February 5, 2019 — Report

Using Criminal Courts to Coerce Payments from Vulnerable Families

In states across the country, the rent-to-own (RTO) industry is abusing the criminal system to extract payment from low-income consumers who have fallen behind on payments on abusive contracts. Under little-known laws often written years ago by the industry lobby, RTO companies are able to turn a dispute over a furniture set into threats of arrest, felony theft charges, and even incarceration. The objective of these efforts is not to discourage intentional theft, but rather to compel low-income consumers to make payments they cannot afford on predatory RTO contracts.

This report examines this practice and the statutes that authorize it. According to the National
Consumer Law Center’s (NCLC) review, every state except three has a law that could be used to criminalize the failure to return rental property at the end of the lease term. As a result, vulnerable families on tight budgets who have lost the ability to keep up with onerous payments—due to common misfortunes like loss of income, rent increases, an accident or illness, divorce, or the need to care for a family member in distress—face devastating criminal consequences. This is true even in cases where the customers have already paid thousands of dollars on predatory contracts that are designed to escape important consumer protections.