Rent-A-Center to settle California lawsuit alleging illegal markups

National rent-to-own giant Rent-A-Center will pay $15.5 million to settle a lawsuit alleging the company engaged in unlawful business practices, including overcharging customers and the Failure to Inform Your Rights, California Atty. That’s what General Rob Bonta said on Tuesday.

As part of the settlement, which is pending approval, Rent-A-Center would pay $13.5 million in compensation to thousands of customers and $2 million in civil penalties.

“Rent-A-Center has repeatedly relied on fraudulent and unlawful tactics to improve its bottom line,” Bonta said in a press release. “We will not stand idly by when a company like Rent-A-Center overcharges these hard-working Californians and takes money needed for rent, groceries or other essential expenses.”

Bonta’s lawsuit, filed last August, alleges that in 2014 the company began charging “an unlawful 15% mark-up” on the cash price of products customers purchased through its preferred lease program.

The program included kiosks set up in brick-and-mortar retailers such as Ashley Furniture, where customers who could not afford to pay cash could hire-purchase sofas, television consoles and other household goods with Rent-A-Center. Rent-A-Center would then purchase the items from the retailer and ship them to the customer.

The customer would make monthly payments for the products, with the option to purchase them for a “cash price.”

But Rent-A-Center’s quoted “cash price” for those deals was 15% higher than the retailer’s, in violation of the state’s Karnette hire-purchase law, the attorney general’s office said.

“The fact that traditional retailers are allowing Preferred Lease to work on their storefronts to service customers who cannot pay cash upfront (or who cannot obtain financing) means virtually the only price available to a cash-paying customer The beginning of the agreement is the retailer’s price,” prosecutors said in the complaint.

In addition, prosecutors alleged that the company failed to properly inform its customers of certain rights, including their right to return products, and misled them about the nature of the program.

Customers who rented goods through the in-store kiosks are eligible for a refund and will receive a billing notification to their last known postal address.

The ruling also prohibits Rent-A-Center from imposing a cash markup or cap on returns and requires the company to inform customers of their rights and retrain employees.

Rent-A-Center did not respond to a request for comment Tuesday. Rent-A-Center to settle California lawsuit alleging illegal markups

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