Section 115.01 Obligation to Disclose
It shall constitute an unfair and deceptive trade act and
practice in commerce under 9 V.S.A. S2453 (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.
Section 115.02 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 10-point type.
(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.
Section 115.03 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 state:
(a) that the transaction advertised is a
rent-to-own transaction;
(b) that
the consumer will not own the property until the total amount to be paid to
acquire ownership is paid in full; and
(c) for each specific item advertised, the
total amount to be paid to acquire ownership, which amount shall be labeled
"total cost."
Section 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 transaction; and
(2)
that the consumer will not own the property until the 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 rental payments);
(5) a
statement as to whether the item is new or used.
Section 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 consumer's signature:
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 (itemize):
_______________ $__________
_______________ $__________
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
consumer;
(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; and
(9) an
explanation of the right of any party to terminate the agreement, and to
reinstate the agreement.
Section 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.
Section 115.07 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.
Section 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 transaction,
or
(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. S1606, 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
merchandise.
(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.
Section 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.
Section 115.10 Effective Date
This rule shall take effect on January 1, 1997.Authority: 9
V.S.A. S41b
