director at the Wisconsin Center for Investigative Journalism (www.WisconsinWatch.org). The project, a partnership of the Center and MapLight, is supported by the Open Society Institute.

The Center collaborates with Wisconsin Public Radio, Wisconsin Public Television, other news media and the UW-Madison School of Journalism and Mass Communication. All works created, published, posted or disseminated by the Center do not necessarily reflect the views or opinions of UW-Madison or any of its affiliates.

jodi March 21, 2013 at 07:59 PM
This sounds just like the payday loans....
jack ryan March 21, 2013 at 08:05 PM
Another $100,000 in the pockets of your Representatives and its a done deal.
ann March 21, 2013 at 08:36 PM
If a person wants to purchase a product from a business that rents to own, why is it any of your business? Stay out of peoples business you busy body lazy liberals.
Bren March 21, 2013 at 08:41 PM
Having known someone who worked in rent-to-own collections, the biggest challenge was people who through language or educational barriers, thought that they had signed onto monthly payments which turned out to be weekly (e.g., thinking they had a $35/month payment which was actually $140). Yes, we are all responsible for our own financial decisions but there was a perception that these people had been targeted for abuse. Given what we have learned about predatory mortgage-writing practices that contributed in fair part to our continuing economic woes, I'd think twice about giving preferential treatment to rent-to-own companies. Perhaps a re-think on the type of governor who'd sign such a bill is also appropriate.
CowDung March 21, 2013 at 08:45 PM
What exactly is the 'preferential' treatment they are asking for?
Pamela March 21, 2013 at 08:50 PM
Heck yes, people should be able to see ahead of time what they are getting themselves into. Spelled out plain and simple. By offering 300% interest, call these rent to own centers what they truly are. Leeches. They feed off the poor, plain and simple. I like how they always try to pull the focus about them, as being all about filling the need of those who seek TEMPORARY goods. Who are they trying to kid? Who is really seeking just "temporary goods"? How many traveling execs exist, who seek temporary housing and furniture? We all knw the other 99.9% are seeking "permanent" possession of goods that they can't afford at the present. IMO, charging 300% interest should be considered loan sharking and illegal.
CowDung March 21, 2013 at 08:55 PM
How do you define what is a fair interest rate and what is not? It's pretty common to charge higher interest rates for those with less than perfect credit. As long as the consumer is aware of how much he/she is paying each month and how many months they are paying it, I don't see that it's wrong.
ann March 21, 2013 at 09:02 PM
Rent to own industry is no different than the other poverty pimps who profit from the poor. At least with the Rent to own industry they are getting something for their money.
Greg March 21, 2013 at 09:37 PM
Not commenting directly on the issue, I really dislike when things like this are included in a budget. I know that it is done on both a national and state level, but that should change. If this issue is right or correct, it should stand on its own.
Greg March 21, 2013 at 09:46 PM
Pamela, You can open a rent-to-own and do it for less. The business model requires that they charge high interest to cover their risk. I don't defend the businesses, but I do understand their rates.
CowDung March 21, 2013 at 09:50 PM
I can agree with that.
Terry March 22, 2013 at 01:03 AM
Being conservative Ann does not mean that its a "Lord of the Flies" world. There is a place for Government in making sure that business practices remain legal and to some extent, fair. Pyramid business models for example. Should we have nothing to say about those as well?
Mr Lundt March 22, 2013 at 12:30 PM
Gee I thought people were allowed to make bad decisions? From the state that runs a lottery? Be real bunch of hypocrites. Rent to own is a bad idea. So is over- eating, dropping out of high school, and becoming a teen mom. Why don't the do gooders work on that first.
yomammy March 22, 2013 at 12:44 PM
funny, when I didnt have enough money to buy somehting...I didnt.... I ate off of card table and chairs for years. Why. Cause I didnt hvae the $$$ Now, everyone thinks the "deserve" nice things. FYI- you get nice things when you work/work hard to get them. Sorry. Amerika---the only place on earth where the "poor" have 55" plasma tv's
Richard Head March 22, 2013 at 12:54 PM
"Having known someone who worked in rent-to-own collections, the biggest challenge was people who through language or educational barriers, thought that they had signed onto monthly payments which turned out to be weekly (e.g., thinking they had a $35/month payment which was actually $140)." Lots of people are like this - not intelligent enough to contract for themselves. and a slave to their desires. This is why Democracy doesn't work and voting must be limited. Testing and ownership of property needs to be a requirement.
Richard Head March 22, 2013 at 12:56 PM
It's time to stop subsidizing failure and funding these people. Their inability to control their desires becomes the payments of those who can.
Mike March 22, 2013 at 01:34 PM
Let's be honest, the people that patronize these stores can't afford "nicer" possessions, so they go to a place like this where they can still get what they can't afford. People know that they're signing onto to pay for something regularly until they return it or pay it off. So long as the store tells the person how much money they have to pay each week or month or whatever, does the interest rate really matter? It doesn't change the dollar amount.
Hershal Webster March 23, 2013 at 09:20 PM
One question, why does Wisconsin need requirements that 47 other states don't need?

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