[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1588 Reported in House (RH)]

                                                 Union Calendar No. 405
112th CONGRESS
  2d Session
                                H. R. 1588

                          [Report No. 112-565]

   To amend the Consumer Credit Protection Act to assure meaningful 
   disclosures of the terms of rental-purchase agreements, including 
disclosures of all costs to consumers under such agreements, to provide 
certain substantive rights to consumers under such agreements, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 15, 2011

    Mr. Canseco (for himself, Mr. Clay, Mr. Manzullo, Mr. Dold, Mr. 
  Westmoreland, Mr. Hensarling, Mr. McIntyre, Mr. Jones, Mr. Ross of 
 Arkansas, Mr. Baca, Mr. Holden, Mr. Sessions, Mr. Davis of Illinois, 
  Mr. Meeks, and Mr. Towns) introduced the following bill; which was 
            referred to the Committee on Financial Services

                             June 29, 2012

    Additional sponsors: Mr. Sam Johnson of Texas, Mr. Shimkus, Ms. 
 Jenkins, Mr. Hall, Mrs. Blackburn, Mr. Platts, Mr. Akin, Mr. Hastings 
of Florida, Mr. Luetkemeyer, Mr. Whitfield, Mr. Bonner, Mr. LaTourette, 
 Mr. David Scott of Georgia, Mr. Graves of Missouri, Mr. King of Iowa, 
Mr. Schock, Mr. Stivers, Mr. Roe of Tennessee, Mr. Duncan of Tennessee, 
   Mr. Palazzo, Mr. Ross of Florida, Mr. Burgess, Mrs. Myrick, Mrs. 
Emerson, Mr. Shuster, Mr. Wolf, Mr. Rogers of Kentucky, Mr. Olson, Mr. 
   Coble, Mr. Gohmert, Mr. Bishop of Utah, Mr. Johnson of Ohio, Mr. 
 Marchant, Mr. Nugent, Mr. Turner of Ohio, Mr. Kinzinger of Illinois, 
 Mr. Crawford, Mr. Harper, Mr. Neugebauer, Mr. Womack, Mr. Griffin of 
 Arkansas, Mr. Kline, Mr. Smith of Texas, Mr. Wittman, Mr. Goodlatte, 
 Mr. Alexander, Mr. Schilling, Mr. Guthrie, Mr. Nunnelee, Mr. Fincher, 
 Ms. Foxx, Mr. Boustany, Mr. Lucas, Mr. Farenthold, Mrs. Hartzler, Mr. 
   Costello, Mr. Austria, Ms. Wilson of Florida, Mr. DesJarlais, Mr. 
   Boswell, Mr. Cleaver, Mr. Fleischmann, Mr. Davis of Kentucky, Ms. 
    Castor of Florida, Mr. Johnson of Illinois, Mr. Austin Scott of 
Georgia, Ms. Eddie Bernice Johnson of Texas, Mr. Conaway, Mrs. McMorris 
  Rodgers, Mr. Rogers of Alabama, Mr. Diaz-Balart, Mr. Hinojosa, Mr. 
Terry, Mr. McHenry, Mr. Grimm, Mrs. Black, Mr. Kingston, Mr. Ackerman, 
Mr. Gingrey of Georgia, Mr. Hurt, Mr. Royce, Mr. Duffy, Mr. Jordan, Mr. 
  Latham, Mr. Wilson of South Carolina, Mrs. Schmidt, Mr. Forbes, Ms. 
Hanabusa, Mr. Calvert, Mr. Reyes, Mr. Bartlett, Mrs. Noem, Mr. Young of 
Alaska, Mr. Gibbs, Mrs. Christensen, Mr. Kelly, Mr. Boren, Mr. Smith of 
               Nebraska, Mr. Rigell, and Mr. Butterfield

                             June 29, 2012

 Deleted sponsor: Mr. Carnahan (added May 23, 2011; deleted April 27, 
                                 2012)

                             June 29, 2012

  Reported with an amendment; committed to the Committee of the Whole 
       House on the State of the Union and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
 [For text of introduced bill, see copy of bill as introduced on April 
                               15, 2011]

_______________________________________________________________________

                                 A BILL


 
   To amend the Consumer Credit Protection Act to assure meaningful 
   disclosures of the terms of rental-purchase agreements, including 
disclosures of all costs to consumers under such agreements, to provide 
certain substantive rights to consumers under such agreements, and for 
                            other purposes.


 


    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Consumer Rental Purchase Agreement 
Act''.

SEC. 2. FINDINGS AND DECLARATION OF PURPOSE.

    (a) Findings.--The Congress finds as follows:
            (1) The rental-purchase industry provides a service that 
        meets and satisfies the demands of many consumers.
            (2) Each year, approximately 2,300,000 United States 
        households enter into rental-purchase transactions and over a 
        5-year period approximately 4,900,000 United States households 
        will do so.
            (3) Competition among the various firms engaged in the 
        extension of rental-purchase transactions would be strengthened 
        by informed use of rental-purchase transactions.
            (4) The informed use of rental-purchase transactions 
        results from an awareness of the cost thereof by consumers.
    (b) Purpose.--The purpose of this title is to assure the 
availability of rental-purchase transactions and to assure simple, 
meaningful, and consistent disclosure of rental-purchase terms so that 
consumers will be able to more readily compare the available rental-
purchase terms and avoid uninformed use of rental-purchase 
transactions, and to protect consumers against unfair rental-purchase 
practices.

SEC. 3. RENTAL-PURCHASE TRANSACTIONS COVERED UNDER THE CONSUMER CREDIT 
              PROTECTION ACT.

    The Consumer Credit Protection Act is amended by adding at the end 
the following new title:

                ``TITLE X--RENTAL-PURCHASE TRANSACTIONS

``Sec. 1001. Definitions.
``Sec. 1002. Exempted transactions.
``Sec. 1003. General disclosure requirements.
``Sec. 1004. Rental-purchase disclosures.
``Sec. 1005. Other agreement provisions.
``Sec. 1006. Right to acquire ownership.
``Sec. 1007. Prohibited provisions.
``Sec. 1008. Statement of accounts.
``Sec. 1009. Renegotiations and extensions.
``Sec. 1010. Point-of-rental disclosures.
``Sec. 1011. Rental-purchase advertising.
``Sec. 1012. Civil liability.
``Sec. 1013. Additional grounds for civil liability.
``Sec. 1014. Liability of assignees.
``Sec. 1015. Regulations.
``Sec. 1016. Enforcement.
``Sec. 1017. Criminal liability for willful and knowing violation.
``Sec. 1018. Relation to other laws.
``Sec. 1019. Effect on Government agencies.
``Sec. 1020. Compliance date.

``SEC. 1001. DEFINITIONS.

    ``For purposes of this title, the following definitions shall 
apply:
            ``(1) Advertisement.--The term `advertisement' means a 
        commercial message in any medium that promotes, directly or 
        indirectly, a rental-purchase agreement but does not include 
        price tags, window signs, or other in-store merchandising aids.
            ``(2) Agricultural purpose.--The term `agricultural 
        purpose' includes--
                    ``(A) the production, harvest, exhibition, 
                marketing, transformation, processing, or manufacture 
                of agricultural products by a natural person who 
                cultivates plants or propagates or nurtures 
                agricultural products; and
                    ``(B) the acquisition of farmlands, real property 
                with a farm residence, or personal property and 
                services used primarily in farming.
            ``(3) Board.--The term `Board' means the Board of Governors 
        of the Federal Reserve System.
            ``(4) Cash price.--The term `cash price' means the price at 
        which a merchant, in the ordinary course of business, offers to 
        sell for cash the property that is the subject of the rental-
        purchase transaction.
            ``(5) Consumer.--The term `consumer' means a natural person 
        who is offered or enters into a rental-purchase agreement.
            ``(6) Date of consummation.--The term `date of 
        consummation' means the date on which a consumer becomes 
        contractually obligated under a rental-purchase agreement.
            ``(7) Initial payment.--The term `initial payment' means 
        the amount to be paid before or at the consummation of the 
        agreement or the delivery of the property if delivery occurs 
        after consummation, including the rental payment; service, 
        processing, or administrative charges; delivery fee; refundable 
        security deposit; taxes; mandatory fees or charges; and any 
        optional fees or charges agreed to by the consumer.
            ``(8) Merchant.--The term `merchant' means a person who 
        provides the use of property through a rental-purchase 
        agreement in the ordinary course of business and to whom a 
        consumer's initial payment under the agreement is payable.
            ``(9) Payment schedule.--The term `payment schedule' means 
        the amount and timing of the periodic payments and the total 
        number of all periodic payments that the consumer will make if 
        the consumer acquires ownership of the property by making all 
        periodic payments.
            ``(10) Periodic payment.--The term `periodic payment' means 
        the total payment a consumer will make for a specific rental 
        period after the initial payment, including the rental payment, 
        taxes, mandatory fees or charges, and any optional fees or 
        charges agreed to by the consumer.
            ``(11) Property.--The term `property' means property that 
        is not real property under the laws of the State where the 
        property is located when it is made available under a rental-
        purchase agreement.
            ``(12) Rental payment.--The term `rental payment' means 
        rent required to be paid by a consumer for the possession and 
        use of property for a specific rental period, but does not 
        include taxes or any fees or charges.
            ``(13) Rental period.--The term `rental period' means a 
        week, month, or other specific period of time, during which the 
        consumer has a right to possess and use property that is the 
        subject of a rental-purchase agreement after paying the rental 
        payment and any applicable taxes for such period.
            ``(14) Rental-purchase agreement.--
                    ``(A) In general.--The term `rental-purchase 
                agreement' means a contract in the form of a bailment 
                or lease for the use of property by a consumer for an 
                initial period of 4 months or less, that is renewable 
                with each payment by the consumer, and that permits but 
                does not obligate the consumer to become the owner of 
                the property.
                    ``(B) Exclusions.--The term `rental-purchase 
                agreement' shall not be construed to be, nor governed 
                by laws regulating any of the following:
                            ``(i) A credit sale (as defined in section 
                        103(g) of the Truth in Lending Act).
                            ``(ii) A consumer lease (as defined in 
                        section 181(1) of such Act).
                            ``(iii) An extension of credit or a 
                        transaction giving rise to a debt incurred in 
                        connection with the purchase of a thing of 
                        value.
            ``(15) Rental-purchase cost.--
                    ``(A) In general.--For purposes of sections 1010 
                and 1011, the term `rental-purchase cost' means the sum 
                of all rental payments and mandatory fees or charges 
                imposed by the merchant as a condition of entering into 
                a rental-purchase agreement or acquiring ownership of 
                property under a rental-purchase agreement, such as the 
                following:
                            ``(i) Service, processing, or 
                        administrative charge.
                            ``(ii) Fee for an investigation or credit 
                        report.
                            ``(iii) Charge for delivery required by the 
                        merchant.
                    ``(B) Excluded items.--The following fees or 
                charges shall not be taken into account in determining 
                the rental-purchase cost with respect to a rental-
                purchase transaction:
                            ``(i) Fees and charges prescribed by law, 
                        which actually are or will be paid to public 
                        officials or government entities, such as sales 
                        tax.
                            ``(ii) Fees and charges for optional 
                        products and services offered in connection 
                        with a rental-purchase agreement.
            ``(16) State.--The term `State' means any State of the 
        United States, the District of Columbia, any territory of the 
        United States, Puerto Rico, Guam, American Samoa, the Trust 
        Territory of the Pacific Islands, the Virgin Islands, and the 
        Northern Mariana Islands.
            ``(17) Total cost.--The term `total cost' means the sum of 
        the initial payment and all periodic payments in the payment 
        schedule to be paid by the consumer to acquire ownership of the 
        property that is the subject of the rental-purchase agreement.

``SEC. 1002. EXEMPTED TRANSACTIONS.

    ``This title shall not apply to rental-purchase agreements 
primarily for business, commercial, or agricultural purposes, or those 
made with Government agencies or instrumentalities.

``SEC. 1003. GENERAL DISCLOSURE REQUIREMENTS.

    ``(a) Recipient of Disclosure.--A merchant shall disclose to any 
person who will be a signatory to a rental-purchase agreement the 
information required by sections 1004 and 1005.
    ``(b) Timing of Disclosure.--The disclosures required under 
sections 1004 and 1005 shall be made before the consummation of the 
rental-purchase agreement and clearly and conspicuously in writing as 
part of the rental-purchase agreement to be signed by the consumer.
    ``(c) Clearly and Conspicuously.--As used in this section, the term 
`clearly and conspicuously' means that information required to be 
disclosed to the consumer shall be worded plainly and simply, and 
appear in a type size, prominence, and location as to be readily 
noticeable, readable, and comprehensible to an ordinary consumer.

``SEC. 1004. RENTAL-PURCHASE DISCLOSURES.

    ``(a) In General.--For each rental-purchase agreement, the merchant 
shall clearly and conspicuously disclose to the consumer the following, 
to the extent applicable:
            ``(1) The date of the consummation of the rental-purchase 
        transaction and the identities of the merchant and the 
        consumer.
            ``(2) A brief description of the rental property, which 
        shall be sufficient to identify the property to the consumer, 
        including an identification or serial number, if applicable, 
        and a statement indicating whether the property is new or used.
            ``(3) A description of any fee, charge or penalty, in 
        addition to the periodic payment, that the consumer may be 
        required to pay under the agreement, which shall be separately 
        identified by type and amount.
            ``(4) A statement that the transaction is a rental-purchase 
        agreement and that the consumer will not obtain ownership of 
        the property until the consumer has paid the total dollar 
        amount necessary to acquire ownership.
            ``(5) The amount of any initial payment.
            ``(6) The amount of the cash price of the property that is 
        the subject of the rental-purchase agreement, and, if the 
        agreement involves the rental of 2 or more items as a set (as 
        may be defined by the Board in regulation) a statement of the 
        aggregate cash price of all items shall satisfy this 
        requirement.
            ``(7) The payment schedule.
            ``(8) The total cost, using that term, and a brief 
        description, such as `This is the amount you will pay the 
        merchant if you make all periodic payments to acquire ownership 
        of the property.'.
            ``(9) A statement of the consumer's right to terminate the 
        agreement without paying any fee or charge not previously due 
        under the agreement by voluntarily surrendering or returning 
        the property in good repair upon expiration of any rental 
        period.
            ``(10) Substantially the following statement: `other 
        important terms: See your rental-purchase agreement for 
        additional important information on early termination 
        procedures, purchase option rights, responsibilities for loss, 
        damage or destruction of the property, warranties, maintenance 
        responsibilities, and other charges or penalties you may 
        incur.'.
    ``(b) Form of Disclosure.--The disclosures required by paragraphs 
(4) through (10) of subsection (a) shall be segregated from other 
information at the beginning of the rental-purchase agreement and shall 
contain only directly related information, and shall be identified in 
boldface, upper-case letters as follows: `important rental-purchase 
disclosures'.
    ``(c) Disclosure Requirements Relating to Insurance Premiums and 
Liability Waivers.--
            ``(1) In general.--A merchant shall clearly and 
        conspicuously disclose in writing to the consumer before the 
        consummation of a rental-purchase agreement that the purchase 
        of leased property insurance or liability waiver coverage is 
        not required as a condition for entering into the rental-
        purchase agreement.
            ``(2) Affirmative written request after cost disclosure.--A 
        merchant may provide insurance or liability waiver coverage, 
        directly or indirectly, in connection with a rental-purchase 
        transaction only if--
                    ``(A) the merchant clearly and conspicuously 
                discloses to the consumer the cost of such coverage 
                before the consummation of the rental-purchase 
                agreement; and
                    ``(B) the consumer signs an affirmative written 
                request for such coverage after receiving the 
                disclosures required under subparagraph (A) of this 
                paragraph and paragraph (1).
    ``(d) Accuracy of Disclosure.--
            ``(1) In general.--The disclosures required to be made 
        under subsection (a) shall be accurate as of the date the 
        disclosures are made, based on the information available to the 
        merchant.
            ``(2) Information subsequently rendered inaccurate.--If 
        information required to be disclosed under subsection (a) is 
        subsequently rendered inaccurate as a result of any agreement 
        between the merchant and the consumer subsequent to the 
        delivery of the required disclosures, the resulting inaccuracy 
        shall not constitute a violation of this title.

``SEC. 1005. OTHER AGREEMENT PROVISIONS.

    ``(a) In General.--Each rental-purchase agreement shall--
            ``(1) provide a statement specifying whether the merchant 
        or the consumer is responsible for loss, theft, damage, or 
        destruction of the property;
            ``(2) provide a statement specifying whether the merchant 
        or the consumer is responsible for maintaining or servicing the 
        property, together with a brief description of the 
        responsibility;
            ``(3) contain a provision for reinstatement of the 
        agreement, which at a minimum--
                    ``(A) permits a consumer who fails to make a timely 
                rental payment to reinstate the agreement, without 
                losing any rights or options which exist under the 
                agreement, by the payment of all past due rental 
                payments and any other charges then due under the 
                agreement and a payment for the next rental period 
                within 7 business days after failing to make a timely 
                rental payment if the consumer pays monthly, or within 
                3 business days after failing to make a timely rental 
                payment if the consumer pays more frequently than 
                monthly;
                    ``(B) if the consumer returns or voluntarily 
                surrenders the property covered by the agreement, other 
                than through judicial process, during the applicable 
                reinstatement period set forth in subparagraph (A), 
                permits the consumer to reinstate the agreement during 
                a period of at least 60 days after the date of the 
                return or surrender of the property by the payment of 
                all amounts previously due under the agreement, any 
                applicable fees, and a payment for the next rental 
                period;
                    ``(C) if the consumer has paid 50 percent or more 
                of the total cost necessary to acquire ownership and 
                returns or voluntarily surrenders the property, other 
                than through judicial process, during the applicable 
                reinstatement period set forth in subparagraph (A), 
                permits the consumer to reinstate the agreement during 
                a period of at least 120 days after the date of the 
                return of the property by the payment of all amounts 
                previously due under the agreement, any applicable 
                fees, and a payment for the next rental period; and
                    ``(D) permits the consumer, upon reinstatement of 
                the agreement to receive the same property, if 
                available, that was the subject of the rental-purchase 
                agreement, or if the same property is not available, a 
                substitute item of comparable quality and condition may 
                be provided to the consumer; except that, the Board 
                may, by regulation or order, exempt any independent 
                small business (as defined by the Board by regulation) 
                from the requirement of providing the same or 
                comparable product during the extended reinstatement 
                period provided in subparagraph (C), if the Board 
                determines, taking into account such standards as the 
                Board determines to be appropriate, that the 
                reinstatement right provided in such subparagraph would 
                provide excessive hardship for such independent small 
                business;
            ``(4) provide a statement specifying the terms under which 
        the consumer shall acquire ownership of the property that is 
        the subject of the rental-purchase agreement either by payment 
        of the total cost to acquire ownership, as provided in section 
        1006, or by exercise of any early purchase option provided in 
        the rental-purchase agreement;
            ``(5) provide a statement disclosing that if any part of a 
        manufacturer's express warranty covers the property at the time 
        the consumer acquires ownership of the property, the warranty 
        will be transferred to the consumer if allowed by the terms of 
        the warranty; and
            ``(6) provide, to the extent applicable, a description of 
        any grace period for making any periodic payment, the amount of 
        any security deposit, if any, to be paid by the consumer upon 
        initiation of the rental-purchase agreement, and the terms for 
        refund of such security deposit to the consumer upon return, 
        surrender or purchase of the property.
    ``(b) Repossession During Reinstatement Period.--Subsection (a)(3) 
shall not be construed so as to prevent a merchant from attempting to 
repossess property during the reinstatement period pursuant to 
subsection (a)(3)(A), but such a repossession does not affect the 
consumer's right to reinstate.

``SEC. 1006. RIGHT TO ACQUIRE OWNERSHIP.

    ``(a) In General.--The consumer shall acquire ownership of the 
property that is the subject of the rental-purchase agreement, and the 
rental-purchase agreement shall terminate, upon compliance by the 
consumer with the requirements of subsection (b) or any early payment 
option provided in the rental purchase agreement, and upon payment of 
any past due payments and fees, as permitted in regulation by the 
Board.
    ``(b) Payment of Total Cost.--The consumer shall acquire ownership 
of the rental property upon payment of the total cost of the rental-
purchase agreement, as such term is defined in section 1001(17), and as 
disclosed to the consumer in the rental-purchase agreement pursuant to 
section 1004(a).
    ``(c) Additional Fees Prohibited.--A merchant shall not require the 
consumer to pay, as a condition for acquiring ownership of the property 
that is the subject of the rental-purchase agreement, any fee or charge 
in addition to, or in excess of, the regular periodic payments required 
by subsection (b), or any early purchase option amount provided in the 
rental-purchase agreement, as applicable. A requirement that the 
consumer pay an unpaid late charge or other fee that is past due shall 
not constitute an additional fee or charge for purposes of this 
subsection.
    ``(d) Transfer of Ownership Rights.--Upon payment by the consumer 
of all payments necessary to acquire ownership under subsection (b) or 
any early purchase option amount provided in the rental-purchase 
agreement, as appropriate, the merchant shall--
            ``(1) deliver to the consumer, or mail to the consumer's 
        last known address, such documents or other instruments, which 
        the Board has determined by regulation, are necessary to 
        acknowledge full ownership by the consumer of the property 
        acquired pursuant to the rental-purchase agreement; and
            ``(2) transfer to the consumer the unexpired portion of any 
        warranties provided by the manufacturer, distributor, or seller 
        of the property, which shall apply as if the consumer were the 
        original purchaser of the property, except where such transfer 
        is prohibited by the terms of the warranty.

``SEC. 1007. PROHIBITED PROVISIONS.

    ``A rental-purchase agreement may not contain--
            ``(1) a confession of judgment;
            ``(2) a negotiable instrument;
            ``(3) a security interest or any other claim of a property 
        interest in any goods, except those goods the use of which is 
        provided by the merchant pursuant to the agreement;
            ``(4) a wage assignment;
            ``(5) a provision requiring the waiver of any legal claim 
        or remedy created by this title or other provision of Federal 
        or State law;
            ``(6) a provision requiring the consumer, in the event the 
        property subject to the rental-purchase agreement is lost, 
        stolen, damaged, or destroyed, to pay an amount in excess of 
        the least of--
                    ``(A) the fair market value of the property, as 
                determined by the Board in regulation;
                    ``(B) any early purchase option amount provided in 
                the rental-purchase agreement; or
                    ``(C) the actual cost of repair, as appropriate;
            ``(7) a provision authorizing the merchant, or a person 
        acting on behalf of the merchant, to enter the consumer's 
        dwelling or other premises without obtaining the consumer's 
        consent or to commit any breach of the peace in connection with 
        the repossession of the rental property or the collection of 
        any obligation or alleged obligation of the consumer arising 
        out of the rental-purchase agreement;
            ``(8) a provision requiring the purchase of insurance or 
        liability damage waiver to cover the property that is the 
        subject of the rental-purchase agreement, except as permitted 
        by the Board in regulation; or
            ``(9) a provision requiring the consumer to pay more than 1 
        late fee or charge for an unpaid or delinquent periodic 
        payment, regardless of the period in which the payment remains 
        unpaid or delinquent, or to pay a late fee or charge for any 
        periodic payment because a previously assessed late fee has not 
        been paid in full.

``SEC. 1008. STATEMENT OF ACCOUNTS.

    ``Upon request of a consumer, a merchant shall provide a statement 
of the consumer's account. If a consumer requests a statement for an 
individual account more than 4 times in any 12-month period, the 
merchant may charge a reasonable fee for the additional statements.

``SEC. 1009. RENEGOTIATIONS AND EXTENSIONS.

    ``(a) Renegotiations.--A renegotiation occurs when a rental-
purchase agreement is satisfied and replaced by a new agreement 
undertaken by the same consumer. A renegotiation requires new 
disclosures, except as provided in subsection (c).
    ``(b) Extensions.--An extension is an agreement by the consumer and 
the merchant, to continue an existing rental-purchase agreement beyond 
the original end of the payment schedule, but does not include a 
continuation that is the result of a renegotiation.
    ``(c) Exceptions.--New disclosures are not required for the 
following, even if they meet the definition of a renegotiation or an 
extension:
            ``(1) A reduction in payments.
            ``(2) A deferment of 1 or more payments.
            ``(3) The extension of a rental-purchase agreement.
            ``(4) The substitution of property with property that has a 
        substantially equivalent or greater economic value provided the 
        rental-purchase cost does not increase.
            ``(5) The deletion of property in a multiple-item 
        agreement.
            ``(6) A change in rental period provided the rental-
        purchase cost does not increase.
            ``(7) An agreement resulting from a court proceeding.
            ``(8) Any other event described in regulations prescribed 
        by the Board.

``SEC. 1010. POINT-OF-RENTAL DISCLOSURES.

    ``(a) In General.--For any item of property or set of items 
displayed or offered for rental-purchase, the merchant shall display on 
or next to the item or set of items a card, tag, or label that clearly 
and conspicuously discloses the following:
            ``(1) A brief description of the property.
            ``(2) Whether the property is new or used.
            ``(3) The cash price of the property.
            ``(4) The amount of each rental payment.
            ``(5) The total number of rental payments necessary to 
        acquire ownership of the property.
            ``(6) The rental-purchase cost.
    ``(b) Form of Disclosure.--
            ``(1) In general.--A merchant may make the disclosure 
        required by subsection (a) in the form of a list, catalog, or 
        electronic facsimile of the card, tag, or label which is 
        readily available to the consumer at the point of rental if the 
        merchandise is not displayed in the merchant's showroom or if 
        displaying a card, tag, or label would be impractical due to 
        the size of the merchandise.
            ``(2) Clearly and conspicuously.--As used in this section, 
        the term `clearly and conspicuously' means that information 
        required to be disclosed to the consumer shall appear in a type 
        size, prominence, and location as to be noticeable, readable, 
        and comprehensible to an ordinary consumer.

``SEC. 1011. RENTAL-PURCHASE ADVERTISING.

    ``(a) In General.--If an advertisement for a rental-purchase 
transaction refers to or states the amount of any payment for any 
specific item or set of items, the merchant making the advertisement 
shall also clearly and conspicuously state in the advertisement the 
following for the item, or set of items, advertised:
            ``(1) The transaction advertised is a rental-purchase 
        agreement.
            ``(2) The amount, timing, and total number of rental 
        payments necessary to acquire ownership under the rental-
        purchase agreement.
            ``(3) The amount of the rental-purchase cost.
            ``(4) To acquire ownership of the property the consumer 
        must pay the rental-purchase cost plus applicable taxes.
            ``(5) Whether the stated payment amount and advertised 
        rental-purchase cost is for new or used property.
    ``(b) Prohibition.--An advertisement for a rental-purchase 
agreement shall not state or imply that a specific item, or set of 
items, is available at specific amounts or terms unless the merchant 
usually and customarily offers, or will offer, the item or set of items 
at the stated amounts or terms.
    ``(c) Clearly and Conspicuously.--
            ``(1) In general.--For purposes of this section, the term 
        `clearly and conspicuously' means that required disclosures 
        shall be presented in a type, size, shade, contrast, 
        prominence, location, and manner, as applicable to different 
        mediums for advertising, so as to be readily noticeable and 
        comprehensible to the ordinary consumer.
            ``(2) Regulatory guidance.--The Board shall prescribe 
        regulations on principles and factors to meet the clear and 
        conspicuous standard as appropriate to print, video, audio, and 
        computerized advertising, reflecting the principles and factors 
        typically applied in each medium by the Federal Trade 
        Commission.
            ``(3) Limitation.--Nothing contrary to, inconsistent with, 
        or in mitigation of, the required disclosures shall be used in 
        any advertisement in any medium, and no audio, video, or print 
        technique shall be used that is likely to obscure or detract 
        significantly from the communication of the disclosures.

``SEC. 1012. CIVIL LIABILITY.

    ``(a) In General.--Except as otherwise provided in section 1013, 
any merchant who fails to comply with any requirement of this title 
with respect to any consumer is liable to such consumer as provided for 
leases in section 130. For purposes of this section, the term 
`creditor' as used in section 130 shall include a `merchant', as 
defined in section 1001, and for purposes of this title, the term 
`total amount of monthly payments under the lease' as used in section 
130 shall mean the sum of all fees, periodic payments, initial payment, 
and any other charges paid by the consumer since the date of 
consummation.
    ``(b) Jurisdiction of Courts; Limitation on Actions.--
            ``(1) In general.--Notwithstanding section 130(e), any 
        action under this section may be brought in any United States 
        district court, or in any other court of competent 
        jurisdiction, before the end of the 1-year period beginning on 
        the date the last payment was made by the consumer under the 
        rental-purchase agreement.
            ``(2) Recoupment or set-off.--This subsection shall not bar 
        a consumer from asserting a violation of this title in an 
        action to collect an obligation arising from a rental-purchase 
        agreement, which was brought after the end of the 1-year period 
        described in paragraph (1) as a matter of defense by recoupment 
        or set-off in such action, except as otherwise provided by 
        State law.

``SEC. 1013. ADDITIONAL GROUNDS FOR CIVIL LIABILITY.

    ``(a) Individual Cases With Actual Damages.--Any merchant who fails 
to comply with any requirements imposed under section 1010 or 1011 with 
respect to any consumer who suffers actual damage from the violation 
shall be liable to such consumer as provided in section 130.
    ``(b) Pattern or Practice of Violations.--If a merchant engages in 
a pattern or practice of violating any requirement imposed under 
section 1010 or 1011, the Federal Trade Commission or an appropriate 
State attorney general, in accordance with section 1016, may initiate 
an action to enforce sanctions against the merchant, including--
            ``(1) an order to cease and desist from such practices; and
            ``(2) a civil money penalty of such amount as the court may 
        impose, based on such factors as the court may determine to be 
        appropriate.

``SEC. 1014. LIABILITY OF ASSIGNEES.

    ``(a) Assignees Included.--For purposes of section 1013, and this 
section, the term `merchant' includes an assignee of a merchant.
    ``(b) Liabilities of Assignees.--
            ``(1) Apparent violation.--An action under section 1012 or 
        1013 for a violation of this title may be brought against an 
        assignee only if the violation is apparent on the face of the 
        rental-purchase agreement to which it relates.
            ``(2) Apparent violation defined.--For purposes of this 
        subsection, a violation that is apparent on the face of a 
        rental-purchase agreement includes, but is not limited to, a 
        disclosure that can be determined to be incomplete or 
        inaccurate from the face of the agreement.
            ``(3) Involuntary assignment.--An assignee has no liability 
        in a case in which the assignment is involuntary.
            ``(4) Rule of construction.--No provision of this section 
        shall be construed as limiting or altering the liability under 
        section 1012 or 1013 of a merchant assigning a rental-purchase 
        agreement.
    ``(c) Proof of Disclosure.--In an action by or against an assignee, 
the consumer's written acknowledgment of receipt of a disclosure, made 
as part of the rental-purchase agreement, shall be conclusive proof 
that the disclosure was made, if the assignee had no knowledge that the 
disclosure had not been made when the assignee acquired the rental-
purchase agreement to which it relates.

``SEC. 1015. REGULATIONS.

    ``(a) In General.--The Board shall prescribe regulations as 
necessary to carry out the purposes of this title. Such regulations may 
contain such additional requirements, classifications, 
differentiations, or other provisions, and may provide for such 
adjustments and exceptions for all or any class of transactions, as in 
the judgment of the Board are necessary or proper to effectuate the 
purposes of this title, to prevent circumvention or evasion thereof, or 
to facilitate compliance therewith.
    ``(b) Model Disclosure Forms.--The Board may publish model 
disclosure forms and clauses for common rental-purchase agreements to 
facilitate compliance with the disclosure requirements of this title 
and to aid the consumer in understanding the transaction by utilizing 
readily understandable language to simplify the technical nature of the 
disclosures. In devising such forms, the Board shall consider the use 
by merchants of data processing or similar automated equipment. Nothing 
in this title may be construed to require a merchant to use any such 
model form or clause prescribed by the Board under this section. A 
merchant shall be deemed to be in compliance with the requirement to 
provide disclosure under section 1003(a) if the merchant--
            ``(1) uses any appropriate model form or clause as 
        published by the Board; or
            ``(2) uses any such model form or clause and changes it 
        by--
                    ``(A) deleting any information which is not 
                required by this title; or
                    ``(B) rearranging the format, if in making such 
                deletion or rearranging the format, the merchant does 
                not affect the substance, clarity, or meaningful 
                sequence of the disclosure.
    ``(c) Effective Date of Regulations.--Any regulation prescribed by 
the Board, or any amendment or interpretation thereof, shall not be 
effective before the October 1 that follows the date of publication of 
the regulation in final form by at least 6 months. The Board may at its 
discretion lengthen that period of time to permit merchants to adjust 
to accommodate new requirements. The Board may also shorten that period 
of time, notwithstanding the first sentence, if it makes a specific 
finding that such action is necessary to comply with the findings of a 
court or to prevent unfair or deceptive practices. In any case, 
merchants may comply with any newly prescribed disclosure requirement 
prior to its effective date.

``SEC. 1016. ENFORCEMENT.

    ``(a) Federal Enforcement.--Compliance with the requirements 
imposed under this title shall be enforced under the Federal Trade 
Commission Act (15 U.S.C. 41 et seq.), and a violation of any 
requirements imposed under this title shall be deemed a violation of a 
requirement imposed under that Act. All of the functions and powers of 
the Federal Trade Commission under the Federal Trade Commission Act are 
available to the Commission to enforce compliance by any person with 
the requirements of this title, irrespective of whether that person is 
engaged in commerce or meets any other jurisdictional test in the 
Federal Trade Commission Act.
    ``(b) State Enforcement.--
            ``(1) In general.--An action to enforce the requirements 
        imposed by this title may also be brought by the appropriate 
        State attorney general in any appropriate United States 
        district court, or any other court of competent jurisdiction.
            ``(2) Prior written notice.--
                    ``(A) In general.--The State attorney general shall 
                provide prior written notice of any such civil action 
                to the Federal Trade Commission and shall provide the 
                Commission with a copy of the complaint.
                    ``(B) Emergency action.--If prior notice is not 
                feasible, the State attorney general shall provide 
                notice to the Commission immediately upon instituting 
                the action.
            ``(3) FTC intervention.--The Commission may--
                    ``(A) intervene in the action;
                    ``(B) upon intervening--
                            ``(i) remove the action to the appropriate 
                        United States district court, if it was not 
                        originally brought there; and
                            ``(ii) be heard on all matters arising in 
                        the action; and
                    ``(C) file a petition for appeal.

``SEC. 1017. CRIMINAL LIABILITY FOR WILLFUL AND KNOWING VIOLATION.

    ``Whoever willfully and knowingly gives false or inaccurate 
information or fails to provide information which he is required to 
disclose under the provisions of this title or any regulation issued 
thereunder shall be subject to the penalty provisions as provided in 
section 112.

``SEC. 1018. RELATION TO OTHER LAWS.

    ``(a) Relation to State Law.--
            ``(1) No effect on consistent state laws.--Except as 
        otherwise provided in subsection (b), this title does not 
        annul, alter, or affect in any manner the meaning, scope, or 
        applicability of the laws of any State relating to rental-
        purchase agreements, except to the extent those laws are 
        inconsistent with any provision of this title, and then only to 
        the extent of the inconsistency.
            ``(2) Determination of inconsistency.--Upon its own motion 
        or upon the request of an interested party, which is submitted 
        in accordance with procedures prescribed in regulations of the 
        Board, the Board shall determine whether any such inconsistency 
        exists. If the Board determines that a term or provision of a 
        State law is inconsistent, merchants located in that State need 
        not follow such term or provision and shall incur no liability 
        under the law of that State for failure to follow such term or 
        provision, notwithstanding that such determination is 
        subsequently amended, rescinded, or determined by judicial or 
        other authority to be invalid for any reason.
            ``(3) Greater protection under state law.--Except as 
        provided in subsection (b), for purposes of this section, a 
        term or provision of a State law is not inconsistent with the 
        provisions of this title if the term or provision affords 
        greater protection and benefit to the consumer than the 
        protection and benefit provided under this title as determined 
        by the Board, on its own motion or upon the petition of any 
        interested party.
    ``(b) State Laws Relating to Characterization of Transaction.--
Notwithstanding the provisions of subsection (a), this title shall 
supersede any State law to the extent that such law--
            ``(1) regulates a rental-purchase agreement as a security 
        interest, credit sale, retail installment sale, conditional 
        sale or any other form of consumer credit, or that imputes to a 
        rental-purchase agreement the creation of a debt or extension 
        of credit; or
            ``(2) requires the disclosure of a percentage rate 
        calculation, including a time-price differential, an annual 
        percentage rate, or an effective annual percentage rate.
    ``(c) Relation to Federal Trade Commission Act.--No provision of 
this title shall be construed as limiting, superseding, or otherwise 
affecting the applicability of the Federal Trade Commission Act to any 
merchant or rental-purchase transaction.

``SEC. 1019. EFFECT ON GOVERNMENT AGENCIES.

    ``No civil liability or criminal penalty under this title may be 
imposed on the United States or any of its departments or agencies, any 
State or political subdivision, or any agency of a State or political 
subdivision.

``SEC. 1020. COMPLIANCE DATE.

    ``Compliance with this title shall not be required until 6 months 
after the date of the enactment of the `Consumer Rental Purchase 
Agreement Act'. In any case, merchants may comply with this title at 
any time after such date of enactment.''.
                                                 Union Calendar No. 405

112th CONGRESS

  2d Session

                               H. R. 1588

                          [Report No. 112-565]

_______________________________________________________________________

                                 A BILL

   To amend the Consumer Credit Protection Act to assure meaningful 
   disclosures of the terms of rental-purchase agreements, including 
disclosures of all costs to consumers under such agreements, to provide 
certain substantive rights to consumers under such agreements, and for 
                            other purposes.

_______________________________________________________________________

                             June 29, 2012

  Reported with an amendment; committed to the Committee of the Whole 
       House on the State of the Union and ordered to be printed