Opponents to Walker: Back off new rent-to-own rule

MILWAUKEE (AP) -- Milwaukee's Roman Catholic archbishop and a Republican state senator joined with others Friday to pressure Gov. Scott Walker to back off his plan to free rent-to-own businesses from Wisconsin's consumer protection act.

The provision in the Republican governor's executive budget proposal ensures the businesses wouldn't have to disclose what industry opponents say are exorbitant interest rates.

"I assume Gov. Walker does not know how predatory and plain evil this chain is," Sen. Glenn Grothman, R-West Bend, said of Rent-A-Center, which he said he's been fighting for 18 years. "I hope we can get Gov. Walker to change his mind."

Grothman, Archbishop Jerome Listecki, the director of the consumer advocacy group WISPIRG, the president of the Hispanic Chamber of Commerce of Wisconsin and others spoke at a press conference Milwaukee. They contended rent-to-own businesses prey on the poor, uneducated or those with language barriers and charge exorbitant interest rates similar to payday lenders.

"The budget is now in the hands of the Joint Finance Committee and they can remove the proposal if they choose to do so," Walker spokesman Tom Evenson said in an email to The Associated Press Friday.

Rent-A-Center spokesman Xavier Dominicis said the contracts aren't credit transactions and Wisconsin's consumer act shouldn't apply to them.

"If you really do a deep dive into it, what you discover is there are very key differences between rent to own and traditional consumer credit," he said.

Rent-to-own businesses offer customers a chance to rent items such as appliances, electronics, computers and furniture with no credit check. Typically, customers can exit and rejoin the deals as they wish with no effect on their credit rating. People who complete their contracts can exercise options to buy the items.

Dominicis said the critics aren't giving consumers enough credit to read their contracts, which he said are clear on how much customers will pay if they make payments to the end.

"It's not smoke and mirrors," he said.

He said rent-to-own businesses are particularly helpful for people with bad credit or who don't want to take on more credit.

"It's making life manageable for everyday Americans," he said.

Listecki said rent-to-own businesses keep people in economic servitude.

"If someone wants to pay seven times the amount for an item, they are more than welcome to pay more than seven times for the amount for the item," he said. "The difficulty is when you are not told when you are paying seven times the amount."

Grothman said some other Republicans agree with him but won't speak up publicly. He also said he spoke to Walker about it before the governor introduced his budget proposal and hopes to speak with him again.

"I am going to have to be a lot more vocal about the details if I can get in to see him again," Grothman said.

Forty-seven states have separate laws governing rent-to-own businesses; Wisconsin, New Jersey and North Carolina do not, according to research by Columbia University economics instructor Alejo Czerwonko.

More than 8,500 rent-to-own storefronts were operating in all 50 states and Canada in 2009, generating more than $7 billion and employing more than 50,000 people, according Czerwonko's research. Walker's office says about 50 rent-to-own businesses operate in Wisconsin.

A Wisconsin appeals court ruling in 1993 affirmed the state's consumer protection act governs the industry here, agreeing with a circuit court judge that rent-to-own deals are indeed credit transactions.

In 1999, the state Department of Justice filed a lawsuit against Rent-A-Center Inc. The agency accused the company of not abiding by provisions in the act requiring the businesses to disclose all terms of its deals to customers, including finance charges and interest rates. Three years later, a Milwaukee County judge sided with DOJ and ordered Rent-A-Center to pay the state $7 million in restitution and $1.4 million in penalties and fees, according to court documents.