U.S. Sen. Charles Schumer, D-N.Y., wants tighter regulations on rent-to-own companies to limit what they can charge customers.
During a telephone conference call with reporters across the state Wednesday, Sen. Schumer called the companies, "one of the most despicable" industries he's aware of.
"They make huge profits by overcharging their customers who lease items on a weekly or monthly basis from them," he said.
He's asking the Federal Trade Commission to investigate the industry and wants to apply federal usury laws to them that would limit the amount they can charge above a product's actual cost to 30 percent. Sen. Schumer also wants the companies to clearly state what their rental fees are for and disclose the final cost of all rental agreements.
Sen. Schumer alleges the companies "bilk" their customers out of hundreds and thousands of dollars by jacking up the price of televisions, home appliances and furniture.
He said investigators in his office found one rent-to-own company advertising a Whirlpool refrigerator that retails for ,579. The company will rent the refrigerator for 91 weekly payments of ,14.99.
"That means they'll pay ,1,364 for the refrigerator," Sen. Schumer said. "That's a 135 percent mark up."
Sen. Schumer said the companies mainly rent to lower-income people who have exceeded the limits on their credit cards or who cannot get credit to begin with.
There are six rent-to-own businesses in the Twin Tiers. Champion Rent-to-Own has stores in Olean, Salamanca and Bradford, Pa. Rent-A-Center has two stores in Olean and one in Bradford.
Morris Otander and his brother Randy started Jamestown-based Champion Rent-to-Own in 1980.
Morris Otander said they charge high rental rates because Champion assumes all the risk for the products their customers rent.
"We have people walk off with these items and collections can be a problem," he said.
Mr. Otander said the rental rate covers moving an appliance or furniture, plus all maintenance for the item.
"If the customer moves, we'll move the item for them," he said.
He said his customers normally rent items for 12 to 18 months and most sign rent-to-own contracts so at the end of the term, they own the item.
"Usually it amounts to double what the cash price would be if it goes to them," he said.
Mr. Otander said his industry is already regulated by the government and doesn't need more regulation.
A message left with Rent-A-Center's corporate affairs office was not returned.
Reporters asked Sen. Schumer whether rent-to-own customers have a responsibility to protect themselves and not sign the rental agreements in the first place.
He said in many cases he's aware of, customers were kept in the dark about the final cost of the rental agreements or what the actual retail price of an item is.
The senator was asked why the federal government should regulate a business that rents non-essential items like wide-screen televisions, stereos and computers.
"If you're going to take that attitude then maybe the government shouldn't regulate anything. I think that idea went out with the 1800s," he said.