[Congressional Record Volume 151, Number 29 (Friday, March 11, 2005)]
[Senate]
[Pages S2517-S2521]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. LANDRIEU (for herself, Mr. Johnson, Mr. Baucus, Mrs. 
        Lincoln, and Mr. Shelby):
  S. 603. 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; to the Committee on Banking, 
Housing, and Urban Affairs.
  Ms. LANDRIEU. Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 603

       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 of 2005''.

     SEC. 2. FINDINGS AND DECLARATION OF PURPOSES.

       (a) Findings.--Congress finds that--
       (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-

[[Page S2518]]

     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; 
     and
       (4) the informed use of rental-purchase transactions 
     results from an awareness of the cost thereof by consumers.
       (b) Purposes.--The purposes of this Act are 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. CONSUMER CREDIT PROTECTION ACT.

       The Consumer Credit Protection Act (15 U.S.C. 1601 et seq.) 
     is amended by adding at the end the following new title:

                ``TITLE X--RENTAL-PURCHASE TRANSACTIONS

``Sec. 1001. Short title; 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. SHORT TITLE; DEFINITIONS.

       ``(a) Short Title.--This title may be cited as the `Rental-
     Purchase Protections Act'.
       ``(b) 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 time of consummation 
     of the agreement, or the time of delivery of the property 
     covered by the agreement if delivery occurs after 
     consummation, including--
       ``(A) the rental payment;
       ``(B) service, processing, or administrative charges;
       ``(C) any delivery fee;
       ``(D) refundable security deposit;
       ``(E) taxes;
       ``(F) mandatory fees or charges; and
       ``(G) 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 the 
     initial payment by the consumer 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 that 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 in which 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' 
     does not include--
       ``(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 
     the Truth in Lending Act); or
       ``(iii) a transaction giving rise to a debt incurred in 
     connection with the business of lending money or 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, including--
       ``(i) any service, processing, or administrative charge;
       ``(ii) any fee for an investigation or credit report; and
       ``(iii) any 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 does not apply to rental-purchase agreements 
     primarily for business, commercial, or agricultural purposes, 
     or those made with agencies or instrumentalities of the 
     Federal Government or a State or political subdivision 
     thereof.

     ``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 disclose to the consumer, to the extent 
     applicable--
       ``(1) the date of 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 clear and conspicuous 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, which includes the 
     first periodic payment, and the total amount of any fees, 
     taxes, or other charges, required to be paid by the consumer;
       ``(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

[[Page S2519]]

     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 amount and timing of periodic payments, and the 
     total number of periodic payments necessary to acquire 
     ownership of the property under the rental-purchase 
     agreement;
       ``(8) the total cost, using that term, and a brief 
     description, such as `This is the amount that you will pay 
     the merchant if you make all periodic payments to acquire 
     ownership of the property.';
       ``(9) a statement of the right of the consumer 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 
     lease term; and
       ``(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--
       ``(1) be segregated from other information at the beginning 
     of the rental-purchase agreement;
       ``(2) contain only directly related information; and
       ``(3) 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 each component 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 
     paragraph (1) and subparagraph (A) of this paragraph.
       ``(d) Accuracy of Disclosure.--
       ``(1) In general.--The disclosures required to be made 
     under subsection (a) shall be accurate as of the date on 
     which 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) provide that the consumer may terminate the agreement 
     without paying any charges not previously due under the 
     agreement by voluntarily surrendering or returning the 
     property that is the subject of the agreement upon expiration 
     of any rental period;
       ``(4) 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, except that the Board may, 
     by regulation or order, exempt any independent small business 
     (as defined by regulation of the Board) 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 appropriate, that the reinstatement 
     right provided in subparagraph (C) would provide excessive 
     hardship for the independent small business;
       ``(5) 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;
       ``(6) 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
       ``(7) 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)(4) shall not be construed so as to prevent a merchant 
     from attempting to repossess property during the 
     reinstatement period pursuant to subsection (a)(4)(A), but 
     such a repossession does not affect the right of the consumer 
     to reinstatement under subsection (a)(4).

     ``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 by regulation of 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 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 or charge which the merchant has previously billed 
     to the consumer 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 applicable, the merchant 
     shall--
       ``(1) deliver, or mail to the last known address of the 
     consumer, 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 that 
     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 regulation of the Board;

[[Page S2520]]

       ``(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 dwelling of 
     the consumer or other premises without obtaining the consent 
     of the consumer, 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 regulation of the Board; 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 account of the consumer. 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 requested in 
     excess of 4 times during that 12-month period.

     ``SEC. 1009. RENEGOTIATIONS AND EXTENSIONS.

       ``(a) Renegotiations.--For purposes of this section, 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 under 
     this title, except as provided in subsection (c).
       ``(b) Extensions.--For purposes of this section, 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 under this title are not 
     required for the following, even if they meet the definition 
     of a renegotiation or an extension under this section:
       ``(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 
     that the rental-purchase cost does not increase.
       ``(5) The deletion of property in a multiple-item 
     agreement.
       ``(6) A change in the rental period, provided that 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--
       ``(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; and
       ``(6) the rental-purchase cost.
       ``(b) Form of Disclosure.--
       ``(1) In general.--A merchant may make the disclosures 
     required by subsection (a) in the form of a list or catalog 
     which is readily available to the consumer at the point of 
     rental if the merchandise is not displayed in the showroom of 
     the merchant, 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 for the item or set of items 
     advertised--
       ``(1) that 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) that to acquire ownership of the property, the 
     consumer must pay the rental-purchase cost plus applicable 
     taxes; and
       ``(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 
     media 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 disclosures required by this section 
     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 required 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.
       ``(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 on which 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 requirement 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 
     under this section 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 this title, to prevent its 
     circumvention, and to facilitate compliance with its 
     requirements.
       ``(b) Model Disclosure Forms.--
       ``(1) Board authority.--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.

[[Page S2521]]

       ``(2) Content.--In devising forms described in paragraph 
     (1), the Board shall consider the use by merchants of data 
     processing or similar automated equipment.
       ``(3) Use not mandatory.--Nothing in this title may be 
     construed to require a merchant to use any model form or 
     clause published by the Board under this section.
       ``(4) Determination of compliance.--A merchant shall be 
     deemed to be in compliance with the requirement to provide 
     disclosure under section 1003(a) if the merchant--
       ``(A) uses any appropriate model form or clause published 
     by the Board under this section; or
       ``(B) uses any such model form or clause, and changes it by 
     deleting any information which is not required by this title 
     or 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.--
       ``(1) In general.--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.
       ``(2) Authority to modify.--The Board may, at its 
     discretion--
       ``(A) lengthen the period of time described in paragraph 
     (1) to permit merchants to adjust to accommodate new 
     requirements; or
       ``(B) shorten that period of time, if the Board makes a 
     specific finding that such action is necessary to comply with 
     the findings of a court or to prevent unfair or deceptive 
     practices.
       ``(3) Voluntary compliance.--Notwithstanding paragraph (1) 
     or (2), a merchant may comply with any newly prescribed 
     disclosure requirement prior to its effective date.

     ``SEC. 1016. ENFORCEMENT.

       ``(a) Federal Enforcement.--Compliance with this title 
     shall be enforced under the Federal Trade Commission Act (15 
     U.S.C. 41 et seq.), and a violation of any requirement 
     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 under 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 civil action described in 
     paragraph (1) to the Federal Trade Commission, and shall 
     provide the Commission with a copy of the complaint.
       ``(B) Emergency action.--If prior notice required by this 
     paragraph 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 an action described in paragraph (1);
       ``(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 that 
     person is required to disclose under the provisions of this 
     title or any regulation issued under this title 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 that 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 by 
     regulation 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 with a 
     provision of this title, merchants located in that State 
     shall not be required to comply with that 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 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 thereof, or 
     any agency of a State or political subdivision thereof.

     ``SEC. 1020. COMPLIANCE DATE.

       ``Compliance with this title shall not be required until 6 
     months after the date of enactment of this title. In any 
     case, a merchant may comply with this title at any time after 
     such date of enactment.''.
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