SUBJECT: CONSUMER FRAUD - RENT-TO-OWN DISCLOSURES
ATTORNEY GENERAL - CONSUMER PROTECTION SECTION
ADOPTED PURSUANT TO 9 V.S.A. §41b
RULE CF 115
Obligation to Disclose
It shall constitute an unfair and deceptive trade act and
practice in commerce under 9 V.S.A. §2453(a) for any person
engaged in the rent-to-own business to rent, or offer to rent,
merchandise of any kind on a rent-to-own basis without fully and
conspicuously disclosing the terms of the rent-to-own agreement
as required by this rule.
General Disclosure Requirements
(a) All disclosures required by this rule shall be made clearly,
conspicuously, in meaningful sequence, and in accordance with
the further requirements of this section. All numerical amounts
and percentages shall be stated in figures and shall be printed
or legibly handwritten in not less than the equivalent of
(b) Any information not required by this rule may be supplied
with any disclosure required by this rule, but none shall be
stated or placed in such a way as to cause the disclosures as a
whole to be misleading or confusing, or to contradict, obscure
or detract attention from the required disclosures.
(c) If any rent-to-own transaction is renegotiated or
modified in a substantial or material way after the effective
date of this rule, including, but not limited to, any change
that increases the consumer's payments or other obligations, or
diminishes the consumer's rights, such renegotiation or
modification shall be considered a new transaction subject to
the disclosure requirements of this rule.
(d) Unless stated otherwise in a clear and conspicuous
manner, all terms and conditions required to be disclosed by
this rule shall be actually available to all consumers.
Disclosures in Advertising
An advertisement for a rent-to-own transaction that states or
refers to the amount of a payment or the right to acquire
ownership of one or more specific items of merchandise shall
(a) that the transaction advertised is a rent-to-own
(b) that the consumer will not own the property until the
total amount to be paid to acquire ownership is paid in full;
(c) for each specific item advertised, the total amount to be
paid to acquire ownership, which amount shall be labeled "total
CF 115.04 Disclosures in Proximity to Merchandise.
(a) In the same general vicinity as any merchandise overtly
displayed or offered on a rent-to-own basis there shall be
disclosed, with sufficient prominence that a consumer inspecting
the merchandise would be likely to see the disclosure:
(1) that the transaction advertised is a rent-to-own
(2) that the consumer will not own the property until he
total amount to be paid to acquire ownership is paid in full.
(b) In immediate proximity to each specific item of
merchandise overtly displayed or offered on a rent-to-own basis
there shall be disclosed:
(1) the cash price of the item;
(2) the amount of the periodic payment and the total number
of periodic payments required for ownership;
(3) the total amount to be paid to acquire ownership, which
amount shall be labeled "total cost";
(4) the effective annual percentage rate associated with the
item (which may be accompanied by a statement that this rate
applies only if the consumer acquires ownership by making all
(5) a statement as to whether the item is new or used.
115.05 Disclosures in Rent-to-Own Contract.
Prior to consummation of any rent-to-own transaction, the
consumer shall be given a written agreement with the heading, in
no less than 12-point, bold-face type,
IMPORTANT INFORMATION ABOUT RENT-TO-OWN
Do Not Sign This Agreement Before You Read It or If It Contains
Any Blank Spaces.
The agreement must also contain:
(a) The following general disclosures on the front side of
the agreement above the line for the consumer's signature:
(1) the name, address and telephone number of the person
offering the merchandise;
(2) the name and address of the consumer;
(3) the date of the transaction;
(4) a description of the merchandise, including any
applicable model and identification numbers;
(5) whether the merchandise is new or used, and a description
of any damage to the merchandise.
(b) The following cost disclosures, printed and grouped
together as indicated below in no less than 10-point, bold-face
type on the front of the agreement above the line for the
Total initial payment for rent-to-own merchandise (A)$______
Amount & total of regular payments:
$____/week [mo.] x ___ weeks [mos.] (B)$______
Other charges to acquire ownership
Total of "Other Charges" (C)$______
TOTAL OF PAYMENTS TO ACQUIRE
OWNERSHIP (total of A, B & C) (D)$______
CASH PRICE (E)$______
COST OF RENT-TO-OWN SERVICE (D minus E) $______
EFFECTIVE ANNUAL PERCENTAGE RATE (applies only if you acquire
ownership by making
all rental payments) ______%
(c) The following additional disclosures:
(1) that the consumer will not own the merchandise until all
necessary payments have been made;
(2) who is responsible for damage to the merchandise and the
maximum amount of the consumer's liability;
(3) who is responsible for servicing the merchandise;
(4) a description of any manufacturer's or other warranties
on the merchandise, if any, which may be in a separate document
furnished to the consumer;
(5) a description of any insurance required of the consumer,
or a statement that the consumer is not required to purchase
insurance and a description of any insurance purchased by the
(6) an explanation of all options to purchase, including any
early option to purchase;
(7) all deadlines for payments, and the nature and amount of
all charges for late payment, default, pickup of merchandise,
reinstatement and any other contingency;
(8) an explanation of any right to repossess the merchandise;
(9) an explanation of the right of any party to terminate the
agreement, and to reinstate the agreement.
115.06 Disclosure of Age of Merchandise.
Upon the request of a consumer who has entered into a
rent-to-own agreement with respect to used merchandise, the
person offering the merchandise shall, without unreasonable
delay, disclose when the merchandise was purchased new, if known
to said person.
Preservation of Disclosures.
Any person offering merchandise on a rent-to-own basis shall
preserve copies or facsimiles of all disclosures in advertising,
and all rent-to-own agreements containing disclosures required
by this rule, for a period of not less than two years after the
date the disclosures are made. In the case of a radio or
television advertisement, it shall be sufficient to preserve a
copy of the script or story board.
CF 115.08 Definitions.
The following definitions apply to this rule:
(a) "Advertising" means a commercial message in any medium
that directly or indirectly promotes or assists a rent-to-own
transaction. Advertising includes, but is not limited to,
newspapers, magazines, flyers, mailings, radio, and television.
Advertising does not include such commercial messages to the
extent that they are displayed exclusively inside the premises
where the merchandise being offered is located.
(b) "Cash price" means:
(1) the bona fide retail price at which the person offering
merchandise on a rent-to-own basis would sell the item in
question to the consumer for cash on the date of the rent-to-own
(2) if the item is not offered for sale for cash, then the
estimated average cash retail price of the item or a similar
item in the market area.
(c) "Clear and conspicuous" means that the statement or term
being disclosed is of such size, color, contrast and/or
audibility, and is so presented, as to be readily apparent to
the person to whom it is being disclosed.
(d) "Effective annual percentage rate" means the annual
percentage rate of the merchandise subject to a rent-to-own
transaction, calculated in the same manner as an annual
percentage rate under section 107 of the federal Truth in
Lending Act, 15 U.S.C. §1606, except that (a) in place of the
finance charge, there shall be substituted the difference
between the total of payments to acquire ownership and the cash
price, less any amounts specifically excluded from the finance
charge under the Truth in Lending Act; (b) in place of the
amount financed, there shall be substituted the cash price less
any downpayment; and (c) it shall be assumed that the consumer
will pay the total of payments to acquire ownership in the
(e) "Rent-to-own" refers to a transaction in which a person
agrees to make merchandise available for the use of a consumer
for personal, family, or household purposes, for an initial
period of four months or less, where the agreement is renewable
with each payment after the initial period, and where the
consumer is permitted to become the owner of the property.
115.09 Exemption for Certain Musical Instruments.
This rule shall not apply to any transaction to the extent that
it relates to a musical instrument that is intended to be used
in whole or in part in an elementary or secondary school.
CF 115.10 Effective Date.
This rule shall take effect on January 1, 1997.