The company allegedly engaged in “unfair and deceptive business practices” to collect from consumers who missed or otherwise did not make their rental payments.
11/30/2023 10:35 A.M.
2.5 minute read
Massachusetts Attorney General Andrea Joy Campbell announced an $8.75 million settlement against Rent-A-Center (RAC), a Texas-based rent-to-own consumer goods company that is among the largest in the nation, according to a Nov. 28 press release.
The settlement, facilitated through an assurance of discontinuance (AOD), addresses allegations that the company has systematically engaged in unfair and deceptive practices, violating state consumer protection laws.
Under the terms of the AOD (PDF), RAC will pay the multi-million dollar fine and “make significant changes to its business practices to comply with state consumer protection laws, including fair debt collection and repossession practices,” according to the news release.
“I am proud of my team’s dedication in securing a settlement with Rent-A-Center, which sadly utilized egregious tactics to target and exploit low-income communities for profit,” Campbell said. “My office will continue to protect all consumers from harmful and exploitive practices by those who do business in our state.”
RAC operates over 40 retail locations in Massachusetts, with a significant presence in low-income communities and communities of color. The company’s business model involves leasing basic household goods and essentials to consumers who may find it challenging to purchase these items through traditional retailers.
The investigation, led by the attorney general’s Consumer Protection and Civil Rights Divisions, revealed a “pattern of coercive and abusive conduct” by RAC toward consumers who struggled to meet their rental payments andsignificant emotional and financial harm to the company’s consumers.
RAC’s alleged conduct includes misusing the state’s criminal processes, according to the press release. The company reportedly filed applications for criminal theft and larceny complaints against consumers who failed to make payments. The attorney general’s office discovered that RAC frequently pursued such actions, even targeting consumers who had previously made substantial payments over several years before falling behind on their rental payments.
As part of the settlement, RAC has committed to discontinuing this practice of filing criminal complaints against consumers for missed payments.
The investigation also exposed RAC’s alleged deceptive communication practices. The company was found to violate debt collection regulations by “excessively” calling consumers’ residences, workplaces and personal phones. Debt collection calls, according to the the attorney general’s regulations, are restricted to twice within a 7-day period. The company reportedly also failed to notify consumers of home visits or repossession attempts“leading to physical confrontations between consumers and RAC employees.”
Consumers who believe they may have been subjected to unfair and deceptive business practices by RAC are encouraged to file a consumer complaint with the attorney general’s office.
In a summary of the settlement, ACA International member Barron & Newburger noted that a violation of the attorney general’s debt collection rule on communication frequency serves as leverage to secure a settlement from a business.
The firm also noted that last year RAC entered into a $15.5 Million consent order with the California Attorney General for alleged violations of the state’s consumer protection laws.
For a refresher on state communication laws, including Massachusetts, ACA International members can access SearchPoint #2011 State Laws Governing Oral Communication (PDF), updated in May 2023.
Read the attorney general’s assurance of discontinuance here (PDF).