Rent-A-Center will pay $15.5 million to settle lawsuit alleging illegal overcharging

Nationwide rent-to-own large Lease-A-Heart pays $15.5 million to settle a lawsuit that alleged the corporate had engaged in illegal enterprise practices together with overcharging prospects and failing to tell them of their rights, California Atty. Gen. Rob Bonta mentioned Tuesday.

As a part of the settlement, which remains to be topic to approval, Lease-A-Heart would pay $13.5 million in restitution to hundreds of shoppers and $2 million in civil penalties.

“Lease-A-Heart repeatedly relied on misleading and illegal techniques to pad its backside line,” Bonta mentioned in a launch. “We received’t stand by when an organization like Lease-A-Heart overcharges these hardworking Californians, taking cash that’s wanted for hire, meals, or different important bills.”

The lawsuit, filed by Bonta final August, alleged that in 2014 the corporate started to impose “an illegal 15% markup” on the money value for merchandise prospects bought by its “Most popular Lease” program.

This system concerned kiosks arrange inside brick-and-mortar retailers comparable to Ashley Furnishings the place prospects who couldn’t afford to pay money might enter right into a rent-to-own settlement with Lease-A-Heart for couches, TV consoles and different family items. Lease-A-Heart would then buy the objects from the retailer and ship them to the client.

The client would make month-to-month funds on the merchandise with the choice to buy them for a “money value.”

However the “money value” listed by Lease-A-Heart on these agreements was 15% greater than that of the retailer’s, a violation of the state’s Karnette Rental-Buy Act, the lawyer normal’s workplace mentioned.

“Virtually, the truth that conventional retailers enable Most popular Lease to function on their gross sales flooring for the restricted goal of serving prospects who can not pay money up entrance (or who can not acquire financing) means the one value obtainable to a cash-paying buyer on the inception of the settlement is the retailer’s value,” prosecutors mentioned within the grievance.

Moreover, prosecutors alleged that the corporate didn’t correctly inform its prospects of sure rights, together with their proper to return merchandise, and misled them in regards to the nature of this system.

Clients who rented merchandise by the in-store kiosks are eligible for restitution and can obtain discover of the settlement at their final recognized mailing tackle.

The judgment additionally bars Lease-A-Heart from charging a cash-price markup or limiting returns, and requires the corporate to tell prospects of their rights and retrain staff.

Lease-A-Heart didn’t reply Tuesday to a request for remark.