ENGROSSED
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 56
(By Senator Humphreys)
__________
[Originating in the Committee on the Judiciary;
reported February 4, 1994.]
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A BILL to amend and reenact section five, article one, chapter
forty-six-b of the code of West Virginia, one thousand nine
hundred thirty-one, as amended; and to amend and reenact
sections three, seven and eight, article three of said
chapter, all relating to the regulation of the rental of
consumer goods under rent-to-own agreements; general
definitions; disclosure requirements; and prohibitions for
rent-to-own transactions.
Be it enacted by the Legislature of West Virginia:
That section five, article one, chapter forty-six-b of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted; and that sections three, seven
and eight, article three of said chapter be amended and
reenacted, all to read as follows:
ARTICLE 1. GENERAL PROVISIONS; PURPOSE AND INTENT; DEFINITIONS.
§46B-1-5. General definitions.
The following words and phrases, when used in this chapter,
shall have the meanings respectively ascribed to them in this
section, unless the context in which such words or phrases are
used elsewhere in this chapter clearly requires a different
meaning:
(1) "Agricultural purpose" means a purpose related to the
production, harvest, exhibition, marketing, transportation,
processing or manufacture of agricultural products by a natural
person who cultivates, plants, propagates or nurtures the
agricultural products. "Agricultural products" include
agricultural, horticultural, viticultural and dairy products,
livestock, wildlife, poultry, bees, forest products, fish and
shellfish and any products thereof, including processed and
manufactured products, and any and all products raised or
produced on farms and any processed or manufactured products
thereof.
(2) "Consumer" means a natural person who acquires, or seeks
to acquire, the right to possession and use of consumer goods
from a dealer.
(3) "Consumer goods" or "goods" means goods intended to be
used primarily for personal, family or household purposes.
(4) "Damage waiver" means the voiding or disregard by the
dealer of any obligation on the part of the consumer to pay the
value of the consumer goods or to make payments pursuant to a
rent-to-own agreement in the event of loss or damage to the
consumer goods in excess of normal wear and tear or the insurance
of the value of the consumer goods or of payments pursuant to the
rent-to-own agreement in the event of loss or damage to theconsumer goods in excess of normal wear and tear.
(5) "Dealer" or "rent-to-own dealer" means a person who, in
the ordinary course of business, transfers or offers to transfer
the right to possession and use of consumer goods to a consumer
or acts as an agent to transfer or offer to transfer the right to
possession and use of consumer goods to a consumer, pursuant to
a rental agreement.
(6) "Debt collection" means any action, conduct or practice
of soliciting claims for collection or the collection of a claim
or claims owed or due or alleged to be owed or due to a dealer by
a consumer under a rent-to-own agreement.
(7) "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.
(8) "Financial organization" means a corporation,
partnership, cooperative or association which:
(A) Is organized, chartered or holding an authorization
certificate under the laws of this state or of the United States
which authorizes the organization to make consumer loans; and
(B) Is subject to supervision and examination with respect
to such loans by an official or agency of this state or of the
United States.
(9) "Ownership" means the right to enjoy, possess and use
consumer goods to the exclusion of other persons, including the
right to transfer legal title to such consumer goods or tootherwise control, handle or dispose of such consumer goods,
whether or not indicia of such ownership is established by, or
otherwise required to be evidenced by, a title-paper, letter,
receipt or other document or instrument.
(10) "Period" or "rental period" means a week, a month or
another specific length of time set forth in a rent-to-own
agreement, during which such period the consumer has a right to
continue possessing and using consumer goods, after having made
the periodic rental payment for such period.
(11) "Periodic payment" means a payment required to be made
by a consumer to have the right to possession and use of consumer
goods during a specified time period. The periodic payment does
not include any applicable sales, use, privilege, excise or
documentary stamp taxes otherwise payable upon a transfer of
consumer goods from a dealer to a consumer, except as provided
for by the disclosure requirements or other applicable
requirements set forth in this chapter.
(12) "Person" or "party" includes a natural person or an
individual, an organization, partnership or corporation.
(13) "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 controlwith 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.
(14) "Premises" means a particular physical place of
business opened to the public by a dealer.
(15) "Rental agreement" means the bargain, with respect to
the rental of consumer goods under a rent-to-own agreement, of
the dealer and the consumer as found in their language or by
implication from other circumstances including course of dealing
or usage of trade or course of performance as provided in this
chapter.
(16) "Rental contract" means the total legal obligation that
results from the rental agreement as affected by this chapter and
any other applicable rules of law.
(17) (A) "Rent-to-own agreement" means a rental agreement
which:
(i) Transfers the right to possession and use of the rental
property from the dealer to the consumer;
(ii) Obligates the consumer to pay successive periodic
rental payments as each shall become due, in order to continue
his or her right to possession and use of the rented consumer
goods;
(iii) Is subject to termination by the consumer as permittedby this chapter, whereupon the consumer is not obligated to make
payments for any period of time other than a period during which
he or she choses to maintain possession and use of the rented
consumer goods;
(iv) Provides that upon compliance with the terms of the
agreement the consumer shall become or has the option to become
the owner of the property.
(B) The term "rent-to-own agreement" does not include a
rental agreement in which:
(i) A financial organization is a party, if the rental
agreement is subject to the federal Truth in Lending Act or the
federal Consumer Leasing Act and the regulations promulgated
pursuant thereto;
(ii) Any of the consumer goods which are the subject matter
of the rental agreement are vehicles as defined in section one,
article one, chapter seventeen-a of this code;
(iii) All of the consumer goods which are the subject of the
rental agreement are either two-way telecommunications equipment,
medical equipment or musical instruments, and the rental
agreement is subject to the federal Truth in Lending Act or the
federal Consumer Leasing Act and the regulations promulgated
pursuant thereto; or
(iv) All of the goods which are the subject matter of the
rental agreement are primarily intended to be used for
agricultural purposes.
(18) "Retail value" or "fair market value" of particular
consumer goods means the price at which goods of like type,
quality and quantity would change hands between a willing sellerand a willing buyer, at retail, for cash, in the particular
market area at the time of the rent-to-own rental agreement,
which price does not include any applicable sales, use,
privilege, excise or documentary stamp taxes payable upon the
transfer of such goods.
(19) "Rent-to-own charge", in connection with any
rent-to-own agreement, means the sum of all charges in excess of
the retail value which must be paid directly or indirectly by the
consumer in order for the consumer to acquire ownership of the
consumer goods without payment of further consideration.
(20) "Termination" means the cancellation of a rental
agreement when the consumer determines that he or she no longer
desires to pay periodic payments and retain the right to
possession and use of the consumer goods or either party puts an
end to the rental agreement for default by the other party in
accordance with the provisions of this chapter.
(21) "Total of payments" means the total of all periodic
payments specified in the written agreement which the consumer
must pay in order to acquire ownership of the consumer goods
without the payment of additional consideration to the dealer.
(22) "Willing buyer" means a person who:
(A) Buys consumer goods at retail for his or her personal
use or for the use of his or her family or household;
(B) Has a reasonable knowledge of the relevant facts to be
considered in ascertaining the fair market price of consumer
goods which are offered to be sold at retail; and
(C) Is under no compulsion to buy or to buy from a
particular seller.
(23) "Willing seller" means a person other than a
rent-to-own dealer who:
(A) In the ordinary course of business regularly sells or
offers for sale consumer goods at retail;
(B) Has no direct or indirect ownership connection with any
dealer;
(C) Has a reasonable knowledge of the relevant facts to be
considered in fixing the fair market price of consumer goods
which are offered to be sold at retail; and
(D) Is under no compulsion to sell or to sell to a
particular buyer.
(24) "Written agreement" means a written document containing
or evidencing the terms of a rent-to-own transaction, reduced to
a tangible and legible form by printing, typewriting, computer
print-out or any other intentional reduction.
ARTICLE 3. DEFAULT.
§46B-3-3. Termination of rent-to-own agreements.
(a) Upon the termination of a rent-to-own agreement by a
consumer, all obligations that are still executory by both
parties are discharged, but any right based on a failure of the
dealer to maintain the consumer goods in accordance with the
provisions of section six of this article, or any other right
based on prior default or performance of the dealer survives, and
the consumer retains any remedy or defense for such default.
Rights and remedies available to the consumer for material
misrepresentation or fraud by a dealer are not affected by a
termination of the rental agreement by a consumer. Termination
of the rental agreement by a consumer shall not bar or be deemedinconsistent with a claim for damages or other right or remedy.
(b) A consumer may terminate a rent-to-own agreement at any
time.
(c) When a consumer terminates a rent-to-own transaction,
the dealer may not require any further action or payment by the
consumer except:
(1) Payment of any unpaid periodic payments and charges
accrued before the consumer notified the dealer of the
termination of the transaction and made the consumer goods
available to be received by the dealer; and
(2) Payment of any pickup charge provided for in the rental
agreement.
(d) A dealer may terminate a rent-to-own agreement when the
consumer fails to make a periodic payment as it becomes due:
Provided, That seven days prior to terminating the rent-to-own
agreement, the dealer shall provide a written notice to the
consumer informing him or her:
(1) Of the amount of any periodic payment or payments that
the consumer has failed to make;
(2) That the consumer may voluntarily surrender possession
of the goods to the dealer at the location where the goods are
located;
(3) Of any late payment which has been or may be assessed;
(4) Of the right to reinstate which shall include:
(A) The consumer's right to reinstate the agreement by
payment of amounts due when the goods are in the possession of
the consumer;
(B) The amount of time when the consumer has to reinstatethe agreement;
(C) That reinstatement will result in continuation of the
original agreement, including the provisions relating to
ownership of the goods; and
(D) The amount of fees to be paid for reinstatement.
(e) The dealer may request that the goods be surrendered at
any time after a consumer has failed to timely make a periodic
payment required under the agreement.
(f) A rent-to-own agreement terminates when the consumer
surrenders the goods. The dealer shall provide the consumer with
a notice of reinstatement rights as stated in subdivision (4),
subsection (d) of this section.
§46B-3-7. Disclosure requirements.
(a) The dealer shall make all disclosures required by this
section.
(b) In all circumstances listed in subsection (c) of this
section, the dealer shall disclose the following information with
respect to the goods that are the subject of the rental agreement
in a clear, conspicuous and easily understood manner:
(1) Retail value;
(2) Rent-to-own charge;
(3) Rental period;
(4) Number of periodic payments required for ownership;
(5) Amount of each periodic payment;
(6) Total of all payments; and
(7) Whether the goods are new or have been previously rented
or are otherwise used.
(c) The dealer shall make the disclosures required in thissection:
(1) On a label attached or posted on top of the goods
displayed to any potential consumer;
(2) In any rent-to-own agreement as defined in section five,
article one of this chapter;
(3) In any telephone communication with a potential
consumer; and
(4) In any radio, television or printed advertisement for
the goods when the amount of the periodic payment
for the item is
included in the advertisement.
(d) Any oral communications concerning the terms and
conditions of the transaction shall be incorporated into a
written agreement which shall govern the transaction.
(e) In any transaction involving more than one dealer, only
one dealer may make the disclosures required by this article:
Provided, That when the name of the dealer is required to be
disclosed, all dealers shall be disclosed.
(f) A dealer 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-3-8. Prohibitions for rent-to-own transactions.
No dealer may:
(1) Require any initial payment in any transaction except
the payment for the first rental period, taxes, insurance or
delivery fees and other disclosed fees or fees authorized by this
chapter;
(2) Charge any fee at the time ownership of the consumer
goods passes to the consumer, other than an applicable fee, if
any, which actually is or will be paid to public officials for
perfecting title or ownership in the consumer;
(3) 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;
(4) Take any action to collect a payment which is prohibited
by this chapter;
(5) Accept any cosigner other than a person who is in the
household of the consumer and who is expected to use the consumer
goods;
(6) Take any security interest in any property owned by the
consumer;
(7) Require a damage waiver, insurance or form of insurance,
insuring the consumer goods against loss or damage, unless the
dealer requires such insurance for all goods of comparable type
and value in every rent-to-own agreement;
(8) Require damage waiver from a particular insurer;
(9) Seek to collect any charge not authorized by this
chapter and disclosed in a written agreement; or
(10) Have an initial period which is more than one week
longer than any other rental period.