ENGROSSED
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 108
(By Senators Humphreys, Yoder, Grubb, Walker,
Holliday, Wehrle, Chernenko, Blatnik and Macnaughtan)
____________
[Originating in the Committee on the Judiciary;
reported March 26, 1993.]
____________
A BILL to amend the code of West Virginia, one thousand nine
hundred thirty-one, as amended, by adding thereto a new
chapter, designated chapter forty-six-b; and to amend and
reenact section thirty-two, article three, chapter sixty-one
of said code, all relating to the West Virginia consumer
credit protection act; creating the West Virginia rent-to-
own consumer protection act; consumer protection in rent-to-
own transactions for goods to be used for personal, family
or household purposes; providing civil penalties for
violations; decriminalizing certain conversions of property
which are the subject of rent-to-own transactions; and
penalties.
Be it enacted by the Legislature of West Virginia:
That the code of West Virginia, one thousand nine hundred
thirty-one, as amended, be amended by adding thereto a newchapter, designated chapter forty-six-b; and that section thirty-
two, article three, chapter sixty-one of said code be amended and
reenacted, all to read as follows:
CHAPTER 46B. CONSUMER PROTECTION; RENT-TO-OWN.
ARTICLE 1. SHORT TITLE; GENERAL PROTECTION; REGULATION ON
TRANSACTIONS.
§46B-1-1. Act.
This article may be known and cited as "The West Virginia
Rent-To-Own Consumer Protection Act".
§46B-1-2. General definitions; applicability of other law;
inapplicability of other law.
(a)
Definitions. -- Notwithstanding the other provisions of
this chapter, for the purposes of this article, unless a
different meaning is plainly required by this article:
(1) "Claim" means any obligation or alleged obligation of a
lessee to pay money arising out of a rent-to-own transaction
where is the subject of the transaction is primarily for
personal, family or household purposes, whether or not such
obligation has been reduced to judgment.
(2) "Debt collection" means any action, conduct or practice
of soliciting claims for collection or the collection of claims
owed or due or alleged to be owed or due to a lessor by a lessee.
(3) "Debt collector" means any person or organization
engaging directly or indirectly in debt collection. The term
includes any person or organization who sells or offers to sell
forms which are, or are represented to be, a collection system,
device or scheme, and are intended or calculated to be used to
collect claims.
(4) "Damage waiver" means the voiding or disregard by the
lessor of any obligation on the part of the lessee to pay the
value of the goods or to make payments pursuant to the rent-to-
own transaction in the event of loss or damage to the goods in
excess of normal wear and tear for the insurance of the value of
the goods or of payments pursuant to the rent-to-own transaction
in the event of loss or damage to the goods in excess of normal
wear and tear.
(5) "Goods" means personal property not excluded by
subsection (b) of this section.
(6) "Lessor" means a person who, in the ordinary course of
business, provides goods to consumers, offers to provide goods to
consumers or acts as an agent to offer or provide goods to
consumers pursuant to a rent-to-own transaction governed by this
article.
(7) "Lessee" means a consumer who acquires or seeks to
acquire possession, use or ownership of goods to be used
primarily for personal, family or household purposes pursuant to
a rent-to-own transaction governed by this article.
(8) "Ownership" means transferrable legal title to goods
whether or not evidenced or required to be evidenced by a
document.
(9) "Period" means a week, a month or other duration of time
in a rent-to-own transaction during which the lessee has a right
to use or possess covered by a periodic payment.
(10) "Periodic payment" means the payment required from the
lessee to have the right to possession of the goods during a
period. The periodic payment does not include any applicablesales, use, privilege, excise or documentary stamp tax payable
upon sale or other transfer of goods to a lessee from a person or
entity in the business of making such transfers except as
provided by the disclosure requirements of this article.
(11) "Person" or "party" includes a natural person or an
individual, an organization, partnerships and corporations.
(12) "Person related to" with respect to an individual
means: (a) The spouse of the individual; (b) a brother, brother-
in-law, sister or sister-in-law of the individual; (c) an
ancestor or lineal descendant of the individual or his spouse;
and (d) any other relative, by blood or marriage, of the
individual or his spouse who shares the same home with the
individual. "Person related to" with respect to an organization,
partnership or corporation means: (a) A person directly or
indirectly controlling, controlled by or under common control
with the organization, partnership or corporation; (b) an officer
or director of the organization, partnership or corporation or a
person performing similar functions with respect to the
organization or to a person related to the organization,
partnership or corporation; (c) the spouse of a person related to
the organization, partnership or corporation; and (d) a relative
by blood or marriage of a person related to the organization,
partnership or corporation shares the same home with him or her.
(13) "Premises" means a particular physical place of
business opened to the public by a lessor.
(14) "Rent-to-own transaction" means a transaction, other
than a transaction excluded from coverage by subsection (b) of
this section, in which a person acquires the possession or use ofgoods to be used primarily for personal, family or household
purposes and in which the lessee agrees to acquire ownership of
the goods.
(15) "Retail value" means the price at which goods would
change hands in the particular market area at the time of the
rent-to-own transaction in exchange for cash, check or other
legal tender, between a willing seller who has the knowledge of
a reasonable seller of the relevant facts, who is under no
compulsion to sell to a particular buyer and who is in the
business of selling such goods and a willing buyer who has the
knowledge of a reasonable consumer of the relevant facts and who
is under no compulsion to buy or to buy from a particular seller:
Provided, That retail value does not mean the price at which
goods would change hands through catalogue, mail order,
telemarketing or other similar marketing technique in which the
supplier of the goods does not have a place of business in the
market area where such transactions occur unless such marketing
technique used has not direct or indirect ownership connection
with any lessor. The retail value shall not include any
applicable sales, use, privilege, excise or documentary stamp tax
payable upon sale or other transfer of goods to a consumer from
a person or entity in the business of making such transfers
except as provided by the disclosure requirements of this
article.
Retail value of a good is defined as, including, but not
limited to, a bona fide retail sale of goods of the same make or
manufacturer and substantially the same quality and
characteristics in the same market area at the time of therent-to-own transaction in exchange for chase, check or other
legal tender to a willing consumer buyer who has the knowledge of
a reasonable consumer of the relevant facts and who is under no
compulsion to buy or to buy from a particular seller from a
willing seller who is in the business of selling such goods, who
has the knowledge of a reasonable seller of the relevant facts,
who is under no compulsion to sell to a particular buyer, and who
has no connection with the lessor of the goods in questions:
Provided, That a sale of goods through catalogue, mail order,
telemarketing or other similar marketing technique in which the
supplier of the goods does not have a place of business in the
market area where such transactions occur would not alone
constitute such evidence unless such marketing technique used has
no direct or indirect ownership connection with the lessor.
(16) "Services" includes: (a) Work, labor and other
personal services; (b) privileges with respect to transportation,
use of vehicles, hotel and restaurant accommodations, education,
entertainment, recreation, physical culture, hospital
accommodations, funerals, cemetery accommodations and the like;
and (c) insurance.
(17) "Total of payments" means the total of all scheduled
payments specified in the written agreement that the lessee pays
to acquire ownership of the good.
(18) "Written agreement" means a written document containing
or evidencing the terms of a rent-to-own transaction.
(b)
Exclusions. -- Notwithstanding the provisions of
subsection (a) of this section, the further provisions of this
chapter, chapter forty-six of this code and other law, atransaction is not a rent-to-own transaction subject to the
provisions of this article if it is a transaction:
(1) In which a national bank or a state chartered bank is a
party if it is subject to the federal Truth in Lending Act or the
federal Consumer Leasing Act and the regulations promulgated
pursuant thereto;
(2) In which all the goods which are the subject matter of
the transaction are vehicles as defined in section one, article
one, chapter seventeen-a of this code;
(3) In which all of the goods which are the subject of the
transaction are two-way telecommunications equipment and are
subject to the federal Consumer Lease Act and regulations
promulgated pursuant thereto;
(4) In which all of the goods are medical equipment and the
transaction is subject to the federal Truth in Lending Act or the
regulations promulgated pursuant thereto; or
(5) In which all of the goods which are the subject of the
transaction are musical instruments if the transaction is subject
to the federal Truth in Lending Act or the regulations
promulgated pursuant thereto.
(c) Nothing in this chapter shall be construed to limit the
applicability of any other provisions of this code which apply
generally to consumer sales transactions and may apply to a
rent-to-own transaction.
§46B-1-3. Written agreement in rent-to-own transactions.
All rent-to-own purchases shall be by written agreement.
This agreement shall include all disclosures required by this
article and the cost, if any, which is imposed by a governmententity to transfer ownership of the goods upon payment as
provided in section six of this article. The lessee and lessor
shall sign the agreement. A lessor may not attempt to take any
action that is not included in the agreement. The lessor shall
provide a copy of the written agreement to the lessee at the time
of execution of the agreement. Any transaction entered into
without a written agreement may be voided by the lessee who may
return the goods and be refunded all amounts paid to lessor.
§46B-1-4. Termination of rent-to-own transaction by lessee; by
lessor.
(a) Termination by the lessee:
(1) A lessee may terminate any rent-to-own transaction at
the end of any rental period;
(2) When a lessee terminates a rent-to-own transaction, the
lessor may not require any further action or payment by the
lessee except:
(A) Payment of unpaid payments and charges accrued before
the lessee notifies the lessor of the termination of the
transaction and makes the goods available to the lessor; and
(B) Payment of any pickup charge provided for in the written
agreement.
(b) Termination by the lessor: A lessor may terminate any
rent-to-own transaction only as authorized by this section and
when the lessee fails to make a periodic payment or when the
lessee, with the intent to defraud and without written consent of
the lessor, disposes of the goods by sale or transfer, secretes
or converts the goods to his or her own use or moves or causes
the good to be removed from the state.
(1) Seven days prior to terminating any transaction, the
lessor shall provide a written notice to the lessee informing him
or her:
(A) Of amount of any payment that the lessee has failed to
make;
(B) That lessee may voluntarily surrender possession of the
goods to the lessor;
(C) Of any late payment which has been or may be assessed;
(D) Of the right to reinstate which shall include:
(i) That the lessee may reinstate the agreement by payment
of amounts due when the goods are in the possession of the
lessee;
(ii) The amount of time when the lessee has to reinstate the
agreement;
(iii) That reinstatement will result in continuation of the
original agreement, including the provisions relating to
regaining ownership of the goods; and
(iv) The amount of fees to be paid for reinstatement.
(2) The lessor may request that the goods be surrendered at
any time after a lessee has failed to make a payment required
under the agreement. When the lessee surrenders the goods, the
transaction is terminated. The lessor shall provide the lessee
the notice required by this section.
§46B-1-5. Reinstatement of written rental agreement.
(a) The lessee may reinstate the transaction at any time
until the lessee is served, in a manner pursuant to rule four of
the rules of civil procedure, with a civil complaint arising out
of the transaction.
(b) When a lessee fails to timely make one or more periodic
payments, he or she may reinstate the original rent-to-own
transaction, without losing any right or option of the lessee
under the rental-purchase agreement, within sixty days after the
expiration of the last period for which the lessee made a timely
payment:
Provided, That if a lessee has made more than forty
percent of the regular payments required to obtain ownership of
the goods, pursuant to the rent-to-own transaction, the lessee
shall have ninety days to reinstate a rent-to-own transaction:
Provided, however, That when a lessor seeks to repossess the
goods and has lawfully repossessed the goods two previous times
during the same transaction, the lessee may not reinstate the
transaction.
(c) If reinstatement occurs pursuant to this section, the
lessor shall provide the lessee with the same goods leased by the
lessee prior to the reinstatement as if those goods are not
available to the lessor, substitute property that is of no less
quality and condition. When substitute property is provided, the
lessor shall make all disclosures required by this chapter. A
lessor may charge a nominal fee to reinstate the transaction only
when the property is returned to the lessor prior to
reinstatement.
§46B-1-6. Lessee's right to ownership of the goods.
When the lessee has paid all periodic payments required by
a rent-to-own transaction together with any other charges
authorized by law which have been lawfully imposed in the
transaction, he or she shall have exclusive ownership of the
goods:
Provided, That the lessee, after the initial payment, mayobtain ownership before the scheduled end of the rent-to-own
transaction by paying:
(1) A portion of the periodic payments, which have not yet
become payable, subject to any limitation provided by this
chapter;
(2) All periodic payments and other charges authorized by
law which have already become due and which may be lawfully
imposed in the transaction; and
(3) The amount of any documentary or other fee charged by a
governmental entity to transfer ownership or proof of ownership.
§46B-1-7. Maintenance of goods.
All lessors shall maintain the goods that are the subject in
usable condition of any rent-to-own transaction until the lessee
obtains ownership of the goods.
§46B-1-8. Requirement for rent-to-own transactions -- Transfer
of warranty.
(a) When goods that are subjects of a rent-to-own
transaction are covered by a warranty that is transferrable to
the lessee, the warranty shall be transferred to the lessee. The
lessor shall advise, orally and in writing, the lessee of any
manufacturer's warranty that may apply to the goods and any
details regarding the warranty and the transfer of the warranty.
(b) Nothing in this section shall be construed to limit any
other implied or expressed warranty on the goods.
§46B-1-9. Disclosure requirements.
(a) The lessor shall make all disclosures required by this
section.
(b) In all circumstances listed in subsection (c) of thissection, the lessor shall disclose the following information with
respect to the goods that are the subject of the transaction in
a clear, conspicuous and easily understood manner:
(1) Retail value;
(2) Cash price;
(3) Amount of periodic payments;
(4) Rental period;
(5) Number of periodic payments required for ownership;
(6) Total of all payments; and
(7) Whether the goods are new or have been previously rented
or are otherwise used.
(c) The lessor shall make the disclosures required in this
section:
(1) On a label attached or posted on top of the goods
displayed to any potential lessee;
(2) In any written agreement entered pursuant to section
three of this article;
(3) In any telephone communication with a potential lessee;
and
(4) In any radio, television or printed advertisement for
the goods when the price for the item is included in the
advertisement.
Any oral communications concerning the terms and conditions
of the transaction shall be incorporated into a written agreement
which shall govern the transaction.
(d) In any transaction involving more than one lessor, only
one lessor may make the disclosures required by this article:
Provided, That when the name of the lessor is required to bedisclosed, all lessors shall be disclosed.
(e) A lessor may disclose information that is not required
by this section only when the additional information is not
stated, used or placed in a manner that may contradict, obscure
or distract attention from the information required by this
section.
§46B-1-10. Prohibition for rent-to-own transactions.
No lessor may:
(a) Require any initial payment in any transaction except
the payment for the first rental period, taxes, insurance or
delivery fees;
(b) Charge any fee at the conclusion of a transaction except
rental payments, taxes, insurance, delivery fees and the fee
charged by a government entity;
(c) Raise the amount of any payment or charge after the
execution of the written agreement without both parties
voluntarily entering into a second written agreement;
(d) Take any action to collect a payment which is prohibited
by this chapter;
(e) Accept a cosigner unless that person is a lessee;
(f) Take any security interest in any property owned by the
lessee other than the goods that are the subject of the
transaction;
(g) Require a damage waiver, insurance or form of insurance
for any goods except a lessor may require insurance on goods when
the lessor requires the insurance for all goods of that type and
value;
(h) Require insurance from a particular insurer; or
(i) Seek to collect any charge not authorized by this
section or disclosed in a written agreement.
§46B-1-11. Limitations on charges and fees.
(a) Any lessee seeking to fulfill obligations pursuant to
section six of this article may be charged a fee no greater than
the retail value divided by the total of payments multiplied by
the amount of the periodic payments which have not yet become
due.
(b) A lessor may not charge a fee for delivery or pickup
unless the charge is provided for in the written agreements, the
parties agree that the lessor shall deliver or pick up the good,
and the charge is reasonably related to the costs of delivery:
Provided, That no delivery or pick up charge may be assessed in
any transaction when the transaction took place in any place
other than the premises of the lessor.
(c) The total of payments in a rent-to-own transaction shall
not be greater than two hundred forty percent of the retail
value.
§46B-1-12. Attorney general; promulgation of rules.
The attorney general may adopt, amend and repeal such
reasonable rules and regulations, in accordance with the
provisions of chapter twenty-nine-a of this code, as are
necessary and proper to effectuate the purposes of this chapter
and to prevent circumvention or evasion thereof. In addition,
the attorney general shall adopt, amend and repeal such
reasonable rules and regulations, in accordance with the
provisions of said chapter, as are necessary and proper to
determine formula or method of ascertaining retail value asdefined in this article and as are necessary and proper to detail
the requirements for disclosure set forth in this article.
ARTICLE 2. PROHIBITED CONDUCT.
§46B-2-1. Extortionate in rent-to-own transaction.
If the court finds as a matter of fact that it was the
understanding of the lessor and the lessee at the time a rental
agreement for a rent-to-own transaction was made that delay in
making a payment could result in the use of violence or other
criminal means to cause harm to the person, reputation or
property of any person, the agreement of the extension of credit
is unenforceable through civil judicial process against the
lessor and the lessee, at his or her option, may rescind the
agreement and retain the goods without any obligation to pay for
them.
§46B-2-2. Referral sales or leases.
With respect to a rent-to-own transaction lease, the lessor
may not give or offer to give a rebate or discount or otherwise
pay or offer to pay value to the lessee as an inducement for a
sale or lease in consideration of his giving to the lessor the
names of prospective purchasers or lessees, or otherwise aiding
the lessor in making a lease to another person, if the earning of
the rebate, discount or other value is contingent upon the
occurrence of an event subsequent to the time the lessee agrees
to lease. If a lessee is induced by a violation of this section
to enter into a rent-to-own transaction, the agreement is
unenforceable against the lessee, at his or her option, may
rescind the agreement and retain the goods without any obligation
to pay for them.
§46B-2-3. Unconscionability; inducement by unconscionable
conduct.
(1) With respect to a rent-to-own transaction, if the court
as a matter of law finds:
(a) The agreement or transaction to have been unconscionable
at the time it was made or to have been induced by unconscionable
conduct, the court may refuse to enforce the agreement; or
(b) Any term or part of the agreement or transaction to have
been unconscionable at the time it was made, the court may refuse
to enforce the agreement or may enforce the remainder of the
agreement without the unconscionable term or part or may so limit
the application of any unconscionable term or part as to avoid
any unconscionable result.
(2) If it is claimed or appears to the court that the
agreement or transaction or any term or part thereof may be
unconscionable, the parties shall be afforded a reasonable
opportunity to present evidence as to its setting, purpose and
effect to aid the court in making the determination.
(3) For the purpose of this section, a charge or practice
expressly permitted by this chapter is not unconscionable.
§46B-2-4. Practice of law by debt collectors.
Unless a licensed attorney in this state, no debt collector
shall engage in conduct deemed the practice of law. Without
limiting the general application of the foregoing, the following
conduct is deemed the practice of law:
(a) The performance of legal services, furnishing of legal
advice or false representation, direct or by implication, that
any person is an attorney;
(b) Any communication with lessees in the name of an
attorney or upon stationery or other written matter bearing an
attorney's name; and
(c) Any demand for or payment of money constituting a share
of compensation for services performed or to be performed by an
attorney in collecting a claim.
§46B-2-5. Threats or coercion.
No debt collector shall collect or attempt to collect any
money alleged to be due and owing by means of any threat,
coercion or attempt to coerce. Without limiting the general
application of the foregoing, the following conduct is deemed to
violate this section:
(a) The use, or express or implicit threat of use, of
violence or other criminal means to cause harm to the person,
reputation or property of any person;
(b) The accusation or threat to accuse any person of fraud,
any crime or any conduct which, if true, would tend to disgrace
such other person or in any way subject him to ridicule or any
conduct which, if true, would tend to disgrace such other person
or in any way subject him to ridicule or contempt of society;
(c) False accusations made to another person, including any
credit reporting agency, that a lessee is willfully refusing to
pay a just debt or the threat to so make false accusations;
(d) The threat to sell or assign to another the obligation
of the lessee with an attending representation or implication
that the result of such sale or assignment would be that the
lessee would lose any defense to the claim or would be subjected
to harsh, vindictive or abusive collection attempts;
(e) The threat that nonpayment of an alleged claim will
result in the:
(1) Arrest of any person; or
(2) Garnishment of any wages of any person or the taking of
other action requiring judicial sanction, without informing the
lessee that there must be in effect a judicial order permitting
such garnishment or such other action before it can be taken; and
(f) The threat to take any action prohibited by this chapter
or other law regulating the debt collector's conduct.
§46B-2-6. Oppression and abuse.
No debt collector shall unreasonably oppress or abuse any
person in connection with the collection of or attempt to collect
any claim alleged to be due and owing by that person or another.
Without limiting the general application of the foregoing, the
following conduct is deemed to violate this section:
(a) The use of profane or obscene language or language that
is intended to unreasonably abuse the hearer or reader;
(b) The placement of telephone calls without disclosure of
the caller's identity and with the intent to annoy, harass or
threaten any person at the called number;
(c) Causing expense to any person in the form of long
distance telephone tolls, telegram fees or other charges incurred
by a medium of communication, by concealment of the true purpose
of the communication; and
(d) Causing a telephone to ring or engaging any person in
telephone conversation repeatedly or continuously, or at unusual
times or at times known to be inconvenient, with intent to annoy,
abuse, oppress or threaten any person at the called number.
§46B-2-7. Unreasonable publication.
No debt collector shall unreasonably publicize information
relating to any alleged indebtedness of lessee. Without limiting
the general application of the foregoing, the following conduct
is deemed to violate this section:
(a) The communication to any employer or his agent before
judgment has been rendered of any information relating to an
employee's indebtedness other than through proper legal action,
process or proceeding;
(b) The disclosure, publication or communication of
information relating to a lessee's indebtedness to any relative
or family member of the lessee if such person is not residing
with the lessee, except through proper legal action or process or
at the express and unsolicited request of the relative or family
member;
(c) The disclosure, publication or communication of any
information relating to a lessee's indebtedness to any other
person other than a credit reporting agency, by publishing or
posting any list of lessees,
commonly known as "deadbeat lists";
and
(d) The use of any form of communication to the lessee,
which ordinarily may be seen by any other persons, that displays
or conveys any information about the alleged claim other than the
name, address and phone number of the debt collector.
§46B-2-8. Fraudulent, deceptive or misleading representations.
No debt collector shall use any fraudulent, deceptive or
misleading representation or means to collect or attempt to
collect claims or to obtain information concerning lessees.Without limiting the general application of the foregoing, the
following conduct is deemed to violate this section:
(a) The use of any business, company or organization name
while engaged in the collection of claims, other than the true
name of the debt collector's business, company or organization;
(b) The failure to clearly disclose in all communications
made to collect or attempt to collect a claim or to obtain or
attempt to obtain information about a lessee, that the debt
collector is attempting to collect a claim and that any
information obtained will be used for that purpose;
(c) Any false representation that the debt collector has in
his possession information or something of value for the lessee
that is made to solicit or discover information about the lessee;
(d) The failure to clearly disclose the name and full
business address of the person to whom the claim has been
assigned for collection, or to whom the claim is owed, at the
time of making any demand for money;
(e) Any false representation or implication of the
character, extent or amount of a claim against a lessee or of its
status in any legal proceeding;
(f) Any false representation or false implication that any
debt collector is vouched for, bonded by, affiliated with or an
instrumentality, agent or official of this state or any agency of
the federal, state or local government;
(g) The use or distribution or sale of any written
communication which simulates or is falsely represented to be a
document authorized, issued or approved by a court, an official
or any other legally constituted or authorized authority, orwhich creates a false impression about its source, authorization
or approval;
(h) Any representation that an existing obligation of the
lessee may be increased by the addition of attorney's fees,
investigation fees, service fees or any other fees or charges
when in fact such fees or charges may not legally be added to the
existing obligation; and
(i) Any false representation or false impression about the
status or true nature of or the services rendered by the debt
collector or his business.
§46B-2-9. Unfair or unconscionable means.
No debt collector shall use unfair or unconscionable means
to collect or attempt to collect any claim. Without limiting the
general application of the foregoing, the following conduct is
deemed to violate this section:
(a) The seeking or obtaining of any written statement or
acknowledgment in any form that specifies that a lessee's
obligation is one incurred for necessaries of life where the
original obligation was not in fact incurred for such
necessaries;
(b) The seeking or obtaining of any written statement or
acknowledgment in any form containing an affirmation of any
obligation by a lessee who has been declared bankrupt without
clearly disclosing the nature and consequences of such
affirmation and the fact that the lessee is not legally obligated
to make such affirmation;
(c) The collection or the attempt to collect from the lessee
all or any part of the debt collector's fee or charge forservices rendered;
(d) The collection of or the attempt to collect any interest
or other charge, fee or expense incidental to the principal
obligation unless such interest or incidental fee, charge or
expense is expressly authorized by the written rental agreement
and by statute; and
(e) Any communication with a lessee whenever it appears that
the lessee is represented by an attorney and the attorney's name
and address are known, or could be easily ascertained, unless the
attorney fails to answer correspondence, return phone calls or
discuss the obligation in question or unless the attorney
consents to direct communication.
§46B-2-10. Postal violations.
No debt collector shall use, distribute, sell or prepare for
use any written communication which violates or fails to conform
to United States postal laws and regulations.
ARTICLE 3. ASSIGNMENT AND RECEIPT OF PAYMENT.
§46B-3-1. Notice of assignment.
A lessee is authorized to pay the original lessor until he
receives notification of assignment of rights to payment pursuant
to a rent-to-own transaction and that payment is to be made to
the assignee. A notification which does not reasonably identify
the rights assigned is ineffective. If requested by the lessee,
the assignee must seasonably furnish reasonable proof that the
assignment has been made and unless he does so the lessee may pay
the original lessor.
§46B-3-2. Receipts; statements of account; evidence of payment.
(1) The lessor shall deliver or mail to the lessee, withoutrequest, a written receipt for each payment by coin or currency
on an obligation pursuant to a written rental agreement. A
periodic statement showing a payment received complies with this
subsection.
(2) Upon written request of a lessee, the lessor shall
provide a written statement of the dates and amounts of payments
made within the past twelve months and the total amount unpaid.
The requested statement shall be provided without charge once
during each year of the term of the agreement. If additional
statements are requested the creditor may charge not in excess of
three dollars for each additional statement.
(3) After a lessee has fulfilled all obligations with
respect to a rent-to-own transaction, the lessor shall, upon the
request of the lessee, deliver or mail to the lessee written
evidence acknowledging payment in full of all obligations with
respect to the transaction.
§46B-3-3. Notification.
(1) Every person engaged in this state in making rent-to-own
transactions and every person having an office or place of
business in this state who takes assignments of and undertakes
direct collection of payments from or enforcement of rights
against debtors arising from such transactions shall file
notification with the state tax department within thirty days
after commencing business in this state, and, thereafter, on or
before the thirty-first day of January of each year. A
notification shall be deemed to be in compliance with this
section if the information hereinafter required is given in an
application for a business registration certificate provided forin section four, article twelve, chapter eleven of this code.
The state tax commissioner shall make any information required by
this section available to the attorney general or commissioner
upon request. The notification shall state:
(a) Name of the person;
(b) Name in which business is transacted if different from
subdivision (a) of this subsection;
(c) Address of principal office, which may be outside this
state;
(d) Address of all offices or retail stores, if any, in this
state at which rent-to-own transactions are made or, in the case
of a person taking assignments of obligations, the offices or
places of business within this state at which business is
transacted; and
(e) Address of designated agent upon whom service of process
may be made in this state.
(2) If information in a notification becomes inaccurate
after filing, accurate information must be filed within thirty
days.
ARTICLE 4. LIMITATIONS ON COLLECTIONS AND RELATED PROVISIONS.
§46B-4-1. Assignment of earnings.
(1) The maximum part of the aggregate disposable earnings of
an individual for any workweek which may be subjected to any one
or more assignments of earnings for the payment of a debt or
debts arising from one or more rent-to-own transactions, may not
exceed twenty-five percent of his disposable earnings for that
week.
(2) As used in this section:
(a) "Disposable earnings" means that part of the earnings of
an individual remaining after the deduction from those earnings
of amounts required by law to be withheld; and
(b) "Assignment of earnings" includes all forms of
assignments, deductions, transfers or sales of earnings to
another, either as payment or as security and whether stated to
be revocable or nonrevocable and includes any deductions
authorized under the provisions of section three, article five,
chapter twenty-one of this code, except deductions for union or
club dues, pension plans, payroll savings plans, charities, stock
purchase plans and hospitalization and medical insurance.
(3) Any assignment of earnings and any deduction under
section three, article five, chapter twenty-one of this code
shall be revocable by the employee at will at any time,
notwithstanding any provision to the contrary.
(4) The priority of multiple assignments of earnings shall
be according to the date and time of each such assignment.
§46B-4-2. Authorization to confess judgment prohibited.
A lessee may not authorize any person to confess judgment on
a claim arising out of a rent-to-own transaction. An
authorization in violation of this section is void. The
provisions of this section shall not be construed as in any way
impliedly authorizing a confession of judgment in any other type
of transaction.
§46B-4-3. No garnishment before judgment.
Prior to entry of judgment in an action against the lessee
for debt arising from a rent-to-own transaction, the lessor may
not attach unpaid earnings of the lessee by garnishment or likeproceedings. The provisions of this section shall not be
construed as in any way impliedly authorizing garnishment before
judgment in any other type of transaction.
§46B-4-4. Limitation on garnishment.
(1) For the purposes of the provisions in this chapter
relating to garnishment:
(a) "Disposable earnings" means that part of the earnings of
an individual remaining after the deduction from those earnings
of amounts required by law to be withheld; and
(b) "Garnishment" means any legal or equitable procedure
through which the earnings of an individual are required to be
withheld for payment of a debt.
(2) The maximum part of the aggregate disposable earnings of
an individual for any workweek which is subjected to garnishment
to enforce payment of a judgment arising from a rent-to-own
transaction may not exceed the lesser of:
(A) Twenty percent of his disposable earnings for that week;
(B) The amount by which his disposable earnings for that
week exceed thirty times the federal minimum hourly wage
prescribed by Section 6(a)(1) of the "Fair Labor Standards Act of
1938", U.S.C. Title 19, Section 206(a)(1), in effect at the time
the earnings are payable; or
(C) In the case of earnings for a pay period other than a
week, the commissioner shall prescribe by rule a multiple of the
federal minimum hourly wage equivalent in effect to that set
forth in subdivision (B) of this subsection.
(3) No court may make, execute or enforce an order or
process in violation of this section. Any time after a lessee'searnings have been executed upon pursuant to article five-a or
five-b, chapter thirty-eight of this code by a creditor resulting
from a rent-to-own transaction, such lessee may petition any
court having jurisdiction of such matter or the circuit court of
the county wherein he resides to reduce or temporarily or
permanently remove such execution upon his earnings on the
grounds that such execution causes or will cause undue hardship
to him or his family. When such fact is proved to the
satisfaction of such court, it may reduce or temporarily or
permanently remove such execution.
(4) No garnishment governed by the provisions of this
section will be given priority over a voluntary assignment of
wages to fulfill a support obligation, a garnishment to collect
arrearages in support payments or a notice of withholding from
wages of amounts payable as support, notwithstanding the fact
that the garnishment in question or the judgment upon which it is
based may have preceded the support-related assignment,
garnishment or notice of withholding in point of time or filing.
§46B-4-5. No discharge or reprisal because of garnishment.
No employer shall discharge or take any other form of
reprisal against an employee for the reason that a creditor of
the employee has subjected or attempted to subject unpaid
earnings of the employee to garnishment or like proceedings
directed to the employer for the purpose of paying a judgment
arising from a rent-to-own transaction.
§46B-4-6. Personal property exemptions.
Any lessee residing in this state may set apart and hold
personal property to be exempt from execution or other judicialprocess resulting from rent-to-own transactions, except for the
purchase money due on such property, in such amounts as follows:
Clothing and other wearing apparel of the lessee, his spouse and
any dependents of such lessee, not to exceed the fair market
value of two hundred dollars; furniture, appliances, furnishings
and fixtures regularly used for family purposes in the lessee's
residence, to the extent of the fair market value of one thousand
dollars; children's books, pictures, toys and other such personal
property of children; all medical health equipment used for
health purposes by the lessee, his or her spouse and any
dependent of such lessee; tools of trade, including any income-
producing property used in the lessee's principal occupation, to
the extent of the fair market value of one thousand dollars; and
any policy of life or endowment insurance which is payable to the
spouse or children of the insured lessee or to a trustee for
their benefit, except the cash value of any accrued dividends
thereon. When a lessee claims personal property as exempt under
the provisions of this section, he shall deliver a list
containing all the personal property owned or claimed by him and
all items of such property he claims as exempt hereunder, with
the value of each separate item listed according to his best
knowledge, to the officer holding the execution or other such
process. Such list shall be sworn to by affidavit. If the value
of the property named in such list exceeds the amounts specified
in this section, the lessee shall state at the foot thereof what
part of such property he claims as exempt. If such value does
not exceed the amounts specified in this section, the claim of
exemption shall be held to extend to the whole thereof withoutstating more and, if no appraisement is demanded, the property so
claimed shall be set aside as exempt. Where the lessee owning
exempt property is absent or incapable of acting or neglects or
declines to act hereunder, the claim of exemption may be made,
the list delivered and the affidavit made by his spouse with the
same effect as if the lessee had done so. Upon receipt of such a
list, the officer to whom it is given shall immediately exhibit
such list to the lessor or his agent or attorney. The rights
granted and procedures provided for in article eight, chapter
thirty-eight of this code shall apply to any proceeding under
this section, except that the provisions of sections one and
three of such article shall not apply.
ARTICLE 5. NONRESIDENT DEFENDANTS.
§46B-5-1. Service of process on certain nonresidents.
Any nonresident person, except a nonresident corporation
authorized to do business in this state pursuant to the
provisions of chapter thirty-one of this code, who takes or holds
any negotiable instrument, nonnegotiable instrument, or contract
or other writing, arising from a rent-to-own lease which is
subject to the provisions of this chapter, shall be conclusively
presumed to have appointed the secretary of state as his
attorney-in-fact with authority to accept service of notice and
process in any action or proceeding brought against him arising
out of such rent-to-own transaction. A person shall be
considered a nonresident hereunder if he is a nonresident at the
time such service of notice and process is sought. No act of
such person appointing the secretary of state shall be necessary.
Immediately after being served with or accepting any such processor notice, of which process or notice two copies for each
defendant shall be furnished the secretary of state with the
original notice or process, together with a fee of two dollars,
the secretary of state shall file in his office a copy of such
process or notice, with a note thereon endorsed of the time of
service or acceptance, as the case may be, and transmit one copy
of such process or notice by registered or certified mail, return
receipt requested, to such person at his address, which address
shall be stated in such process or notice:
Provided, That such
return receipt shall be signed by such person or an agent or
employee of such person if a corporation, or the registered or
certified mail so sent by said secretary of state is refused by
the addressee and the registered or certified mail is returned to
said secretary of state, or to his office, showing thereon the
stamp of the U.S. postal service that delivery thereof has been
refused, and such return receipt or registered or certified mail
is appended to the original process or notice and filed therewith
in the clerk's office of the court from which such process or
notice was issued. But no process or notice shall be served on
the secretary of state or accepted fewer than ten days before the
return date thereof. The court may order such continuances as
may be reasonable to afford each defendant opportunity to defend
the action or proceeding.
The provisions for service of process or notice herein are
cumulative and nothing herein contained shall be construed as a
bar to the plaintiff in any action from having process or notice
in such action served in any other mode and manner provided by
law.
ARTICLE 6. ENFORCEMENT AND REMEDIES.
§46B-6-1. Enforcement.
For a violation of or a failure to comply with the
provisions of this article by a lessor, a lessee is entitled to
recover from the lessor the lessee's actual damages, reasonable
attorney's fees and court costs and a civil penalty in an amount
not less than one hundred dollars nor more than one thousand
dollars for each violation.
§46B-6-2. Injunctions against unconscionable agreements and
fraudulent or unconscionable conduct.
(1) The attorney general may bring a civil action to
restrain a lessor or a person acting in his behalf from engaging
in a course of:
(a) Making or enforcing unconscionable terms or provisions
of rent-to-own transactions;
(b) Fraudulent or unconscionable conduct in inducing lessees
to enter into rent-to-own transactions; or
(c) Fraudulent or unconscionable conduct in the collection
of payments arising from rent-to-own transactions.
(2) In an action brought pursuant to this section the court
may grant relief only if it finds:
(a) That the respondent has made unconscionable agreements
or has engaged or is likely to engage in a course of fraudulent
or unconscionable conduct;
(b) That the agreements or conduct of the respondent have
caused or are likely to cause injury to lessees; and
(c) That the respondent has been able to cause or will be
able to cause the injury primarily because the transactionsinvolved are rent-to-own transactions.
(3) In applying this section, consideration shall be given
to each of the following factors, among others:
(a) Belief by the lessor at the time rent-to-own
transactions are made that there was no reasonable probability of
payment in full of the obligation by the lessee;
(b) Knowledge by the lessor at the time of the sale of the
inability of the lessee to receive substantial benefits from the
transaction;
(c) Gross disparity between the price of the property or
services sold that are the subject of the transaction and the
value of the property measured by the price at which similar
property are readily obtainable in rent-to-own transactions by
like lessees;
(d) The fact that the lessor contracted for or received
separate charges for insurance with respect to the goods with the
effect of making the sales or loans, considered as a whole,
unconscionable; and
(e) The fact that the respondent has knowingly taken
advantage of the inability of the lessee reasonably to protect
his interests by reason of physical or mental infirmities,
ignorance, illiteracy or inability to understand the language of
the agreement or similar factors.
(4) In an action brought pursuant to this chapter, a charge
or practice expressly permitted by this chapter is not
unconscionable.
§46B-6-3. Civil actions by attorney general.
(a) After demand, the attorney general may bring a civilaction against a lessor for making or collecting charges in
excess of those permitted by this chapter. If the court finds
that an excess charge has been made, the court shall order the
respondent to refund to the lessee the amount of the excess
charge. If a lessor has made an excess charge in a deliberate
violation of or in reckless disregard for this chapter, or if a
lessor has refused to refund an excess charge within a reasonable
time after demand by the lessee or the attorney general, the
court may also order the respondent to pay to the lessee a civil
penalty in an amount determined by the court not in excess of ten
times the amount of the excess charge. Refunds and penalties to
which the lessee is entitled pursuant to this subsection may be
set off against the lessee's obligation. If a lessee brings an
action against a lessor to recover an excess charge or civil
penalty, an action by the attorney general to recover for the
same excess charge shall be stayed while the lessee's action is
pending and shall be dismissed if the lessee's action is
dismissed with prejudice or results in a final judgment granting
or denying the lessee's claim. No action pursuant to this
subsection may be brought more than one year after the time the
excess charge was made. If the lessor establishes by a
preponderance of evidence that a violation is unintentional or
the result of a bona fide error, no liability to pay a penalty
shall be imposed under this subsection.
(b) The attorney general may bring a civil action against a
lessor to recover a civil penalty for willfully violating this
chapter and if the court finds that the defendant has engaged in
a course of repeated and willful violations of this chapter, itmay assess a civil penalty of no more than five thousand dollars.
No civil penalty pursuant to this subsection may be imposed for
violations of this chapter occurring more than four years before
the action is brought.
CHAPTER 61. CRIMES AND THEIR PUNISHMENT.
ARTICLE 3. CRIMES AGAINST PROPERTY.
§61-3-32. Removal out of county of property securing claim;
penalties; fraudulent disposition of personal property in
possession by virtue of lease; notice to return; failure to
return; penalty; right to immediate possession.
(a) Any debtor under any security instrument conveying
personal property, who retains possession of such personal
property, and who, without the consent of the owner of the claim
secured by such security instrument, and with intent to defraud,
removes or causes to be removed any of the property securing such
claim out of the county where it is situated at the time it
became security for such claim or out of a county to which it was
removed by virtue of a former consent of the owner of the claim
under this section, or, with intent to defraud, secretes or sells
the same, or converts the same to his own use, shall be guilty of
a misdemeanor, and, upon conviction thereof, be fined not more
than five hundred dollars, or imprisoned not more than six
months, or both, in the discretion of the court.
(b) Any person in possession or control of any personal
property by virtue of or subject to a written lease who, with
intent to defraud and without written consent of the owner,
disposes of such property by sale or transfer, or, after
receiving a written notice to return the property to the lessor,secretes or converts such property to his own use and in so doing
placing the property in a location other than the locations
described in a written rental agreement, or removes or causes to
be removed such property from the state shall be deemed guilty of
the larceny of such property.
In any prosecution under the provisions of this subsection,
written notice may be mailed by certified mail, addressed to the
lessee at the address of the lessee stated in the lease, and
served on the lessee within ten days of the expiration of the
lease, which notice shall state that the lease has expired and
that lessee has ten days from receipt of such notice to return
the leased property. Proof that the lessee failed to return the
property within ten days of receiving such notice shall in any
prosecution under this subsection constitute prima facie evidence
that the lessee intended to defraud the owner.
Whenever the lessee is a resident of the county in which the
lease was contracted, the lessor, after written notice to the
lessee within ten days after the expiration of the lease, has the
right to immediate possession of the leased property, without
formal process to secure return and possession of the leased
property, if this can be done without breach of the peace. The
lessor is not liable to the lessee for any damages for any action
taken that is reasonable, necessary and incidental to the
reclaiming or taking possession of the leased property.