A Rent to Own agreement is not a 'debt', in a traditional sense. Rent to Own customers do not incur debt. However, we all make efforts to collect past due rent. This effort often involves contact with a customer by phone and/or mail to arrange payment, or to pick up merchandise.

While a rent to own agreement may be a different class than a retail transaction, most state Rental Purchase Acts are a bit vague when it comes to collection practices. Some refer directly to the federal Fair Debt Collection Act (FDCPA). Most state legislation regarding collections have their roots in the FDCPA. The FDCPA gives a long list of detailed do's and don'ts for the collector. Follow the provisions of the FDCPA and you can be relatively sure of being well within your state law. Other statutes may apply. Check your state statutes as they apply to Rent to Own here.

The FDCPA defines debt as...

...any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.

Speaking to third parties about a customer
The first section of the Act deals with speaking to third parties in an effort to locate your customer. For example; following up on a skip or other failure to return.

When speaking to third parties (ie: personal references) a collector shall

• identify himself, state that he is confirming or correcting location information concerning the consumer, and, only if expressly requested, identify his employer;
• not state that such consumer owes any debt;
• not communicate with any such person more than once unless requested to do so
• not communicate by post card;
• not use any language or symbol on any envelope or in the contents of any communication effected by the mails or telegram that indicates that the debt collector is in the debt collection business or that the communication relates to the collection of a debt

No No's when contacting customers

The Act considers the following to be harassment or abuse...

• The use or threat of use of violence or other criminal means
• The use of obscene or profane language
• Calling before 8am or after 9pm
• Calling a customers employer if it is reasonable to assume the employer prohibits such calls
• Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass

The following are considered false and misleading...

• The false representation or implication that the debt collector is vouched for, bonded by, or affiliated with the United States or any State, including the use of any badge, uniform, or facsimile thereof
• The representation or implication that nonpayment of any debt will result in the arrest or imprisonment
• The threat to take any action that cannot legally be taken or that is not intended to be taken
• The use or distribution of any written communication which simulates or is falsely represented to be a document authorized, issued, or approved by any court, official, or agency of the United States or any State, or which creates a false impression as to its source, authorization, or approval

The following are considered 'unfair' by the Act...

• The acceptance by a debt collector from any person of a check or other payment instrument postdated by more than five days
• Depositing or threatening to deposit any postdated check or other postdated payment instrument prior to the date on such check or instrument
• Communicating with a consumer regarding a debt by post card

As previously stated, most states consider Rent to Own to be a different 'class' of debt and may have separate provisions for fair collection practices. When dealing with collections, it is wise to be conservative. Review all statutes carefully and design a system that keeps you and your employees WELL within all applicable statutes.

This is not meant to be an analysis of the entire Act. We have pulled out a few interesting nuggets. You can print the entire text of the Act here.