Bill Text: NY A07746 | 2009-2010 | General Assembly | Introduced
Bill Title: Makes various provisions relating to rent-to-own sales practices and disclosure requirements for rental-purchase agreements; requires that the termination of rent-to-own contracts not exceed five percent of the contract price; prohibits any merchant from assessing interest rates at a rate exceeding 25%.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2010-06-08 - held for consideration in judiciary [A07746 Detail]
Download: New_York-2009-A07746-Introduced.html
S T A T E O F N E W Y O R K
________________________________________________________________________
7746
2009-2010 Regular Sessions
I N A S S E M B L Y
April 23, 2009
___________
Introduced by M. of A. KELLNER -- read once and referred to the Commit-
tee on Judiciary
AN ACT to amend the personal property law, in relation to rent-to-own
sales practices and disclosure requirements for rental-purchase agree-
ments
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Subdivision 2 of section 500 of the personal property law,
2 as added by chapter 792 of the laws of 1986, is amended and a new subdi-
3 vision 3-a is added to read as follows:
4 2. "Cash price" means the BONA FIDE RETAIL price at which a merchant,
5 in the ordinary course of business, would offer to sell the merchandise
6 to the consumer for cash on the date of the rental-purchase agreement.
7 SUCH PRICE SHALL BE REPRESENTATIVE OF MERCHANDISE OFFERED WITHIN THE
8 MARKET AREA AND SHALL BE COMPETITIVE AND COMPARABLE IN PRICE TO SIMILAR
9 MERCHANDISE FOR RETAIL IN SUCH AREA.
10 3-A. "EFFECTIVE ANNUAL PERCENTAGE RATE" MEANS THE ANNUAL PERCENTAGE
11 RATE OF THE MERCHANDISE SUBJECT TO A RENTAL-PURCHASE AGREEMENT, CALCU-
12 LATED IN THE SAME MANNER AS AN ANNUAL PERCENTAGE RATE UNDER SECTION 107
13 OF THE FEDERAL TRUTH IN LENDING ACT (15 USC 1606) EXCEPT THAT (A) IN THE
14 PLACE OF THE FINANCE CHARGE, THERE SHALL BE SUBSTITUTED THE DIFFERENCE
15 BETWEEN THE TOTAL PAYMENTS TO ACQUIRE OWNERSHIP AND THE CASH PRICE, LESS
16 ANY AMOUNTS SPECIFICALLY EXCLUDED FROM THE FINANCE CHARGE UNDER THE
17 TRUTH IN LENDING ACT; (B) IN PLACE OF THE AMOUNT FINANCED, THERE SHALL
18 BE SUBSTITUTED THE CASH PRICE LESS ANY DOWN PAYMENT; AND (C) IT SHALL BE
19 ASSUMED THAT THE CONSUMER SHALL PAY THE TOTAL OF PAYMENTS TO ACQUIRE
20 OWNERSHIP IN THE MERCHANDISE.
21 S 2. Subdivisions 5 and 7 of section 501 of the personal property law,
22 as added by chapter 792 of the laws of 1986, are amended and a new
23 subdivision 2-a is added to read as follows:
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD01335-01-9
A. 7746 2
1 2-A. A RENTAL-PURCHASE AGREEMENT SHALL SET FORTH THE ITEMS REQUIRED TO
2 BE DISCLOSED BY (A) THE FEDERAL TRUTH IN LENDING ACT (15 USC 1606 ET
3 SEQ) AND THE REGULATIONS THEREUNDER, AS SUCH ACT AND REGULATIONS MAY
4 FROM TIME TO TIME BE AMENDED, (B) THE FEDERAL EQUAL CREDIT OPPORTUNITY
5 ACT (P.L. 93-435, 15 USC 1691 ET SEQ) AS SUCH STATUTE MAY FROM TIME TO
6 TIME BE AMENDED, (C) THE FEDERAL FAIR DEBT AND COLLECTION PRACTICES ACT
7 (15 USC 1692 ET SEQ) AS SUCH STATUTE MAY FROM TIME TO TIME BE AMENDED,
8 AND (D) THE FAIR CREDIT REPORTING ACT (15 USC 1681 ET SEQ) AS SUCH STAT-
9 UTE MAY FROM TIME TO TIME BE AMENDED.
10 5. A rental-purchase agreement [must] SHALL provide that:
11 (a) a charge in addition to periodic payments, if any, must be reason-
12 ably related to the cost of a service performed;
13 (b) a consumer who fails to make a timely payment may reinstate an
14 agreement without losing rights or options previously acquired and with-
15 out incurring any charges, other than rental charges for the time he
16 possessed the property, except for those charges provided for in para-
17 graph (e) of subdivision three of THIS section [five hundred one of this
18 article] by making the required payment before the later of seven days
19 or half the number of days in a regular payment period after the due
20 date of the payment; [and]
21 (B-1) A CONSUMER SHALL HAVE THE RIGHT TO TERMINATE THE RENTAL-PURCHASE
22 AGREEMENT AT ANY TIME DURING THE CONTRACT PERIOD AND THE TERMINATION FEE
23 FOR SUCH SHALL NOT EXCEED FIVE PERCENT OF THE CONTRACT PRICE; AND
24 (c) if the merchandise is returned or voluntarily surrendered by the
25 consumer, other than through judicial process, during the applicable
26 reinstatement period set forth in paragraph (b) of this subdivision, the
27 consumer's right to reinstate the agreement as set forth in paragraph
28 (b) of this subdivision shall be extended for a period of not less than
29 thirty days after the date of the return of the merchandise. If a
30 consumer has paid one-half the total of payments necessary to acquire
31 ownership, the right to reinstate the agreement shall be extended for a
32 period of not less than sixty days after the date of the return of the
33 merchandise. If a consumer has paid three-quarters of the total of
34 payments necessary to acquire ownership, the consumer's rights to rein-
35 state the agreement shall be extended for a period of not less than one
36 hundred eighty days after the return of the merchandise.
37 7. A rental-purchase agreement [must] SHALL disclose in a conspicuous
38 and informative fashion:
39 (a) a description of the merchandise provided;
40 (b) whether the merchandise is new or used, provided however, that it
41 shall not be a violation of this section to indicate that the merchan-
42 dise is used if it is actually new;
43 (c) the amount and timing of rental-purchase payments, INCLUDING THE
44 AMOUNT OF THE PERIODIC PAYMENT AND THE TOTAL NUMBER OF PERIODIC PAYMENTS
45 REQUIRED FOR OWNERSHIP UNDER THE TERMS OF THE AGREEMENT;
46 (d) the total number of payments and the total amount that must be
47 paid to acquire ownership of the merchandise, which amount shall be
48 explicitly labelled "total cost";
49 (e) the amount and purpose of any payment, charge, or fee, in addition
50 to the regular periodic payments;
51 (f) whether the consumer is liable for loss or damage to the merchan-
52 dise and, if so, the maximum amount for which the consumer may be
53 liable, which in the case of loss shall in no event be greater than the
54 price the consumer would have paid to exercise an early purchase option
55 pursuant to this article. In the case of damage to the merchandise,
56 other than normal wear and tear the consumer shall be liable for the
A. 7746 3
1 lesser of the price the consumer would have paid to exercise an early
2 purchase option pursuant to this article or the cost of the repair as
3 determined by the merchant;
4 (g) that the consumer does not acquire ownership rights unless the
5 consumer has complied with the ownership terms of the agreement;
6 (h) the cash price of the merchandise; [and]
7 (i) a statement of the conditions under which a consumer may exercise
8 an early purchase option and under which the merchant or consumer may
9 otherwise terminate the lease[.];
10 (J) AN ITEMIZATION OF SERVICES OFFERED UNDER THE RENTAL-PURCHASE
11 AGREEMENT AND THE PRICE FOR EACH SERVICE; AND
12 (K) THE EFFECTIVE ANNUAL PERCENTAGE RATE ASSOCIATED WITH THE MERCHAN-
13 DISE UNDER THE RENTAL-PURCHASE AGREEMENT (WHICH MAY BE ACCOMPANIED BY A
14 STATEMENT THAT THIS RATE APPLIES ONLY IF THE CONSUMER ACQUIRES OWNERSHIP
15 BY MAKING ALL PAYMENTS).
16 S 3. Subdivisions 2 and 3 of section 505 of the personal property law,
17 as added by chapter 792 of the laws of 1986, are amended to read as
18 follows:
19 2. An advertisement for personal property available through rental-
20 purchase agreements that refers to more than one appliance or particular
21 item and includes information on periodic payment amounts shall include
22 a representative item available at that amount and shall conspicuously
23 state:
24 (a) that the merchandise offered may be new or used;
25 (b) that transaction advertised is a rental-purchase agreement; [and]
26 (c) that the consumer does not acquire ownership rights unless the
27 consumer complies with the ownership terms of the agreement[.]; AND
28 (D) THE EFFECTIVE ANNUAL PERCENTAGE RATE ASSOCIATED WITH THE MERCHAN-
29 DISE UNDER THE RENTAL-PURCHASE AGREEMENT (WHICH MAY BE ACCOMPANIED BY A
30 STATEMENT THAT THIS RATE APPLIES ONLY IF THE CONSUMER ACQUIRES OWNERSHIP
31 BY MAKING ALL PAYMENTS).
32 3. Every item displayed or offered under a rental-purchase agreement
33 shall have clearly and conspicuously indicated in arabic numerals, so as
34 to be readable and understandable by visual inspection, each of the
35 following affixed to the item:
36 (a) the cash price of the merchandise;
37 (b) the amount of the periodic payment and the total number of period-
38 ic payments required for ownership, INCLUDING THE AMOUNT OF THE PERIODIC
39 PAYMENT AND THE TOTAL NUMBER OF PERIODIC PAYMENTS REQUIRED FOR OWNERSHIP
40 UNDER THE TERMS OF THE AGREEMENT; [and]
41 (c) the total amount that must be paid to acquire ownership of
42 merchandise, which amount shall be explicitly labeled total cost[.]; AND
43 (D) AN ITEMIZATION OF SERVICES OFFERED UNDER THE RENTAL-PURCHASE
44 AGREEMENT AND THE PRICE FOR EACH SERVICE.
45 S 4. Section 503 of the personal property law, as added by chapter 792
46 of the laws of 1986, is amended to read as follows:
47 S 503. Total cost. 1. No merchant shall offer a rental-purchase agree-
48 ment requiring periodic payments totalling more than an amount, fifty
49 percent of which equals the cash price of merchandise. When periodic
50 payments made by a consumer total an amount, fifty percent of which
51 equals the cash price of the merchandise, the consumer shall acquire
52 ownership of the merchandise and the rental-purchase agreement shall
53 terminate.
54 2. NOTWITHSTANDING ANY GENERAL OR SPECIAL STATUTES, LOCAL LAWS OR
55 ORDINANCES TO THE CONTRARY, ANY LATE CHARGE OR FEE ASSESSED BY A
56 MERCHANT PURSUANT TO THIS ARTICLE SHALL BE TREATED AND COLLECTED AS
A. 7746 4
1 INTEREST ASSESSED. NO MERCHANT SHALL ASSESS ANY LATE CHARGE OR FEE AS A
2 LEASING CHARGE. ANY MERCHANT ASSESSING INTEREST CHARGES AT A RATE
3 EXCEEDING TWENTY-FIVE PER CENTUM PER ANNUM SHALL BE PUNISHABLE UNDER
4 CRIMINAL USURY IN THE FIRST DEGREE OR CRIMINAL USURY IN THE SECOND
5 DEGREE, AS DEFINED IN SECTION 190.42 OR 190.40 OF THE PENAL LAW, RESPEC-
6 TIVELY.
7 S 5. This act shall take effect on the one hundred eightieth day after
8 it shall have become a law.
