Reminder 4-25-06

AB 592 was authored and sponsored by the left wing troika of Gary Pretlow (D-87), Jeffrion Aubry (D-35) and Audrey Pheffer (D-23).

The New York Assembly Judiciary Committee meets Tuesday, April 25, 2006 at 10:00 AM EST to hear testimony on Assembly Bill 592, a bill that, if passed, would define "lease charge" as the equivalent of interest and legislate the cash price of rental merchandise. This is the second attempt at approval. AB 592 died in committee in January, 2005.

AB 592 was authored and sponsored by the left wing troika of Gary Pretlow (D-87), Jeffrion Aubry (D-35) and Audrey Pheffer (D-23). The group cites as justification an irrelevant, 11 year old PIRG survey of questionable accuracy.

Other AB 592 provisions:

* Define the "lease charge" as the equivalent of the financing charge,
or interest, which is to be paid by the consumer as the cost of
entering into a rental-purchase agreement;

* Exempt Saturdays, Sundays, and federally recognized holidays from
the three day and seven day periods used to determine late charges or
reinstatement fees under these agreements;

* Prohibit lease charges in excess of 25%;

Provide notification upon repossession of the consumers right to
reinstatement;

* Clarify the disclosure required under a rental-purchase agreement,
to be closer to those required under federal Regulations M; and

* Require clear disclosure of the lease charge.

Full bill text.

592

2005-2006 Regular Sessions

I N A S S E M B L Y

January 18, 2005
___________

Introduced by M. of A. PRETLOW, DESTITO, AUBRY, PHEFFER -- read once and
referred to the Committee on Judiciary

AN ACT to amend the personal property law, in relation to providing
consumers with greater protection in rental purchase agreements and to
repeal certain provisions of such law relating thereto

THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

1 Section 1. Subdivisions 2 and 6 of section 500 of the personal proper-
2 ty law, as added by chapter 792 of the laws of 1986, are amended and two
3 new subdivisions 7 and 8 are added to read as follows:
4 2. "Cash price" means the AVERAGE price at which {a merchant, in the
5 ordinary course of business, would offer to sell the merchandise to the
6 consumer for cash on} THE MERCHANDISE OR MERCHANDISE OF SUBSTANTIALLY
7 THE SAME KIND, QUALITY OR QUANTITY, IS OFFERED FOR SALE BY A REASONABLE
8 NUMBER OF MERCHANTS IN THE TRADE AREA DURING THE SIXTY DAYS PRIOR TO the
9 date of the rental-purchase agreement.
10 6. "Rental-purchase agreement" means an agreement for the use of
11 merchandise by a consumer for PRIMARILY personal, family, or household
12 purposes, for an initial period of four months or less, that is renewa-
13 ble with each payment after the initial period and that permits the
14 {lessee} CONSUMER to become the owner of the property, WHETHER OR NOT
15 THE CONSUMER IS OBLIGATED TO COMPLETE THE PAYMENTS ON THE AGREEMENT. An
16 agreement that complies with this article is not a retail installment
17 sales contract, agreement or obligation as defined in this chapter or a
18 security interest as defined in subdivision thirty-seven of section
19 1-201 of the uniform commercial code.
20 7. "LEASE CHARGE" MEANS THE CHARGE TO BE PAID BY THE CONSUMER FOR THE
21 PRIVILEGE OF ENTERING INTO A RENTAL-PURCHASE AGREEMENT OVER THE MAXIMUM
22 PERIOD THE AGREEMENT COULD RUN UNDER ITS TERMS, INCLUDING ALL RENEWALS
23 OR EXTENSIONS, LESS THE CASH PRICE. THE TERM DOES NOT INCLUDE ANY AMOUNT
24 FOR WHICH THE CONSUMER MAY BE LIABLE FOR LOSS OR DAMAGE, ANY LATE CHARG-

EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
{ } is old law to be omitted.
LBD00406-03-5

A. 592 2

1 ES, REINSTATEMENT FEES OR EARLY TERMINATION FEES OR OTHER FEES OR CHARG-
2 ES FOR INSTALLATION, DELIVERY, SERVICE, REPAIR OR OTHER SERVICES INCI-
3 DENTAL TO THE AGREEMENT. SUCH CHARGE SHALL BE CLEARLY PRESENTED AS A
4 PERCENTAGE OF THE CASH PRICE.
5 8. "TRADE AREA" MEANS THE GEOGRAPHICAL AREA IN WHICH THE MERCHANT
6 SOLICITS OR MAKES RENTAL-PURCHASE AGREEMENTS.
7 S 2. Paragraphs (e) and (f) of subdivision 3 and subdivisions 4, 6 and
8 7 of section 501 of the personal property law, as added by chapter 792
9 of the laws of 1986, are amended and a new paragraph (g) is added to
10 subdivision 3 to read as follows:
11 (e) requiring the payment of a late charge or reinstatement fee unless
12 a periodic payment is delinquent for more than three days for agreements
13 that are renewed on week by week terms and seven days for agreements
14 that are renewed on month by month terms, PROVIDED HOWEVER, THAT NEITHER
15 SATURDAYS, SUNDAYS NOR FEDERALLY-RECOGNIZED HOLIDAYS DURING WHICH THE
16 UNITED STATES POSTAL SERVICE IS NOT OPEN TO THE PUBLIC SHALL COUNT
17 TOWARD THE THREE OR SEVEN DAY TOTALS, and the charge or fee is in an
18 amount not more than the greater of ten percent of the delinquent amount
19 or three dollars for agreements that are renewed on week by week terms
20 and not more than the greater of ten percent of the delinquent amount or
21 five dollars for agreements that are renewed on month by month terms. In
22 the event that multiple items are leased to a consumer pursuant to more
23 than one rental-purchase agreement, any late fee imposed pursuant to
24 this section shall not exceed ten percent of the total of the periodic
25 payments that are delinquent{.};
26 (f) requiring a payment in addition to regular periodic payments in
27 order to acquire ownership of the merchandise or requiring periodic
28 payments totalling more than the cost to acquire ownership, as provided
29 in section five hundred three of this article{.}; AND
30 (G) REQUIRING THE PAYMENT OF A LEASE CHARGE IN EXCESS OF TWENTY-FIVE
31 PERCENT OF THE CASH PRICE PER ANNUM.
32 4. Only one late charge or reinstatement fee may be assessed for a
33 delinquent periodic payment regardless of the period during which it
34 remains in default. No merchant shall assess a late charge for a period-
35 ic payment made in full on its due date or within three days for agree-
36 ments that are renewed on week by week terms or seven days for agree-
37 ments that are renewed on month by month terms when the only delinquency
38 is attributable to late fees assessed on earlier periodic payments,
39 PROVIDED HOWEVER, THAT NEITHER SATURDAYS, SUNDAYS NOR FEDERALLY-RECOG-
40 NIZED HOLIDAYS DURING WHICH THE UNITED STATES POSTAL SERVICE IS NOT OPEN
41 TO THE PUBLIC SHALL COUNT TOWARD THE THREE OR SEVEN DAY TOTALS. With
42 respect to payments accepted by mail or by store deposit box, no
43 merchant shall assess a late fee for payments which are post-marked or
44 received before the expiration of the applicable delinquency periods.
45 6. This section does not prevent a merchant from attempting to repos-
46 sess merchandise during the reinstatement period, provided in paragraph
47 (b) of subdivision five of this section. The consumer`s right to rein-
48 state an agreement does not expire because of such a repossession. UPON
49 REPOSSESSION, THE MERCHANT SHALL PROVIDE WRITTEN NOTICE TO THE CONSUMER
50 OF THE CONSUMER`S RIGHT TO REINSTATE THE AGREEMENT PURSUANT TO PARAGRAPH
51 (B) OF SUBDIVISION FIVE OF THIS SECTION AND THE FINAL DATE FOR PAYMENTS
52 NECESSARY FOR REINSTATEMENT PURSUANT TO SUCH PARAGRAPH ALONG WITH THE
53 APPROPRIATE AMOUNT DUE. On reinstatement, the merchant shall provide the
54 consumer with the same merchandise or substitute merchandise of compara-
55 ble quality and condition. If substitute merchandise is provided, the

A. 592 3

1 merchant shall provide the consumer with the disclosures required in
2 subdivision seven of this section.
3 7. A rental-purchase agreement must disclose in a conspicuous and
4 informative fashion:
5 (a) a BRIEF description of the merchandise provided SUFFICIENT TO
6 IDENTIFY THE MERCHANDISE TO THE CONSUMER AND THE MERCHANT, INCLUDING AN
7 IDENTIFICATION NUMBER, IF APPLICABLE;
8 (b) whether the merchandise is new or used, provided however, that it
9 shall not be a violation of this section to indicate that the merchan-
10 dise is used if it is actually new;
11 (c) {the amount and timing of rental-purchase payments} THE TOTAL
12 AMOUNT TO BE PAID BY THE CONSUMER PRIOR TO OR AT THE CONSUMMATION OF THE
13 RENTAL-PURCHASE AGREEMENT, USING THE TERM "AMOUNT DUE AT CONTRACT SIGN-
14 ING." THE MERCHANT SHALL ITEMIZE EACH COMPONENT OF THE TOTAL AMOUNT BY
15 TYPE AND AMOUNT, INCLUDING ANY REFUNDABLE SECURITY DEPOSIT, ADVANCE
16 PERIODIC PAYMENT, AND AMOUNT OF ANY DOWN PAYMENT;
17 (d) the total number of payments and the total amount that must be
18 paid to acquire ownership of the merchandise, which amount shall be
19 explicitly labelled "total cost". THIS AMOUNT IS THE SUM OF THE TOTAL
20 AMOUNT DUE AT SIGNING PROVIDED PURSUANT TO PARAGRAPH (C) OF THIS SUBDI-
21 VISION (LESS ANY REFUNDABLE AMOUNTS), THE TOTAL AMOUNT OF PERIODIC
22 PAYMENTS (LESS ANY PORTION OF THE PERIODIC PAYMENT PAID AT THE TIME THE
23 AGREEMENT IS SIGNED), AND OTHER CHARGES OR FEES DISCLOSED AND ASSESSED
24 PURSUANT TO PARAGRAPH (F) OF THIS SUBDIVISION;
25 (e) the amount and purpose of any payment, charge, or fee, INCLUDING
26 THE LEASE CHARGE, in addition to the regular periodic payments;
27 (f) whether the consumer is liable for loss or damage to the merchan-
28 dise and, if so, the maximum amount for which the consumer may be
29 liable, which in the case of loss shall in no event be greater than the
30 price the consumer would have paid to exercise an early purchase option
31 pursuant to this article. In the case of damage to the merchandise,
32 other than normal wear and tear the consumer shall be liable for the
33 lesser of: (1) the price the consumer would have paid to exercise an
34 early purchase option pursuant to this article or (2) the ACTUAL cost of
35 the repair {as determined by the merchant} REDUCED BY ALL DISCOUNTS,
36 PAID BY THE MERCHANT OR (3) A TWO ITEMIZED ESTIMATE OF THE COST OF SUCH
37 REPAIR;
38 (g) that the consumer does not acquire ownership rights unless the
39 consumer has complied with the ownership terms of the agreement;
40 (h) the cash price of the merchandise; {and}
41 (i) a statement of the conditions under which a consumer may exercise
42 an early purchase option and under which the merchant or consumer may
43 otherwise terminate the {lease} RENTAL PURCHASE AGREEMENT;
44 (J) THE NUMBER, AMOUNT, AND DUE DATES OR PERIODS OF PAYMENTS SCHEDULED
45 UNDER THE RENTAL-PURCHASE AGREEMENT, AND THE TOTAL DOLLAR AMOUNT OF THE
46 PERIODIC PAYMENTS;
47 (K) THE TERM OF THE RENTAL-PURCHASE AGREEMENT WITH A DESCRIPTION SUCH
48 AS "THE NUMBER OF PERIODS OF PAYMENTS IN YOUR AGREEMENT BEFORE YOU OWN
49 THE MERCHANDISE";
50 (L) A STATEMENT SPECIFYING WHETHER THE CONSUMER OR THE MERCHANT IS
51 RESPONSIBLE FOR MAINTAINING OR SERVICING THE MERCHANDISE, TOGETHER WITH
52 A BRIEF DESCRIPTION OF SUCH RESPONSIBILITY;
53 (M) A STATEMENT OF THE MERCHANT`S STANDARDS FOR WEAR AND USE (IF ANY),
54 WHICH MUST BE REASONABLE; AND

A. 592 4

1 (N) A STATEMENT IDENTIFYING ALL EXPRESS WARRANTIES AND GUARANTEES FROM
2 THE MANUFACTURER OR MERCHANT WITH RESPECT TO THE MERCHANDISE THAT APPLY
3 TO THE CONSUMER.
4 S 3. Section 502 of the personal property law, as added by chapter 792
5 of the laws of 1986, is amended to read as follows:
6 S 502. Availability. Every rental purchase agreement shall indicate
7 that a consumer at his or her written request shall be permitted to
8 review a completed rental-purchase agreement for up to {twenty-four}
9 SEVENTY-TWO hours prior to signing.
10 S 4. Section 504 of the personal property law, as added by chapter 792
11 of the laws of 1986, is amended to read as follows:
12 S 504. Early purchase option. At any time, after the initial payment,
13 the consumer may acquire ownership of the property by tendering an
14 amount equal to the cash price of the merchandise minus {fifty percent
15 of} all previous {rental-purchase} payments made UNDER THE RENTAL-PUR-
16 CHASE AGREEMENT, NOT INCLUDING THE PORTION OF ANY SUCH PAYMENTS ATTRIB-
17 UTABLE TO THE LEASE CHARGE OR OTHER CHARGES FOR ANY AMOUNT FOR WHICH THE
18 CONSUMER MAY BE LIABLE FOR LOSS OR DAMAGE, ANY LATE CHARGES, REIN-
19 STATEMENT FEES OR EARLY TERMINATION FEES OR OTHER FEES OR CHARGES FOR
20 INSTALLATION, DELIVERY, SERVICE, REPAIR OR OTHER SERVICES INCIDENTAL TO
21 THE AGREEMENT.
22 S 5. Subdivisions 1 and 3 of section 505 of the personal property law,
23 as added by chapter 792 of the laws of 1986, are amended to read as
24 follows:
25 1. An advertisement for a rental-purchase agreement {that refers to or
26 states the amount of a payment or the right to acquire ownership of any
27 one particular item under the agreement} shall clearly and conspicuously
28 state:
29 (a) that the transaction advertised is a rental-purchase agreement;
30 (b) the total number of payments and the total amount to be paid to
31 acquire ownership, which amount shall be explicitly labeled "total
32 cost"; {and}
33 (c) the circumstances under which the consumer can acquire ownership
34 rights;
35 (D) THAT THE MERCHANDISE OFFERED MAY BE NEW OR USED; AND
36 (E) THE LEASE CHARGE.
37 3. Every item displayed or offered under a rental-purchase agreement
38 shall have clearly and conspicuously indicated in arabic numerals, so as
39 to be readable and understandable by visual inspection, each of the
40 following affixed to the item:
41 (a) the cash price of the merchandise;
42 (b) the amount of the periodic payment and the total number of period-
43 ic payments required for ownership; {and}
44 (c) the total amount that must be paid to acquire ownership of
45 merchandise, which amount shall be explicitly labeled total cost;
46 (D) THE LEASE CHARGE.
47 S 6. Subdivision 2 of section 505 of the personal property law is
48 REPEALED.
49 S 7. This act shall take effect on the ninetieth day after it shall
50 have become a law and shall apply to all agreements entered into or
51 offered on or after such date.