text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Rent-To-Own Consumer Credit 
  Protection Act of 1993''.
  
  SEC. 2. RENT-TO-OWN PROTECTION ACT.
  
      The Consumer Credit Protection Act (15 U.S.C. 1601 et seq.) is 
  amended by adding at the end the following new title:
  
                    ``TITLE X--RENT-TO-OWN TRANSACTIONS
  
  ``Sec.
  ``1001. Short title.
  ``1002. Findings and purposes.
  ``1003. Definitions.
  ``1004. Application of State laws regarding fees, charges, guarantees, 
                              and warranties.
  ``1005. Application of Federal laws.
  ``1006. Disclosures on goods.
  ``1007. Prohibitions; enforcement.
  ``1008. Civil liability.
  ``1009. Regulations.
  ``1010. Relationship to other laws.
  ``Sec. 1001. Short title
      ``This title may be cited as the `Rent-To-Own Consumer Credit 
  Protection Act'.
  ``Sec. 1002. Findings and purposes
      ``(a) Findings.--The Congress finds that--
              ``(1) the rent-to-own industry targets its products 
          primarily to low-income and minority neighborhoods;
              ``(2) the majority of rent-to-own customers enter into 
          rent-to-own contracts with the intention of owning the goods 
          for which they are contracting;
              ``(3) rent-to-own dealers often fail to disclose key terms 
          of rent-to-own contracts, and engage in unfair debt collection 
          practices; and
              ``(4) rent-to-own dealers do not provide customers with the 
          protections afforded purchasers in retail installment sales 
          under State and Federal laws, and often charge excessive fees 
          and interest rates.
      ``(b) Purposes.--The purposes of this title are--
              ``(1) to provide consumers in rent-to-own transactions the 
          range of protections provided under State and Federal laws to 
          individuals who acquire goods in other consumer credit sales;
              ``(2) to require rent-to-own contracts, and tags affixed to 
          items available for acquisition in rent-to-own transactions, to 
          disclose the material terms of those transactions; and
              ``(3) to prohibit rent-to-own dealers and collection agents 
          hired by such dealers from engaging in abusive collection 
          practices.
  ``Sec. 1003. Definitions
      ``As used in this title--
              ``(1) the term `cash price' means--
                      ``(A) with respect to any item of consumer goods--
                              ``(i) the bona fide retail price for the 
                          item as offered for sale by a seller to a 
                          consumer who pays the full price in one payment 
                          before taking possession of the item, as 
                          indicated by actual sales of such item; or
                              ``(ii) the average cash retail price of the 
                          item or a similar item in the community; and
                      ``(B) with respect to a service--
                              ``(i) the bona fide retail value of the 
                          service if provided independently to a 
                          consumer; or
                              ``(ii) the estimated bona fide retail value 
                          of the service;
              ``(2) the term `Commission' means the Federal Trade 
          Commission;
              ``(3) the term `consumer'--
                      ``(A) when used as an adjective, means for use by 
                  an individual primarily for personal, family, or 
                  household purposes; and
                      ``(B) when used as a noun, means an individual who 
                  is the lessee or bailee under a rent-to-own contract;
              ``(4) the term `credit'--
                      ``(A) includes the right granted by a seller to a 
                  consumer to obtain possession of an item of consumer 
                  goods under a rent-to-own contract before payment of 
                  the total amount that is required to be paid to acquire 
                  ownership of the item; and
                      ``(B) is deemed to be a fixed sum equal to the 
                  difference of--
                              ``(i) the total of payments for the item 
                          required to obtain ownership of the item under 
                          the contract; minus
                              ``(ii) the sum of--
                                      ``(I) the cash price;
                                      ``(II) any fees specifically 
                                  allowable under State law, except 
                                  finance charges, interest, or a time 
                                  price differential; and
                                      ``(III) the termination fee under 
                                  section 1004;
              ``(5) the term `organization' means a corporation, trust, 
          estate, partnership, cooperative, or association;
              ``(6) the term `person' means a natural person or an 
          organization;
              ``(7) the term `rent-to-own contract' means a contract in 
          the form of a terminable lease or bailment of an item of 
          consumer goods, under which--
                      ``(A) the consumer--
                              ``(i) has the right of possession and use 
                          of the item; and
                              ``(ii) has the option to renew the contract 
                          periodically by making payments specified in 
                          the contract; and
                      ``(B) the seller agrees, orally or in writing, to 
                  transfer ownership of the item to the consumer upon the 
                  fulfillment of all obligations of the consumer under 
                  the contract for that transfer;
              ``(8) the term `rent-to-own transaction' means the lease or 
          bailment of an item of consumer goods under a rent-to-own 
          contract;
              ``(9) the term `seller' means--
                      ``(A) a person--
                              ``(i) who regularly makes consumer goods 
                          available under rent-to-own contracts; and
                              ``(ii) to whom payments are payable under 
                          those contracts; and
                      ``(B) an assignee of such a person; and
              ``(10) the term `State' means any State, the Commonwealth 
          of Puerto Rico, the District of Columbia, and any territory or 
          possession of the United States.
  ``Sec. 1004. Application of State laws regarding fees, charges, 
                guarantees, and warranties
      ``(a) In General.--Subject to subsection (b), a seller in a rent-
  to-own transaction may not take, receive, or assess any interest, 
  finance charge, or other fee for the transaction that is in excess of 
  the interest, fees, or finance charges that may be charged under the 
  laws of the State in which the seller is located that--
              ``(1) establish a maximum rate or amount of interest, 
          finance charge, or time-price differential that may be charged 
          in connection with a credit sale or retail installment sale;
              ``(2) establish the types of fees and the maximum amount of 
          fees that a seller may charge in connection with a credit sale 
          or retail installment sale; or
              ``(3) establish the types of credit insurance and the 
          maximum amount of premiums that may be charged for credit 
          insurance in connection with a credit sale or a retail 
          installment sale.
      ``(b) Additional Termination Charges and Fees.--
              ``(1) Charges and fees authorized.--In addition to charges 
          and fees authorized under subsection (a), a seller in a rent-
          to-own transaction may charge--
                      ``(A) a termination fee in accordance with 
                  paragraph (2), if in exchange the consumer is given the 
                  right to terminate the rent-to-own contract for the 
                  transaction at any time without regard to whether the 
                  consumer has completed payment of the fee; and
                      ``(B) reasonable fees for recovery of the items 
                  that are the subject of the contract and that are not 
                  voluntarily returned to the seller upon the completion 
                  or termination of the contract.
              ``(2) Termination fee.--A termination fee under paragraph 
          (1)(A)--
                      ``(A) shall not exceed 5 percent of the cash price 
                  disclosed under the contract;
                      ``(B) shall be disclosed in the contract; and
                      ``(C) may be paid at the time the contract is 
                  entered into or over the life of the contract; and
                      ``(D) shall be calculated as part of the finance 
                  charge determined under section 106 of the Truth in 
                  Lending Act.
              ``(3) Recovery fees.--A recovery fee under paragraph (1)(B) 
          shall be disclosed in the contract.
              ``(4) Effect of termination.--The termination of a rent-to-
          own contract by a consumer in accordance with a right of 
          termination given to the consumer in exchange for a termination 
          fee under subsection (a)(1) shall be deemed to satisfy the 
          consumer's obligations for all payments and fees due under the 
          contract, except for payments and fees under the contract that 
          were due prior to the date of termination.
      ``(c) Guarantees and Warranties.--All guarantees and warranties 
  established or required under the laws of a State for goods sold 
  pursuant to a consumer credit sale or retail installment sale shall 
  apply to goods that are the subject of a rent-to-own transaction in the 
  State.
  ``Sec. 1005. Application of Federal laws
      ``The following Federal laws apply to a rent-to-own transaction, as 
  follows:
              ``(1) Truth in lending act.--The Truth in Lending Act 
          applies as it applies to consumer credit transactions other 
          than consumer credit transactions under an open end credit 
          plan.
              ``(2) Equal credit opportunity act.--The Equal Credit 
          Opportunity Act applies as it applies to credit transactions. 
          For purposes of this application--
                      ``(A) a consumer shall be treated as an applicant; 
                  and
                      ``(B) a seller shall be treated as a creditor.
              ``(3) Fair debt collection practices act.--The Fair Debt 
          Collection Practices Act applies to the collection of overdue 
          payments arising from a rent-to-own transaction, unless the 
          payments are collected by any person specified in subparagraphs 
          (A) through (F) of section 803(6) of such Act. For purposes of 
          this application, overdue payments shall be treated as debt.
              ``(4) Fair credit reporting act.--The Fair Credit Reporting 
          Act applies as it applies to a credit transaction and to any 
          extension or denial of credit.
  ``Sec. 1006. Disclosures on goods
      ``A seller shall include on each item in the place of business of 
  the seller that is available for purchase pursuant to a rent-to-own 
  transaction--
              ``(1) the cash price of the item;
              ``(2) an itemization of services offered under a rent-to-
          own contract for the item, and the cash price of each service;
              ``(3) the annual percentage rate of the item under a rent-
          to-own contract, determined under section 107 of the Truth in 
          Lending Act;
              ``(4) the weekly, biweekly, monthly, or other incremental 
          payment applicable under the rent-to-own contract for the 
          transaction and the number of payments;
              ``(5) the total of payments required to be paid to acquire 
          ownership of the item under a rent-to-own contract for the 
          transaction, determined under regulations under the Truth in 
          Lending Act; and
              ``(6) specification of whether the item is new or used.
  ``Sec. 1007. Prohibitions; enforcement
      ``(a) Prohibitions.--A person who is a seller under a rent-to-own 
  contract with a consumer shall not--
              ``(1) threaten or invoke criminal prosecution of a consumer 
          for any matter related to the contract, unless there is clear 
          and convincing evidence that the goods that are the subject of 
          the contract are being held by the consumer with an intent to 
          defraud the seller;
              ``(2) use threats or coercion to collect or attempt to 
          collect any amounts alleged to be due from the consumer;
              ``(3) engage in any conduct, the natural consequence of 
          which is to oppress, harass, or abuse any person in connection 
          with an attempt to collect amounts owed by the consumer under 
          the contract;
              ``(4) unreasonably publicize information to third parties 
          regarding amounts owed by the consumer;
              ``(5) make any fraudulent, deceptive, or misleading 
          representation to obtain information about the consumer or to 
          collect amounts owed by the consumer;
              ``(6) use any unconscionable means to collect or attempt to 
          collect a debt owed to the seller;
              ``(7) engage in any act or practice that is unfair or 
          deceptive in making, servicing, or collecting payment pursuant 
          to a rent-to-own contract;
              ``(8) advertise, announce, solicit, or otherwise represent 
          as free or available without charge (including by use of other 
          words of similar meaning) any service under the contract for 
          which the seller charges the consumer, including any service 
          for which a charge is collected by inclusion in the amount 
          required to be paid under the contract;
              ``(9) use, for purposes of complying with any State or 
          Federal law governing rent-to-own transactions (other than a 
          State or Federal tax law) any definition of the term `cash 
          price' other than the definition under section 1003(2); or
              ``(10) attempt to evade the provisions of this title by any 
          devise or subterfuge.
      ``(b) Enforcement.--
              ``(1) In general.--Compliance with the requirements under 
          this title shall be enforced by the Commission. All functions 
          and powers of the Commission under the Federal Trade Commission 
          Act shall be available to the Commission to enforce compliance 
          with this title by any person, irrespective of whether the 
          person is engaged in commerce or meets any other jurisdictional 
          tests in the Federal Trade Commission Act, including the power 
          to enforce the provisions of this title in the same manner as 
          if the violation had been a violation of a Commission trade 
          regulation rule.
              ``(2) Treatment of violations.--For the purpose of the 
          exercise by the Commission of its functions and powers under 
          the Federal Trade Commission Act, a violation of any 
          requirement or prohibition under this title is deemed to be an 
          unfair or deceptive act or practice in commerce in violation of 
          that Act.
  ``Sec. 1008. Civil liability
      ``(a) Liability for Failure to Properly Disclose Terms.--A seller 
  who fails to comply with a requirement under section 1006 shall be 
  liable to the consumer in an amount equal to the sum of--
              ``(1) actual damages sustained by the consumer as a result 
          of the failure;
              ``(2) $500 for each failure; and
              ``(3) all costs of the action and reasonable attorney fees, 
          as determined by the court.
      ``(b) Other Liability.--A seller who violates this title or fails 
  to comply with any requirement imposed under this title, other than 
  under section 1005, shall be liable to the consumer in an amount equal 
  to the sum of--
              ``(1) actual damages sustained by the consumer as a result 
          of the violation;
              ``(2) $5,000 for each violation; and
              ``(3) all costs of the action and reasonable attorney fees, 
          as determined by the court.
      ``(c) Jurisdiction; Limitation.--
              ``(1) In general.--An action under this title may be 
          brought in any United States district court or in any other 
          court of competent jurisdiction, not later than 2 years after 
          the date of the violation or failure that is the subject of the 
          action.
              ``(2) Other actions.--The 2-year statute of limitations in 
          paragraph (1) shall not prohibit any person from asserting a 
          violation of this title as a defense in an action to collect 
          amounts alleged to be due from such person, if such action is 
          brought more than 2 years after the date of the occurrence of 
          the violation.
      ``(d) Remedies.--Nothing in this title shall be construed to limit 
  any remedy otherwise available under State or Federal law.
  ``Sec. 1009. Regulations
      ``Not later than 6 months after the date of enactment of this 
  title, the Commission shall issue such regulations as may be necessary 
  to implement this title.
  ``Sec. 1010. Relationship to other laws
      ``(a) State Law.--This title does not annul, alter, affect, or 
  exempt any person subject to the provisions of this title from 
  complying with the laws of any State with respect to rent-to-own 
  transactions, except to the extent that such laws are inconsistent with 
  any provision of this title, and then only to the extent of the 
  inconsistency.
      ``(b) Consumer Lease Provisions of Truth in Lending Act.--Chapter 5 
  of the Truth in Lending Act, relating to consumer leases, shall not 
  apply to a rent-to-own transaction to the extent application of that 
  Act to the transaction is inconsistent with this title.''.
  
  SEC. 3. RECOMMENDATIONS TO CONGRESS.
  
      Not later than 2 years after the date of enactment of this Act, the 
  Federal Trade Commission shall submit to the Congress any 
  recommendations for further legislative or administrative action with 
  respect to the regulation of rent-to-own transactions.
  
  SEC. 4. EFFECTIVE DATE.
  
      The provisions of this Act and the amendments made by this Act 
  shall take effect on the date of enactment of this Act.
  
                                   
  
  S 1566 IS----2
target: Rent-To-Own Consumer Credit Protection Act of 1993 - Amends the Consumer Credit Protection Act to prohibit a seller in a rent-to-own transaction from taking, receiving, or assessing any interest, finance charge, or other fee for the transaction in excess of that which may be charged under State law which establishes in connection with a credit or retail installment sale for the same or a similar item:  (1) a maximum rate or amount of interest, finance charge, or time-price differential that may be charged; (2) the types and maximum amount of fees that a seller may charge; or (3) the types of credit insurance and the maximum amount of premiums that can be charged for credit insurance. 
  Sets forth requirements regarding:  (1) termination, recovery, and other fees; (2) the effect of termination; and (3) guarantees and warranties. 
  Makes the following Federal laws applicable to rent-to-own transactions:  (1) the Truth in Lending Act; (2) the Equal Credit Opportunity Act; (3) the Fair Debt Collection Practices Act; and (4) the Fair Credit Reporting Act. 
  Requires a seller to include the following information on each item in the seller's place of business that is available for purchase pursuant to a rent-to-own transaction:  (1) the cash price; (2) an itemization of services offered and the price of each service; (3) the annual percentage rate; (4) any applicable periodic payment and the number of payments; (5) the total number of payments required to acquire ownership; and (6) whether the item is new or used.  Requires a seller to provide such information to a consumer in writing at the time the parties enter into the contract. 
  Prohibits a seller under a rent-to-own contract with a consumer from taking specified actions, such as using threats or coercion to collect amounts alleged due, or unreasonably disclosing information to third parties regarding amounts owed by the consumer. 
  Makes compliance with the requirements of this Act enforceable by the Federal Trade Commission.  Deems a violation of this Act to be an unfair or deceptive act or practice in violation of the Federal Trade Commission Act. 
  Subjects sellers who violate the requirements of this Act to civil liability.
feat_title: Rent-To-Own Consumer Credit Protection Act of 1993