On August 14, New York State Attorney General (AG) Letitia James filed a complaint in New York State court against a company (the defendant) offering financing products using Retail Purchase Agreements (RPAs). An RPA is a rent-to-own agreement where consumers select merchandise and the financing company “buys” it from a retailer, then leases it to the consumer on a periodic basis. The consumer “owns” the product only after completing the specified periodic payments. 

The New York AG alleged the RPAs offered by the defendant violated New York’s Personal Property Law (PPL) Article 11 in several ways, including because consumers cannot return a product if they no longer wish to rent it. The AG noted that a legally compliant rent-to-own (RTO) transaction must allow consumers to return a product if they no longer wish to rent it. According to the AG’s complaint, however, the defendant’s return rate was reportedly between 0.11 and 0.17 percent. Further, because the AG alleged the RPAs do not comply with RTO laws, the RPAs were actually loans under New York State law. The AG asserted the RPAs were thus void under New York State law, because they were loans that charged annual interest rates over 100 percent, violating New York’s usury cap of 16 percent set by General Obligations Law § 5-501 and Penal Law § 190.40. 

The New York AG further alleged the company failed to follow other laws applicable to rent-to-own agreements. Specifically, the AG alleged that, among other practices, the company failed to comply with e-signature laws, misrepresented the cost of its financing, failed to offer early payment options, failed to disclose prices, failed to name its retailers, charged consumers for damaged or lost merchandise, fabricated delays and harvested fees, misled consumers on returns, and obstructed their right to terminate, among other violations. Through these alleged practices, the New York AG claimed the company engaged in “fraudulent, deceptive, and illegal conduct” in violation of Executive Law § 63(12), General Business Law §§ 349-350 and 601, and PPL Article 11.  

The AG’s complaint prayed the court permanently enjoin the company from engaging in these behaviors and issue an order declaring all RPAs with New York consumers void. The AG also sought restitution for all injured consumers, disgorgement of profits illegally obtained, and civil penalties, among other remedies.