On November 28, Massachusetts Attorney General (AG) Campbell reached an $8.75 million settlement with Rent-A-Center (RAC), the nation’s largest rent-to-own company specializing in consumer goods leases. The settlement aimed to resolve allegations that the company engaged in a pattern of unfair and deceptive practices against consumers in violation of Massachusetts consumer protection laws.
Campbell alleged that RAC engaged in coercive and abusive techniques toward consumers who missed or otherwise failed to make rental payments under their leases. The company was accused of misapplying the state’s criminal processes, filing unwarranted applications for criminal theft and larceny against consumers who failed to “make timely payments or return property, even in circumstances where RAC lacked a reasonable basis for concluding that the Consumer intended to permanently retain the property.”
Along with the $8.75 million payment to Massachusetts, RAC agreed to institute significant changes to its business practices to ensure adherence to state consumer protection laws, including fair debt collection and repossession practices. This includes discontinuing the practice of filing criminal complaints against consumers for missing payments. RAC also agreed to discontinue excessively calling consumers’ residences, workplaces, and personal phones in violation of the Massachusetts AG’s Debt Collection regulations, which state that debt collection calls may only be made to consumers twice within a seven-day period.
Why It Matters
Although theft laws in many states empower prosecutors to file criminal charges against individuals, who fail to keep up with lease agreement payments and do not return the leased items, consumer advocates, regulators, and some state legislators recently have voiced concerns about rent-to-own companies exploiting the criminal system to force payments from consumers. Consumer advocates argue that using criminal courts to enforce contracts ultimately criminalizes financial distress, threatening severe criminal repercussions for those struggling to keep up with payments due to unfortunate circumstances like loss of income, rent increases, accidents, illnesses, divorce, or the need to care for a distressed family member.
Given the close observation and scrutiny from regulators, rent-to-own companies like RAC should exercise caution in filing criminal charges against consumers, and should assess their approach to debt collection and repossession strategies to avoid allegations like those brought forward by the Massachusetts AG.
Troutman Pepper State Attorneys General Team
Ashley Taylor – Co-leader and Firm Vice Chair Ashley is co-leader of the firm’s nationally ranked State Attorneys General practice, vice chair of the firm, and a partner in its Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He helps his clients navigate the complexities involved with multistate attorneys general investigations and enforcement actions, federal agency actions, and accompanying litigation. |
|
Clay Friedman – Co-leader Clayton is a partner in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and co-leader of the State Attorneys General practice, multidisciplinary teams with decades of experience crafting effective strategies to help deter or mitigate the risk of enforcement actions and litigation. |
|
Judy Jagdmann Judy is a partner in the firm’s Regulatory Investigations, Strategy and Enforcement (RISE) practice, based in the Richmond office. She brings experience serving as chair and commissioner of the Virginia State Corporate Commission (VSCC) from 2006 through 2022, which includes regulating the utilities, insurance, banking, and securities industries. She also served as Virginia’s attorney general from 2005-2006. |
|
Stephen Piepgrass Stephen leads the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He focuses his practice on enforcement actions, investigations, and litigation. Stephen primarily represents clients engaging with, or being investigated by, state attorneys general and other state or local governmental enforcement bodies, including the CFPB and FTC, as well as clients involved with litigation, with a particular focus on heavily regulated industries. |
|
Avi Schick A former deputy attorney general of New York, Avi applies his experience in bet-the-company matters, representing clients in criminal and civil investigations and enforcement actions before state and federal regulators, prosecutors and enforcement agencies. |
|
Michael Yaghi Michael is a partner in the firm’s State Attorneys General and Regulatory Investigations, Strategy + Enforcement (RISE) Practice Groups, nationwide teams that advise clients on consumer protection enforcement matters and other regulatory issues. |
|
Samuel E. “Gene” Fishel Gene is a member of the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) practice, based in the Richmond office. He brings extensive regulatory experience, having most recently served as senior assistant attorney general and chief of the Computer Crime Section in the Office of the Attorney General of Virginia, and as special assistant U.S. attorney in the Eastern District of Virginia for 20 years. |
|
Tim Bado Tim is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, where he represents corporations and individuals facing potential civil and criminal exposure. Tim’s experience in government investigations, enforcement actions, and white-collar litigation spans a number of industries, including financial services, pharmaceutical, health care, and government contracting, among others. |
|
Chris Carlson Chris Carlson represents clients in regulatory, civil and criminal investigations and litigation. In his practice, Chris regularly employs his prior regulatory experience to benefit clients who are interacting with and being investigated by state attorneys general. |
|
Natalia Jacobo Natalia is an associate in the firm’s Regulatory Investigations, Strategy and Enforcement (RISE) practice. She focuses her practice on two primary areas: government contracting and state attorney general work. |
|
Namrata Kang Namrata (Nam) is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, based in the Washington, D.C. office. She routinely advises clients on a wide variety of state and federal regulatory matters, with a particular emphasis on state consumer protection laws relating to consumer financial services and marketing and advertising. |
|
Michael Lafleur Michael is an associate in the firm’s Regulatory Investigations, Strategy, and Enforcement Practice Group. Based out of the firm’s Boston office, Mike has deep experience in litigation, investigations, and other regulatory matters involving state-level regulators and state attorneys general. |
|
Susan Nikdel Susan is an associate in the firm’s Consumer Financial Services Practice Group, and focuses her practice on consumer financial services matters. She has defended several of the nation’s largest and most influential financial institutions in individual and class action litigation involving the Telephone Consumer Protection Act (TCPA), Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), and other consumer privacy statutes. |
|
John Sample John is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He focuses his practice on a wide range of general and complex litigation matters, including shareholder disputes, fraud, products liability, breach of contract, and Biometric Information Privacy Act claims. |
|
Whitney Shephard Whitney is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. She represents clients facing state and federal regulatory investigations and enforcement actions, as well as related civil litigation. |
|
Trey Smith Trey is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice. He focuses his practice on helping financial institutions and consumer facing companies navigate regulatory investigations and resulting litigation. |
|
Daniel Waltz Daniel is a member of the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and State Attorneys General team. He counsels clients in connection with navigating complex government investigations, regulatory compliance, and transactions, involving state and federal government contracting obligations. Drawing on his broad experience as a former assistant attorney general for the state of Illinois, Daniel is a problem solver both inside and outside the courtroom. |
|
Stephanie Kozol Stephanie is Troutman Pepper’s senior government relations manager in the state attorneys general department. |