by Jeff Sovern
RTO kiosks are, as far as I know, a new way to buy/rent goods. In the past, stores specialized in rent-to-own financing/renting, where consumers could agree to rent an item and make payments (typically weekly) for the item until they had purchased it, or alternatively chose to surrender it. RTO businesses, unregulated by Truth in Lending, though subject to state regulation, typically charge extraordinarily high interest rates. Consumers who pay the full amount usually end up paying much more than they would have if they had, say, charged the item on a credit card and paid it off over time. But RTO kiosks are a bit different. As my co-author Dee Pridgen explains: "when a customer selects some goods but doesn’t qualify for credit at a participating retail store, [the retailer] send[s] him or her to the RTO kiosk inside the store where they lease them the same goods. The RTO company just buys the stuff from the retailer and then leases it to the consumer." In Dee's view, this is problematic because such transactions are "more likely to be confused with a credit sale than if a consumer went to a dedicated RTO store." And that makes the failure to give the TILA disclosures, with the APR, which might enable the consumer to realize how expensive RTO is when used as a form of credit, especially troubling. For more on this, see The Capitol Forum, Rent-To-Own Industry: A Closer Look at the Implications of Expansion of RTO Kiosk Model (The link takes readers to a brief email confirmation, and then to a viewer where the story can be seen as a pdf.); Senator Casey Letter to CFPB and FTC on RTOs here.
