Rent-A-Center accused of harassing, taking advantage of customers

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Accusing Rent-A-Center of using collection tactics and charging fees just this side of a loan shark, Washington state is asking a judge to declare the practices illegal and halt them.

The allegations are another black eye to the business of renting furniture, electronics and appliances to those who can't otherwise get credit or afford to buy at a regular store.

Instead, those who go to Rent-A-Center and its competitors can get items for what might seem to be an affordable payment that ends up costing them many times the actual price.

Rent-A-Center markets itself as giving opportunity to those who wouldn't otherwise have a chance to get the items it leases and is using the popular retired basketball star Ervin "Magic" Johnson in television spots.

Some examples of what Washington officials say certain items cost consumers who were making weekly payments (payments can be made weekly, biweekly or monthly):

  • $6,594 for a used television
  • $3,585 for a refrigerator
  • $4,073 for a laptop computer

Washington state Attorney General Rob McKenna is taking Rent-A-Center to court to try to get the company's collection tactics and rental contracts declared illegal. McKenna asserts Rent-A-Center goes after those who owe with a vengeance -- coming to their homes, threatening customers, their children and harassing relatives and neighbors.

"While companies certainly have the right to collect on outstanding debts, state law, along with the most basic standards of common courtesy, dictate how companies may collect on those debts," McKenna said in a statement. "Attempting to kick doors down, calling the debtor's friends and relatives, and scaring their children aren't included in those basic standards."


California won a $7 million judgment against Rent-A-Center in 2006 over its price disclosure policies. The company settled a class-action case in New Jersey for $109 million after being accused of charging interest in excess of what state law permits.

Rent-A-Center Vice President Xavier Dominicis said the company is getting a bad rap and that the tactics alleged are neither permitted nor tolerated.

"We have a very exacting and exhaustive collection policy in place," he told WalletPop. "We have zero tolerance for non-compliance. We wouldn't allow anything like that. We probably have a more stringent policy about collections that we need to have."

Dominicis said the "much-maligned" rent-to-own business has a place and its success shows that. The complaints, he said, represent a tiny fraction of the company's overall business.

"We make life manageable for everyday Americans," Dominicis said. "It's a week-to-week program so there is no debt. It's a program that has proven very helpful to everyday Americans particularly in a sour economy."

He said many of the calls to customers' homes are to determine whether they intend to keep renting the items. Only 5 percent of all customers, Dominicis said, make every payment and purchase products at the oft-cited extraordinarily high prices.

McKenna's office used the example of Carol Hammons, who said she stopped paying Rent-A-Center to protest renting her ripped and broken furniture. In a sworn statement, the woman said Rent-A-Center employees came to her home, where two girls were watching Hammons' 11-year-old autistic daughter. The employees, she said, refused to leave, told the girls she would be arrested and then told her neighbors personal financial information and accused her of passing bad checks.

The state accused Texas-based Rent-A-Center, which has more than 3,000 stores nationwide, of using abusive language and profanity in its collection efforts -- including referred to customers as "ghetto trash," "deadbeat," and "thief," among others.

Washington officials said Rent-A-Center employees have demanded money from babysitters and others when the customer isn't home, pounded on doors, peered through windows and told children their parents would be thrown in jail if they don't pay up. When challenged by consumers that what they're doing is illegal, Washington officials said Rent-A-Center employees have responded that collection laws that forbid such harassment don't apply to them.

"Because of a loophole in state and federal laws that apply to debt collection, Rent-A-Center employees believe they can use harassing tactics to collect from renters who are late on their payments." Assistant Attorney General Jim Sugarman said.

Rent-A-Center is due to report its second-quarter earnings on Tuesday.
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Gotcha Moments of Retail Shame
Many companies get caught for unfair practices against customers, like Rent-A-Center, recently. Click through to see more stores that got caught cheating.
Mark Humphrey, AP
AP
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