Podcast; Interviews With Seven Key Rent to Own Industry Suppliers

The Nationwide RentDirect Prime Time Buying Show began Monday. RTO Online recorded podcasts with seven key suppliers Monday; Al Benson, Central File Marketing, Brown Councill, Baseline Licensing Group, Dennis Rosen, Florida State Games, Ellison Crider, RSSS, Kevin Leary, RIMCO, Mike Bertolani, SED International and Tim Moore, DSI. Listen to all of today's podcasts by clicking play next to the selected vendor. See a complete photo gallery of Monday's tradeshow here (108 pics).

Nationwide is reporting record attendance at the PrimeTime show. "We have 35 more vendors here than we've ever had before," said Nationwide President Ed Kelly. "We also broke the previous record for buyer attendance by over 300 people." Attendance is up 15% from February of this year.

Kelly is particularly excited about the profit opportunities being generated by innovations in appliance and electronics categories. "Front loading laundry and other innovations are making appliances profitable again."

Kelly said market penetration of flat panel TVs has already reached the magic 17% threshold. Historically, he explained, once a new technology reaches 17% penetration, it can grow to 40-45% within two or three years.

In an Rent to Own legal update held separately, Ed Winn, General Counsel for the Association of Progressive Rental Organizations (APRO), said he has reversed previous guidance on contacting references for collections; the long-shunned practice is now acceptable as long as previous consent is obtained. Winn stated that rental dealers should now feel comfortable calling references to discuss late payments or even skips/stolens, as long as the customer has given the store approval to discuss their default on an agreement with their listed references.

This change in guidance means rental dealers can now use contact information for references to help track down merchandise they might otherwise have no chance of getting back. As expected, there are still rules to follow. According to Winn, “In addition to the fact that you must get the customer’s approval when they sign the agreement, if a customer calls and requests that you stop calling their mother or landlord or employer, then you must stop calling.”

Winn also recommended that all rental dealers add a clause to rental agreements requiring that any disputes be handled through mandatory arbitration rather than through the court system. Mandatory arbitration clauses have long been a staple of commercial contracts, and the United States Supreme Court has twice blessed the use of mandatory arbitration despite the fact that customers, in essence, waive their Constitutional right to have their day in court when they agree to such an arrangement. Winn said the other major benefit to a mandatory arbitration requirement is that, in most states, class action law suits are not permissible.

Winn recommends that rental dealers perform an annual legal checkup of their store paperwork to insure compliance with all applicable laws. Winn says that a 25% failure rate is common when he reviews agreements sent to him by rental dealers. The most common errors include blank sections, missing signatures and notes handwritten in the margins by store employees to the customer. By appointing a person within your company as the head of legal compliance, Winn hopes more dealers can catch the small problems before they turn into something bigger.

Winn also reviewed recent developments within the legislature with regard to rent-to-own, and also revisited the basic elements of the Perez case in New Jersey that is likely, he says, to end with a multi-million dollar settlement being paid by Rent-A-Center.

“This customer had five agreements opened over eight months. The value of those agreements was $18,000 and the woman’s weekly rental payments were $172. When you load up somebody that heavy it is a dangerous situation,” observed Winn. In the Perez case, Rent A Center sued Perez for non-payment causing the customer to counter sue. According to Winn, “Suing customers is risky business.” Winn recommends that one person in your company, preferably the owner, be the only person with the power to file lawsuits against customers.

“I’m not saying don’t ever sue anybody, but be aware it is one of those places in our business where risk resides. And you, as an owner, should not let an assistant manager be in charge of filing lawsuits,” said Winn.

Other situations facing the industry include a recent development in Buffalo, New York. There, the City Council is considering regulating the rental business, thanks to publicity generated in the wake of a study published by the Brookings Institute called “The Poor Pay More”. There is also a bill pending in New York State to limit the cash price of an item to a comparable retail price plus just 25%, regardless of the length of the agreement. Winn commented on Senator Chuck Schumer’s recent plan to introduce the RTO Consumer Protection Act and push for federal legislation that could essentially outlaw the rental industry as it exists today.

Winn expressed confidence that these movements against the industry will fade away, but reminded rental dealers to be careful their business practices are well within the state statues for their area.

The Nationwide RentDirect show and RTO Online’s exclusive coverage continues tomorrow from Las Vegas.

RTO Online is the official channel for Rent-to-Own Industry News and the only independent source of news for the rent-to-own, rental-purchase, lease-purchase trade. RTO Online (Rent to Own Online) represents the choice of the entire RTO Industry for trusted information, as it happens.

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