What's happening
This bill requires rental-purchase agreement disclosures to be in twelve-point type and excludes weekends and federal holidays from late fee calculation periods.
Why it matters
Improved transparency and readability. By requiring all rental-purchase agreement disclosures to be in at least twelve-point bold type, the bill makes key contract terms easier for consumers to see and understand, reducing the risk of customers missing important information due to fine print.
Fairer late fee calculations. Excluding weekends and federally-recognized holidays from the grace periods for late payments means consumers won’t be penalized for payment delays that occur when the postal service is unavailable, which could prevent unfair or unexpected late charges.
Enhanced consumer protections. The changes help ensure that late fees are only charged when consumers have had a fair opportunity to make payments, addressing common complaints about being penalized due to circumstances outside their control, such as mail delays over holidays.
Impact on business practices. Merchants will need to update their agreement forms and payment processing systems to comply with the new requirements, potentially increasing administrative costs but also reducing disputes with customers over late fees and disclosure clarity.
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Who cares
Headline styles
Tighten Rental Agreement Rules
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to judiciary
- Referred to judiciary
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
4606
2017-2018 Regular Sessions
IN SENATE
February 21, 2017
Introduced by Sen. COMRIE -- read twice and ordered printed, and when printed to be committed to the Committee on Judiciary
AN ACT to amend the personal property law, in relation to rental-purchase agreement forms
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subdivision 2, paragraph (e) of subdivision 3, and subdivision 4 of section 501 of the personal property law, as added by chapter 792 of the laws of 1986, are amended to read as follows:
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] twelve-point bold-faced type.
(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[,]; provided, however, that neither Saturdays, Sundays, nor federally-recognized holidays during which the United States postal service is not open to the public shall count toward the three or seven day totals, 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.
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 agree-
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00319-01-7
S. 4606 2
ments 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; provided, however, that neither Saturdays, Sundays, nor federally-recognized holidays during which the United States postal service is not open to the public shall count toward the three or seven day totals. 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.
§ 2. This act shall take effect on the ninetieth day after it shall have become a law and shall apply to all agreements entered into or offered on or after such date.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the personal property law, in relation to rental-purchase agreement forms
Purpose
To improve protections afforded to consumers in rental purchase agreements.
Summary of provisions
Section 1 titles this act as the "rent to own fair practices act."
Section 2 amends section 501 to increase font size on disclosures and removes weekends and holidays from counting toward nonpayment time frame.
Justification
In 2010, the state of New York amended the laws relating to rental purchase agreements in an effort to provide for reasonable price controls in order to ensure that consumers pay reasonable prices, while allowing the rent-to-own industry to continue to offer its unique product in New York state. Unfortunately, the changes failed to fully correct the definition.
In his approval message then-Governor Paterson warned that the "the pricing provisions in the bill will not provide an adequate shield against the predatory practices that they purportedly seek to address." Specifically he was concerned that "the price ceiling ... is woefully inadequate, as the legislation allows for sizeable markups above the cost of acquisition, and will permit merchants to demand payments many times the value of the item rented before equity passes to the consumer." With the passage of time this statement has been proven correct.
As rental purchase agreements do not transfer ownership until the final payment of all payments in the agreement this means that 75% of the people who enter a rental purchase agreement end the agreement having paid large sums of money toward a product that they do not possess.
A study by Wisconsin PIRG of the products of an Illinois merchant found that consumers are being asked to rent those obsolete technologies and pay a price 300% or more than the original market value of the product.
Wisconsin PIRG also found that buying the product with a credit card with an 18% APR and paying it off over 18-24 months would be less expensive than a rent a center deal. According to Empire Justice Center, this type of markup happens under New York law as well.
Indeed, consumers are entering into contracts that provide for price mark ups that are three times the retail price found in a big box retailer. This high price results in a very strange economic outcome for a contracts relating to goods, a 75% failure rate. According to one of the largest rent to own merchants in its public disclosure documents required on federal securities law, only 25% of the rental purchase agreements that the company rent to own enters is completed to term.
Legislative history
2015-16: S.5476/A.10676: Referred to Judiciary.
Fiscal implications
None to the State.
Effective date
This act shall take effect on the ninetieth day after it shall become law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.