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Current as of 07-29-02
Please check with your legislature to verify
New York State Consolidated Laws

ARTICLE 11
                         RENTAL PURCHASE AGREEMENTS
Section 500. Definitions.
        501. Form.
        502. Availability.
        503. Total cost.
        504. Early purchase option.
        505. Advertisement.
        506. Exempted transactions.
        507. Enforcement.

 S 500. Definitions. For the purposes of this article:
1.  "Advertisement"  means a commercial message in any medium that directly
or indirectly promotes or assists a rental-purchase agreement.

2. "Cash price" means the price at which a merchant, in the ordinary course
of business, would offer to sell the merchandise to the consumer  for  cash
on the date of the rental-purchase agreement.
3.  "Consumer"  means  an  individual  who leases personal property under a
rental-purchase agreement.

4.  "Merchandise"  means  the  personal  property  that is the subject of a
rental-purchase agreement.

5.  "Merchant"  means  a  person  who,  in the ordinary course of business,
regularly leases, offers to lease, or acts as an agent for the  leasing  of
merchandise under a rental-purchase agreement.

6.   "Rental-purchase   agreement"  means  an  agreement  for  the  use  of
merchandise by a consumer for personal, family, or household purposes,  for
an  initial  period  of  four  months  or less, that is renewable with each
payment after the initial period and that permits the lessee to become  the
owner  of the property. An agreement that complies with this article is not
a retail installment sales contract, agreement or obligation as defined  in
this  chapter or a security interest as defined in subdivision thirty-seven
of section 1-201 of the uniform commercial code.

 S  501.  Form
1.  A  rental-purchase  agreement must be written in plain
English and in any other language used by the merchant in an  advertisement
related  to the rental-purchase agreement. Numerical amounts must be stated
in figures.

2.  Disclosures  required  by this section must be printed or typed in each
rental-purchase agreement in a size equal to at least ten-point  bold-faced
type.

3. A rental-purchase agreement may not contain a provision:
(a) requiring a confession of judgment;
(b)  authorizing  a merchant or an agent of the merchant to commit a breach
of the peace in the repossession of merchandise;
(c) waiving a defense, counterclaim, or right the consumer may have against
the merchant or an agent of the merchant;
(d)  requiring  the  purchase  of  insurance from the merchant to cover the
merchandise;
(e)  requiring  the  payment of a late charge or reinstatement fee unless a
periodic payment is delinquent for more than three days for agreements that
are  renewed  on  week by week terms and seven days for agreements that are
renewed on month by month terms, and the charge or fee is in an amount  not
more  than  the  greater  of  ten percent of the delinquent amount or three
dollars for agreements that are renewed on week by week terms and not  more
than  the  greater  of ten percent of the delinquent amount or five dollars
for agreements that are renewed on month by month terms. In the event  that
multiple  items  are  leased  to  a  consumer  pursuant  to  more  than one
rental-purchase agreement, any late fee imposed pursuant  to  this  section
shall not exceed ten percent of the total of the periodic payments that are
delinquent.
(f)  requiring  a payment in addition to regular periodic payments in order
to acquire ownership of the  merchandise  or  requiring  periodic  payments
totalling  more  than the cost to acquire ownership, as provided in section
five hundred three of this article.

4.  Only  one  late  charge  or  reinstatement  fee  may  be assessed for a
delinquent periodic payment  regardless  of  the  period  during  which  it
remains  in  default. No merchant shall assess a late charge for a periodic
payment made in full on its due date or within three  days  for  agreements
that  are  renewed  on week by week terms or seven days for agreements that
are  renewed  on  month  by  month  terms  when  the  only  delinquency  is
attributable  to  late  fees  assessed on earlier periodic payments.   With
respect to payments accepted by mail or by store deposit box,  no  merchant
shall  assess  a  late  fee  for payments which are post-marked or received
before the expiration of the applicable delinquency periods.

5. A rental-purchase agreement must provide that:

(a)  a  charge in addition to periodic payments, if any, must be reasonably
related to the cost of a service performed;
(b)  a  consumer  who  fails  to  make  a  timely  payment may reinstate an
agreement without losing rights or options previously acquired and  without
incurring  any charges, other than rental charges for the time he possessed
the property, except for those charges provided for  in  paragraph  (e)  of
subdivision three of section five hundred one of this article by making the
required payment before the later of seven days or half the number of  days
in a regular payment period after the due date of the payment; and
(c)  if  the  merchandise  is  returned  or  voluntarily surrendered by the
consumer, other  than  through  judicial  process,  during  the  applicable
reinstatement  period  set  forth in paragraph (b) of this subdivision, the
consumer`s right to reinstate the agreement as set forth in  paragraph  (b)
of  this subdivision shall be extended for a period of not less than thirty
days after the date of the return of the merchandise.  If  a  consumer  has
paid  one-half  the  total  of payments necessary to acquire ownership, the
right to reinstate the agreement shall be extended for a period of not less
than  sixty  days  after  the  date  of the return of the merchandise. If a
consumer has paid three-quarters of the  total  of  payments  necessary  to
acquire  ownership,  the consumer`s rights to reinstate the agreement shall
be extended for a period of not less than one hundred eighty days after the
return of the merchandise.

6.  This  section  does not prevent a merchant from attempting to repossess
merchandise during the reinstatement period, provided in paragraph  (b)  of
subdivision  five  of  this  section.  The consumer`s right to reinstate an
agreement does not expire because of such a repossession. On reinstatement,
the  merchant  shall  provide  the  consumer  with  the same merchandise or
substitute merchandise of comparable quality and condition.  If  substitute
merchandise  is  provided, the merchant shall provide the consumer with the
disclosures required in subdivision seven of this section.

7.   A  rental-purchase  agreement  must  disclose  in  a  conspicuous  and
informative fashion:

(a) a description of the merchandise provided;
(b) whether the merchandise is new or used, provided however, that it shall
not be a violation of this section to indicate that the merchandise is used
if it is actually new;
(c) the amount and timing of rental-purchase payments;
(d)  the total number of payments and the total amount that must be paid to
acquire ownership of the merchandise,  which  amount  shall  be  explicitly
labelled "total cost";
(e)  the  amount and purpose of any payment, charge, or fee, in addition to
the regular periodic payments;
(f)  whether  the  consumer is liable for loss or damage to the merchandise
and, if so, the maximum amount for which the consumer may be liable,  which
in  the  case  of  loss  shall  in  no  event be greater than the price the
consumer would have paid to exercise an early purchase option  pursuant  to
this  article.  In the case of damage to the merchandise, other than normal
wear and tear the consumer shall be liable for the lesser of the price  the
consumer  would  have paid to exercise an early purchase option pursuant to
this article or the cost of the repair as determined by the merchant;
(g) that the consumer does not acquire ownership rights unless the consumer
has complied with the ownership terms of the agreement;
(h) the cash price of the merchandise; and
(i)  a  statement  of the conditions under which a consumer may exercise an
early purchase  option  and  under  which  the  merchant  or  consumer  may
otherwise terminate the lease.

S 502. Availability.
Every rental purchase agreement shall indicate that a
consumer at his or her written request  shall  be  permitted  to  review  a
completed  rental-purchase  agreement  for up to twenty-four hours prior to
signing.

S  503.  Total  cost.
No merchant shall offer a rental-purchase agreement
requiring periodic payments totalling more than an amount, fifty percent of
which  equals the cash price of merchandise. When periodic payments made by
a consumer total an amount, fifty percent of which equals the cash price of
the  merchandise,  the  consumer shall acquire ownership of the merchandise
and the rental-purchase agreement shall terminate.

S  504. Early purchase option
At any time, after the initial payment, the
consumer may acquire ownership of the property by tendering an amount equal
to  the  cash  price of the merchandise minus fifty percent of all previous
rental-purchase payments made.

 S  505. Advertisement.
1. An advertisement for a rental-purchase agreement
that refers to or states the amount of a payment or the  right  to  acquire
ownership  of any one particular item under the agreement shall clearly and
conspicuously state:

(a) that the transaction advertised is a rental-purchase agreement;
(b) the total number of payments and the total amount to be paid to acquire
ownership, which amount shall be explicitly labeled "total cost"; and
(c)  the  circumstances  under  which  the  consumer  can acquire ownership
rights.

2. An advertisement for personal property available through rental-purchase
agreements that refers to more than one appliance or  particular  item  and
includes   information   on   periodic  payment  amounts  shall  include  a
representative item available at that amount and shall conspicuously state:

(a) that the merchandise offered may be new or used;
(b) that transaction advertised is a rental-purchase agreement; and
(c) that the consumer does not acquire ownership rights unless the consumer
complies with the ownership terms of the agreement.

3.  Every item displayed or offered under a rental-purchase agreement shall
have clearly and conspicuously indicated in arabic numerals, so  as  to  be
readable  and  understandable  by  visual inspection, each of the following
affixed to the item:

(a) the cash price of the merchandise;
(b)  the  amount  of  the periodic payment and the total number of periodic
payments required for ownership; and
(c) the total amount that must be paid to acquire ownership of merchandise,
which amount shall be explicitly labeled total cost.

 S 506. Exempted transactions.
This article does not apply to:

1.  Agreements  for the rental of merchandise in which the person who rents
the merchandise has no legal right to become the owner of the  property  at
the end of the rental period;

2. A lease of a safe deposit box; and

3. Retail installment sales agreements, contracts, or obligations.

 S  507.  Enforcement. 
1.  A  consumer  who  has  suffered a loss due to a
violation of this article by a merchant is entitled  to  recover  from  the
merchant actual damages, reasonable attorney`s fees and court costs.

2.  Whenever  a  court  finds  that  a  consumer has been injured because a
merchant acted in bad faith in its  performance  under  this  article,  the
merchant shall be subject to a penalty of not less than one hundred dollars
nor more than one thousand dollars as determined by the court.

3.  A violation of this article is a deceptive trade practice under section
three hundred forty-nine of the general business law.

4.  Whenever  there shall be a violation of this article an application may
be made by the attorney general in the name of the people of the  state  of
New  York to a court or justice having jurisdiction to issue an injunction,
and upon notice to the defendant of not less than five days, to enjoin  and
restrain  the continuance of such violations; and if it shall appear to the
satisfaction of the court or justice, that  the  defendant  has,  in  fact,
violated  this section an injunction may be issued by such court or justice
enjoining and restraining any further violation,  without  requiring  proof
that  any person has, in fact, been injured or damaged thereby. In any such
proceeding, the court may  make  allowances  to  the  attorney  general  as
provided  in  paragraph  six  of  subdivision  (a)  of section eighty-three
hundred three of the civil practice law and rules, and direct  restitution.
Whenever  the  court  shall  determine that a violation of this article has
occurred, the court may impose a  civil  penalty  of  not  more  than  five
hundred  dollars  for  each violation. In connection with any such proposed
application the attorney general is authorized to take  proof  and  make  a
determination  of  the  relevant facts and to issue subpoenas in accordance
with the civil practice law and rules.

5.  Nothing  in  this article shall be construed so as to nullify or impair
any right or rights which a consumer may have against a merchant at  common
law, by statute, or otherwise.

6. A merchant or assignee may not be held liable in an action brought under
this article for a violation of this article  that  was  unintentional  and
resulted from a bona fide or clerical error notwithstanding the maintenance
of procedures reasonably adopted to avoid any such error.

7.  An  action shall not be brought under this article more than four years
after the occurrence of the act, method or practice which is the subject of
the  action  or  more than one year after the last payment in a transaction
involving the method, act or practice which is the subject of  the  action,
whichever is later.