[Congressional Record (Bound Edition), Volume 148 (2002), Part 12]
[House]
[Pages 16962-16987]
[From the U.S. Government Publishing Office, www.gpo.gov]




                 CONSUMER RENTAL PURCHASE AGREEMENT ACT

  Mr. LINDER. Mr. Speaker, by direction of the Committee on Rules, I 
call up House Resolution 528 and ask for its immediate consideration.
  The Clerk read the resolution, as follows:

                              H. Res. 528

       Resolved, That at any time after the adoption of this 
     resolution the Speaker may, pursuant to clause 2(b) of rule 
     XVIII, declare the House resolved into the Committee of the 
     Whole House on the state of the Union for consideration of 
     the bill (H.R. 1701) 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. The first reading of the bill shall be 
     dispensed with. General debate shall be confined to the bill 
     and shall not exceed one hour, with 50 minutes equally 
     divided and controlled by the chairman and ranking minority 
     member of the Committee on Financial Services and 10 minutes 
     equally divided and controlled by the chairman and ranking 
     minority member of the Committee on the Judiciary. After 
     general debate the bill shall be considered for amendment 
     under the five-minute rule. It shall be in order to consider 
     as an original bill for the purpose of amendment under the 
     five-minute rule the amendment in the nature of a substitute 
     recommended by the Committee on Financial Services, as 
     amended by the amendment recommended by the Committee on the 
     Judiciary, now printed in the bill. The committee amendment 
     in the nature of a substitute shall be considered as read. No 
     amendment to the committee amendment in the nature of a 
     substitute shall be in order except those printed in the 
     report of the Committee on Rules accompanying this 
     resolution. Each such amendment may be offered only in the 
     order printed in the report, may be offered only by a Member 
     designated in the report, shall be considered as read, shall 
     be debatable for the time specified in the report equally 
     divided and controlled by the proponent and an opponent, 
     shall not be subject to amendment, and shall not be subject 
     to a demand for division of the question in the House or in 
     the Committee of the Whole. All points of order against such 
     amendment are waived. At the conclusion of consideration of 
     the bill for amendment the Committee shall rise and report 
     the bill to the House with such amendments as may have been 
     adopted. Any Member may demand a separate vote in the House 
     on any amendment adopted in the Committee of the Whole to the 
     bill or to the committee amendment in the nature of a 
     substitute. The previous question shall be considered as 
     ordered on the bill and amendments thereto to final passage 
     without intervening motion except one motion to recommit with 
     or without instructions.

  The SPEAKER pro tempore. The gentleman from Georgia (Mr. Linder) is 
recognized for 1 hour.
  Mr. LINDER. Mr. Speaker, for the purpose of debate only, I yield the 
customary 30 minutes to the gentleman from Florida (Mr. Hastings), 
pending which I yield myself such time as I might consume. During 
consideration of this resolution, all time yielded is for the purpose 
of debate only.
  Mr. Speaker, the resolution before us is a fair, structured rule 
providing for the consideration of H.R. 1701, the Consumer Rental 
Purchase Agreement Act.
  H. Res. 528 provides 1 hour of general debate, with 50 minutes 
equally divided

[[Page 16963]]

and controlled by the chairman and ranking minority member of the 
Committee on Financial Services and 10 minutes equally divided and 
controlled by the chairman and ranking minority member of the Committee 
on the Judiciary.
  The rule provides that the amendment in the nature of a substitute 
recommended by the Committee on Financial Services, as amended by the 
amendment recommended by the Committee on the Judiciary, now printed in 
the bill, shall be considered as an original bill for the purpose of 
amendment and shall be considered as read.
  H. Res. 528 makes in order only those amendments printed in the 
Committee on Rules report accompanying this resolution. It provides 
that the amendments printed in the report shall be considered only in 
the order printed in the report, may be offered only by a Member 
designated in the report, shall be considered as read, shall be 
debatable for the time specified in the report equally divided and 
controlled by the proponent and an opponent, shall not be subject to 
amendment, and shall not be subject to a demand for division of the 
question in the House or in the Committee of the Whole. This rule 
waives all points of order against the amendments printed in the 
report.
  Finally, H. Res. 528 provides for one motion to recommit, with or 
without instructions.
  Mr. Speaker, I urge my colleagues on both sides of the aisle to join 
me in support of this fair rule, which would enable the House to work 
its will on H.R. 1701, and two separate amendments, one offered by the 
gentleman from New York (Mr. LaFalce) and another offered by the 
gentlewoman from California (Ms. Waters).
  In summary, H.R. 1701 seeks to create uniform national disclosure 
standards for the rent-to-own industry. It provides greater cost 
information to consumers who are considering rental purchase 
agreements.
  I would like to commend the work of the gentleman from Ohio (Mr. 
Oxley), my friend and colleague of the Committee on Financial Services, 
in bringing this legislation to the House floor, which I was pleased to 
cosponsor earlier this year. I also want to commend the gentleman from 
North Carolina (Mr. Jones) for being the primary author of this 
measure.
  Again, in closing, I urge my colleagues to join me in supporting this 
fair rule so that the House can proceed to consider the underlying 
legislation.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HASTINGS of Florida. Mr. Speaker, I thank the gentleman for 
yielding the customary 30 minutes, and I yield myself such time as I 
may consume.
  Mr. Speaker, I rise today in opposition to this rule and to the 
underlying bill, H.R. 1701, a bill to amend the Consumer Credit 
Protection Act to establish Federal disclosure requirements for rental 
purchase businesses.
  Traditionally, rent-to-own businesses cater to low- and moderate-
income individuals who either do not have the money or do not have the 
credit to purchase goods for their homes. These individuals turn to 
businesses such as Rent-A-Center or RentWay with the idea that renting 
is a reasonable alternative to purchasing their household goods; and 
although this may be true in some instances, that is not always the 
case.
  Mr. Speaker, to quote the gentlewoman from California (Ms. Waters), 
who will speak on her own measures that she offered, one of which was 
accepted, three that were categorically rejected, she said this is 
special-interest legislation at its worst. For a number of reasons, 
this legislation fails to protect those consumers who depend on rental 
purchase businesses from being taken for a ride. And while the measure 
does implement necessary contracts, store tag, and advertising 
disclosure, it fails by preempting existing State consumer protection 
laws that treat rent-to-own transactions as credit sales and, 
therefore, require the disclosure of the cost of credit and annual 
percentage rates. A footnote right there, Mr. Speaker: in some of these 
failed disclosure situations, triple digit interest rates are being 
charged to people.
  This bill might have had a chance of being a great piece of 
legislation, had the four amendments of my good friend and colleague, 
the gentlewoman from California (Ms. Waters), and the second amendment 
of the gentleman from New York (Mr. LaFalce) been accepted; and I was 
in full and complete support of both being allowed. As a result, this 
legislation in my judgment is not worth the paper it is drafted on. It 
is not curative. When the question was put yesterday to the relevant 
subcommittee chairman, who I am sure will speak and thus speak 
passionately regarding this matter, when the question was put to him 
whether or not it was curative, he stated that it was ``helpful.''
  Worse yet, the Committee on the Judiciary chairman, the gentleman 
from Wisconsin (Mr. Sensenbrenner), is quoted as saying, ``The bill is 
unnecessary and unwise and is a misguided attempt to preempt the 
existing law of virtually every State.''
  The regulation of the rent-to-own industry is a State issue and all 
those who disagree, in my opinion, are misguided too.
  How can H.R. 1701 fulfill its stated purpose to protect consumers 
against unfair rental purchase agreements and predator financial 
services if it does not require rent-to-own businesses to disclose the 
interest rates in the leasing contract? Would any of us accept a bank 
loan without the APR being stated in the contract?
  Mr. Speaker, one of our duties as Members of Congress is to make 
accessible the highest quality of life for all those who live within 
our great country's borders. H.R. 1701 would work against that 
continuous goal, if passed as is; and I urge my colleagues to vote 
against H.R. 1701 and against this closed rule.
  Mr. Speaker, I yield 6 minutes to the gentlewoman from California 
(Ms. Waters).
  Ms. WATERS. Mr. Speaker, I would like to thank the gentleman from 
Florida (Mr. Hastings) for the attention that he paid to this 
particular piece of legislation in the Committee on Rules. I thank him 
for taking the time to understand it and to try and help me to make it 
a better bill with the amendments that I presented at the Committee on 
Rules.
  I had four amendments in the Committee on Rules to H.R. 1701; only 
one was accepted and, of course, I thank the members for that. However, 
I think I was thrown a bone, a bone to say, well, we did something; but 
certainly, this does not cure what is wrong with this bill.
  Let me tell my colleagues about the other amendments that I proposed 
that were not accepted. One of the amendments that I had was a very 
simple amendment. The sponsors of the bill had indicated that they 
wanted this bill to be a floor rather than a ceiling when it comes to 
State laws, and my amendment would simply strike a single subsection 
that would have accomplished that goal. Let me just share with my 
colleagues that 52 of the State Attorneys General earlier signed on to 
a letter objecting to this bill and, specifically, the preemption 
section. The Attorneys General stated: ``Any State law that affords 
consumers the benefit of disclosures in rent-to-own agreements beyond 
those required by H.R. 1701 would be invalidated.''
  This is simply about State preemption. I am surprised that those who 
are advocating State preemption would do so when oftentimes we find 
they are standing up to protect States' rights and the State to protect 
its ability to make public policy in the interest of that State.
  As initially considered in committee, the bill would have preempted 
all inconsistent Federal and State laws, regardless of whether they 
provided greater or less protection for consumers. This has been 
revised to preempt only those State laws or regulations that treat 
rent-to-own transactions as credit sales and apply credit-like 
regulation, including disclosure of annual percentage rates and cost 
limits based on APRs. This would provide for automatic preemption of 
the laws of four States: Wisconsin, New Jersey,

[[Page 16964]]

Minnesota, and Vermont, which currently apply credit statutes and 
regulations to rent-to-own transactions. It would also preempt all 
States from imposing credit-like restrictions on rent-to-own 
transactions in the future.
  A letter written to the Committee on Financial Services by 52 State 
and territorial Attorneys General expressed strong opposition to any 
language which ``expressly preempts any State law that regulates a 
rent-to-own transaction as a credit sale or similar arrangement that 
requires the disclosure to consumers of an effective interest, annual 
percentage, or singular rate.''
  This is outrageous, and we should be ashamed that a bill like this 
could get this far in the Congress of the United States. Most of those 
people out there as consumers expect us to protect them. Why would we 
fight to keep this industry from disclosing the interest rates on rent-
to-own contracts? I think I know why. Why would we not want to treat 
them like credit sales? I think I know why. But it is unconscionable 
and unreasonable that Members of the Congress of the United States of 
America would use their power to work against consumers in this way 
with an industry that has some really questionable practices.
  Let me tell my colleagues about the third amendment that they 
rejected. It would have added a new subsection to prohibit any unfair 
or deceptive acts or practices and abusive collection by the rental 
purchase industry.

                              {time}  1130

  Mr. Speaker, for years the industry has resisted it being classified 
as a sale so that it would not be subject to protections governing 
credit sales transactions. At the same time, it has also resisted 
coming under protections offered by the Consumer Leasing Act. I think 
it is unconscionable that a Federal law purporting to regulate this 
industry would fail to include basic protections against unfair or 
deceptive practices.
  Let me tell Members a little bit about this industry. Some of the 
more outrageous examples include rent-to-own employees struggling with 
the customer in the home over the possession of the television set, and 
picking up a nearby object and smashing the set. This happened in 
Maryland in 1983.
  An employee was breaking and entering a customer's home, only to be 
shot and killed as a result, in Nebraska in 1980.
  In a number of instances, rent-to-own dealers have been found liable 
for tort claims such as assault, battery, and trespass.
  In 1985, a Texas jury returned a verdict of nearly $130,000 against a 
rental company for injuries to a customer which occurred during an 
attempted repossession.
  Many rent-to-own dealers, when faced with an incident of wrongful 
repossession, will attempt to accuse the employee of unforeseen 
misconduct. It goes on and on and on, but my attempts to clean up the 
legislation were rejected.
  Lastly, let me tell the Members about the fourth amendment, which was 
so reasonable. It would have placed a cap on total price.
  Twelve States currently require an early purchase option in rent-to-
own contracts: California, Connecticut, Delaware, Iowa, Maine, 
Michigan, Nebraska, New York, Ohio, Pennsylvania, South Carolina, and 
West Virginia. All of these States employ a formula to determine how 
much equity is acquired in the product over time, and the difference 
between the figure and the cash price.
  Six States impose substantive limits on rental purchase prices: 
Connecticut, Iowa, Michigan, New York, Ohio, and Pennsylvania. My 
amendment is based on the New York law.
  I would ask that we reject this rule because it has done nothing to 
make this a credible bill.
  Mr. HASTINGS of Florida. Mr. Speaker, I yield myself such time as I 
may consume.
  I would like to add emphasis, in closing, to what the gentlewoman 
said. She had one amendment that brought to the attention of this body 
that when a person that is renting pays 133 percent of the total 
purchase price that they would own the property. Now, any of us that 
pay 133 percent of something ought to at least own 75 percent of 
something by the time that we do that. For us not to have made that 
amendment in order, in my judgment, is a mistake.
  Mr. Speaker, I yield back the balance of my time.
  Mr. LINDER. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I would just like to point out that if one is buying a 
house, in the typical payment, one is paying roughly 200 percent of the 
cost of the house after it is over. Most people are not complaining.
  And to the gentlewoman from California, who said twice she has a list 
of 52 attorneys general writing in against this, I would love to see 
that list.
  Mr. Speaker, I yield back the balance of my time, and I move the 
previous question on the resolution.
  The previous question was ordered.
  The SPEAKER pro tempore (Mr. Dan Miller of Florida). The question is 
on the resolution.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. HASTINGS of Florida. Mr. Speaker, I object to the vote on the 
ground that a quorum is not present and make the point of order that a 
quorum is not present.
  The SPEAKER pro tempore. Evidently a quorum is not present.
  The Sergeant at Arms will notify absent Members.
  The vote was taken by electronic device, and there were--yeas 238, 
nays 178, not voting 16, as follows:

                             [Roll No. 391]

                               YEAS--238

     Aderholt
     Akin
     Armey
     Bachus
     Baker
     Ballenger
     Barcia
     Barr
     Bartlett
     Barton
     Bass
     Bereuter
     Biggert
     Bilirakis
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boozman
     Boyd
     Brady (TX)
     Brown (SC)
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Castle
     Chabot
     Chambliss
     Clement
     Coble
     Collins
     Combest
     Cooksey
     Cox
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Etheridge
     Evans
     Everett
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Fossella
     Frelinghuysen
     Frost
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goss
     Graham
     Granger
     Graves
     Green (WI)
     Greenwood
     Grucci
     Gutknecht
     Hall (TX)
     Hansen
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hobson
     Hoekstra
     Holden
     Hooley
     Horn
     Hostettler
     Houghton
     Hoyer
     Hulshof
     Hunter
     Hyde
     Isakson
     Issa
     Istook
     Jenkins
     John
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Kanjorski
     Keller
     Kelly
     Kennedy (MN)
     Kerns
     Kildee
     King (NY)
     Kirk
     Knollenberg
     Kolbe
     LaHood
     Lampson
     Latham
     LaTourette
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Manzullo
     Matheson
     McCrery
     McHugh
     McInnis
     McIntyre
     McKeon
     Mica
     Miller, Dan
     Miller, Gary
     Miller, Jeff
     Moran (KS)
     Morella
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Paul
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Pombo
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reynolds
     Riley
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Ross
     Royce
     Ryan (WI)
     Ryun (KS)
     Sandlin
     Saxton
     Schaffer
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shows
     Shuster
     Simpson
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Spratt
     Stearns
     Sullivan
     Sununu
     Sweeney
     Tancredo
     Tanner
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Thune
     Tiahrt
     Tiberi
     Toomey
     Towns
     Turner
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins (OK)
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Young (AK)

                               NAYS--178

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldacci
     Baldwin
     Barrett
     Becerra
     Bentsen
     Berkley

[[Page 16965]]


     Berman
     Berry
     Bishop
     Blumenauer
     Borski
     Boswell
     Boucher
     Brady (PA)
     Brown (OH)
     Capps
     Capuano
     Cardin
     Carson (IN)
     Carson (OK)
     Clayton
     Clyburn
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Crowley
     Cummings
     Davis (CA)
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Dooley
     Doyle
     Edwards
     Engel
     Eshoo
     Farr
     Fattah
     Filner
     Ford
     Frank
     Gephardt
     Gonzalez
     Gordon
     Green (TX)
     Gutierrez
     Harman
     Hastings (FL)
     Hill
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Holt
     Honda
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Johnson, E. B.
     Jones (OH)
     Kaptur
     Kennedy (RI)
     Kilpatrick
     Kind (WI)
     Kleczka
     Kucinich
     LaFalce
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Lowey
     Luther
     Lynch
     Maloney (CT)
     Maloney (NY)
     Markey
     Mascara
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Mollohan
     Moore
     Moran (VA)
     Murtha
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Phelps
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Roemer
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sawyer
     Schakowsky
     Schiff
     Scott
     Serrano
     Sherman
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Solis
     Stark
     Stenholm
     Strickland
     Stupak
     Tauscher
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Thurman
     Tierney
     Udall (CO)
     Udall (NM)
     Visclosky
     Waters
     Watson (CA)
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                             NOT VOTING--16

     Blagojevich
     Bonior
     Brown (FL)
     Bryant
     Clay
     Hilleary
     Kingston
     Leach
     Miller, George
     Mink
     Myrick
     Roukema
     Simmons
     Stump
     Velazquez
     Young (FL)

                              {time}  1220

  Mr. McNULTY, Ms. ESHOO and Mr. DAVIS of Florida changed their vote 
from ``yea'' to ``nay.''
  Mr. HOYER and Mr. DOOLITTLE changed their vote from ``nay'' to 
``yea.''
  The resolution was agreed to.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.
  The SPEAKER pro tempore (Mr. Dan Miller of Florida). Pursuant to 
House Resolution 528 and rule XVIII, the Chair declares the House in 
the Committee of the Whole House on the State of the Union for the 
consideration of the bill, H.R. 1701.

                              {time}  1222


                     in the committee of the whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the State of the Union for the consideration of the bill 
(H.R. 1701) to amend the Consumer Credit Protection Act to assure 
meaningful disclosures of the terms and 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, with Mr. Isakson in the chair.
  The Clerk read the title of the bill.
  The CHAIRMAN. Pursuant to the rule, the bill is considered as having 
been read the first time.
  Under the rule, the gentleman from Alabama (Mr. Bachus) and the 
gentlewoman from California (Ms. Waters) each will control 25 minutes 
for the Committee on Financial Services, and the gentleman from 
Wisconsin (Mr. Sensenbrenner) and the gentlewoman from California (Ms. 
Waters) each will control 5 minutes for the Committee on the Judiciary.
  The Chair recognizes the gentleman from Alabama (Mr. Bachus).
  Mr. BACHUS. Mr. Chairman, I yield 5 minutes to myself to speak in 
support of this legislation.
  Mr. Chairman, I speak to the whole House when I say that the subject 
of the legislation we find ourselves debating on the floor here today 
is the rent-to-own industry and the need to have some floor of 
regulations over that industry.
  There are 15 million citizens who annually use rent-to-own stores. 
There has been an exhaustive study, a survey of rent-to-own by the 
Federal Trade Commission. In fact, they made several suggestions and 
proposals. They outlined abuses in the industry.
  Let me speak to that industry. That industry is an industry, like 
many others, that people, their only connection with it is they drive 
by a store, and we see more and more rent-to-own stores in their 
neighborhood or in their city, but they do not know much about it. What 
the survey found is that people of all educational levels apparently 
are using rent-to-own. The number of people that have graduate school 
degrees, a good percentage of those people are using these stores.
  Sometimes people go in and they rent equipment, rent furniture for as 
little as a month or 2 months, or even 2 weeks. I recently talked to 
someone that said they had gone in a rent-to-own store, and their 
explanation was that they were going to be in a city for 2 months and 
they simply did not want to get a U-Haul. They checked on the U-Haul 
rate, and it was $900 out and $900 back, and so they made a decision to 
spend $1,500 on furniture.
  Many Members, such as the gentleman from North Carolina (Mr. Jones) 
and the gentleman from Connecticut (Mr. Maloney), felt there ought to 
be some protection for consumers. There are State laws in 40 percent of 
the States that have protections; but this will establish in all 50 
States a floor of protection. With the floor of protection we do not, 
and I want to repeat this, we do not preempt State consumer laws. We do 
not preempt State consumer laws. So there will be 15 States, if we 
enact this legislation, that will have stronger laws than this 
legislation. There will be approximately 35 that have weaker laws. In 
fact, there are States that have no laws. There are a number of States 
that have no laws. They will suddenly have laws regulating this 
industry. In fact, the worse abuses were in those States with no laws. 
The abuses identified in this report, they are addressed in this 
legislation. There will be significant provisions in this legislation 
to stop those abuses. There are States with very strong laws. We do not 
preempt those laws.
  Do we preempt anything? Yes, we do. If we pass this law, there will 
be four States in which there is today an existing law, none which have 
been passed by the legislature, but four courts in four States have 
found that these are credit sales, and 46 States say they are leases. 
And those four States which say these are credit sales, we ought to 
give people disclosure like it was a credit sale, and we ought to show 
them the annual percentage rate.
  Well, the IRS has looked at this and they say this is not a credit 
sale, this is a lease. This is not a credit sale. The Federal Trade 
Commission and the Federal Reserve, we brought them in. We had them 
testify. Is this a credit sale or is it a lease-purchase or a lease? 
They both said it is actually misleading and confusing to consumers to 
have them sign, have them give an APR disclosure of the annual 
percentage rate. It is a confusing thing. It will add nothing. That is 
what the Federal Trade Commission and the Federal Reserve have said.
  And I think legitimately there are Members among us, and they have 
every right to their opinion, saying that the law in these four States, 
we do not want to preempt the four States that have said it is a credit 
sale. Well, the alternative is not to strengthen the law in 36 States. 
That is the choice we have.
  Mr. Chairman, I reserve the balance of my time.
  Ms. WATERS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, I would like the Members of this House of 
Representatives and the public to pay special attention to H.R. 1701, 
the bill we are debating on the floor today. For those Members who have 
been outraged about what they have learned about Enron and Global 
Crossing and Qwest and WorldCom and all of those major corporations 
which have been found to game the system, who have been ripping off the 
investors, who have been

[[Page 16966]]

putting their pensioners at risk, if Members think that is bad, they 
ought to pay attention to this one.

                              {time}  1230

  This is special interest legislation at its worst, because the people 
who will be ripped off in these schemes are little people. They are 
poor people. They are working people. They are people without very much 
money.
  We talk a lot about trying to do something about predatory lending. 
That is, some of us. But, Mr. Chairman, this rent-to-own industry falls 
in the category of the check cashers and the payday lenders and even 
the tax preparers that are ripping off the most vulnerable of our 
society.
  Let me tell you more about this rent-to-own industry. The bill is 
falsely presented by its industry proponents as pro-consumer, as not 
preemptive of State law. That is absolutely not true. The bill has one 
purpose and one purpose only, to circumvent stronger consumer 
protections in the Federal Truth in Lending Act and in statutes of a 
handful of States that the rent-to-own industry had not been able to 
overturn.
  As originally introduced, H.R. 1701 sought to preempt all 
inconsistent State laws. This included all current or future State laws 
that attempt to regulate rent-to-own transactions as credit or 
installment sales as well as industry-enacted State rent-to-own 
statutes that provide stronger, but inconsistent, protections for its 
consumers. Although the amended committee bill has narrowed the scope 
of the bill's preemption somewhat, the bill would still preempt the 
best of the State laws in New Jersey, Minnesota, Wisconsin, and Vermont 
that seek to provide meaningful protections against unfair predatory 
practices; and it would still prevent these and other States from 
strengthening consumer protections in the future by treating rent-to-
own transactions as credit sales.
  If the industry had any good intentions, they would have supported my 
amendments in the Committee on Rules. I went in there and I asked for 
four simple amendments that I talked about during the debate on the 
rule. I suppose the worst of these is this preemption. Why would the 
Congress of the United States of America wish to preempt State laws 
that give strong protection to their people against this rip-off 
industry? The stories about what happens in this rent-to-own industry 
are absolutely outrageous and unconscionable. The idea that you could 
go in and rent a television that cost about $169, we checked this out, 
and end up paying $800 or $900 for that television set through one of 
these contracts, and on top of it, be forced to pay insurance that 
would protect the company from any damages that they may have caused in 
addition to what you may have caused is just simply outrageous.
  Let me just say this. We are elected to come here to do a number of 
things. The least of that is to protect poor people and working people 
and voters and our constituents from being ripped off by industries 
that we know are ripping them off. We know what this is all about. 
Consumers must ask the question, Why would my Representative not 
protect me from this kind of rip-off? I want the consumers to ask that 
question.
  Mr. Chairman, we have a lot of Members here, some Members here, who 
want to add their voices to try to protect consumers.
  Mr. Chairman, I reserve the balance of my time.
  Mr. SENSENBRENNER. Mr. Chairman, I yield myself such time as I may 
consume.
  Mr. Chairman, I rise in opposition to this bill. There is no 
overriding national need, no overriding public policy purpose, no 
overriding crisis that requires the Congress to federalize the 
regulation of the rent-to-own industry. The rent-to-own industry 
supports this legislation, and it is understandable why they do so. The 
fiscal note that is contained in the report of the Committee on the 
Judiciary says that the Federal Trade Commission intends to hire five 
new attorneys and investigators to investigate and enforce violations 
of this bill. That is five people nationwide looking into violations of 
the rent-to-own provisions that are contained in H.R. 1701.
  That makes enforcement a joke. Because if you only have five cops 
regulating this pugnacious industry nationwide, you know that the law 
is not going to be enforced. So we are passing a piece of paper here 
supposedly in the name of consumer protection that the enforcing agency 
says that they will be able to enforce with just five people in the 
entire United States of America. I think that blows the cover on this 
being consumer protection legislation.
  Let me tell you what this bill does to the Wisconsin Consumer Act. 
The Wisconsin Consumer Act by judicial construction has said that a 
rent-to-own contract is a credit transaction. This bill overrides that 
definition, and says it is a lease transaction and that eviscerates the 
enforcement by the Wisconsin attorney general's office of the rent-to-
own industry. That is where the preemption is particularly harmful to 
consumers not only in my State but also in New Jersey, Minnesota, North 
Carolina, and Vermont.
  Let us look at what enforcement has done in the States that have this 
preemption: $16 million worth of recoveries in Wisconsin, $30 million 
in Minnesota, and $60 million in New Jersey. So the rent-to-own 
industry knows that it is going to get a get-out-of-jail-free card 
should this legislation be passed. Furthermore, the Wisconsin 
legislature has been lobbied incessantly by this industry to pass an 
exemption, and they got it in as a budget amendment in this last budget 
cycle. Republican Governor Scott McCallum vetoed this exemption as 
being special interest legislation. So opposition to moving these 
transactions from credit to lease transactions in my State is 
bipartisan.
  We have done a good job in regulating this industry in our State, and 
I think that has been the case in most of the other States. We should 
not do away with this. And if a State has lower consumer protections 
than this bill provides, then I think it is the business of that State 
legislature to look at their law and see if it is adequate and to make 
whatever amendments might be necessary. We should not have a Federal 
preemption even of a small amount in this legislation. I would urge the 
legislation to be defeated.
  Mr. Chairman, I yield back the balance of my time.
  Mr. BACHUS. Mr. Chairman, I yield myself such time as I may consume.
  Let me simply respond to some of the arguments that we have heard 
here today and let me stress why I do not think those arguments have a 
lot of validity. They sound good. The gentleman from Wisconsin has 
said, ``We don't think there's a national problem,'' but the 
gentlewoman from California stood up and talked about all sorts of 
abuses in all sorts of States. The Federal Trade Commission outlined 
abuses in several States. We have almost 20 States that have no 
regulation. The gentleman from Wisconsin says that this is up to the 
States, that the States ought to do something about this. When it came 
to homeowners, when it came to people that transact business with 
financial institutions, with Fair Debt Collection Practice Act, the 
Equal Credit Opportunity Act, Truth in Lending Act, Consumer Lease Act, 
Electronic Funds Transfer Act, we felt like the American consumer, the 
American customer, was entitled to some Federal protection. There is no 
Federal protection.
  The gentleman did say that Wisconsin has acted, and acted in a tough 
way. Let me submit something to you. If we pass this legislation, there 
is nothing, nothing that prevents New Jersey, there is nothing that 
prevents Wisconsin, there is nothing that prevents Minnesota, there is 
nothing that prevents any of these States from banning these 
transactions. They can outlaw them. They can pass any type of tough 
legislation.
  The gentlewoman from California is going to offer an amendment to 
basically put the California law as the law of all 50 States because 
she says California has this really tough provision and we want it in 
this bill. It will still be the law after we pass this legislation. It 
will still be the law in California. But to get enough support to

[[Page 16967]]

pass this legislation, we have set a floor.
  The gentlewoman from California talks about the attorney generals, 
that they wrote, all 50 of them, she said. But what you did not hear is 
that was to an original proposal before it came to the committee that I 
chair. When it came to the committee that I chair, we put in a 
provision that it does not preempt tougher consumer protection laws in 
those States that have it. In fact, my own attorney general who signed 
that letter wrote me September 13 and now says this legislation before 
us today will offer important new consumer protections for the citizens 
of my State. I do not have any protections now. The people of my State 
do not have any protections.
  The gentlewoman from California, and I applaud her, and another 
gentlewoman from California and one of the gentlemen from Florida said, 
``In 40 States, you walk in these stores and there is not even a price 
tag on there. There is not even a disclosure as to the price.'' That is 
true. What did we do? We added a provision in this legislation that we 
are considering which, if it passes today, will require that in all 50 
States, something that two of the States of the four that call this a 
credit sale do not even have today. And important, they said one of the 
most important protections a consumer ought to have. They will have 
that even in two of these States, including North Carolina.
  Several things that North Carolina does not have if this law passes, 
they will have a much stronger law. Yes, we are overruling a judge in 
four States because we have to have a national standard. This does not 
work. You have to either call it a lease if you are going to have a 
Federal statute, or you have to call it a credit sale. Forty-six 
legislatures have said it is a credit sale. Those States, not 
legislatures, 46 States, including the majority of legislatures who 
have looked at it, well, all the legislatures that have looked at it 
say it is a lease. None of the legislatures have said it is a credit 
sale. Four judges sitting in four courts in four States have said it is 
a credit sale. The FTC, the Federal Reserve said this could be 
confusing. The IRS says it is not, that it is a lease. That is how we 
have come down. We have come down on the side of every legislature that 
has looked at this, the two Federal agencies that have looked at this, 
we have come down on that side. We have disagreed with four judges 
sitting in four courtrooms across the country because we have to come 
down on one side or the other because we strengthen the protections in 
36 States, and we absolutely do not preempt any law that California has 
on the books today or other States, the 15 that have stronger laws 
except the credit sales thing.
  Mr. Chairman, I reserve the balance of my time.
  Ms. WATERS. Mr. Chairman, I yield 6 minutes to the gentleman from New 
York (Mr. LaFalce).
  Mr. LaFALCE. Mr. Chairman, I regret that I must come to the well of 
the House to oppose the bill that is before us today. Even if the 
amendments, the two amendments that have been permitted by the 
Committee on Rules, should pass, I would still have to vote against it 
as inadequate. I do this with some mixed emotions, however, because I 
believe it is very, very important for us to pass additional consumer 
protections for rent-to-own transactions. I do this not opposed to the 
concept of a rent-to-own transaction whatsoever. For certain 
individuals at certain times, they can be valuable. But before we pass 
a Federal law, it should meet a very solid standard. This bill simply 
does not do that.
  We have a delicate balance that we have to reach whenever we pass 
Federal legislation given the dual sovereignty under which we exist. We 
have to have, it seems to me, minimal Federal standards, but permit 
States to be even more protective, not less, so that we could have 
competition for the best standard rather than a lowering of the 
standards.

                              {time}  1245

  This bill just does not do this.
  Now, the gentleman from Alabama has said there are approximately 20 
states that do not have any protections and that this bill would, 
therefore, be an improvement for them. I think the gentleman is right, 
and that is one side of the coin.
  The other side of the coin, though, is that we do preempt things that 
the gentleman says we do not preempt, and we ought not to. The 
amendment that I proposed to the Committee on Rules which would deal 
with the preemption issue in a very good manner was simply not 
permitted by them, so we cannot bring it to the floor so we could have 
a debate on it. I think the gentlewoman from California (Ms. Waters) 
will be offering a motion to recommit with her own preemption 
provision. It will differ a little from mine. We will see.
  But who is for this bill and who is against it? First of all, it is 
called consumer rent-to-own. I think that is a misnomer, because no 
consumer groups support this bill. As a matter of fact, they all oppose 
it. The group Consumer Action opposes it, the Consumer Federation of 
America opposes it, Consumers League of New Jersey opposes it, the 
Consumers Union opposes it, the National Association of Consumer 
Advocates opposes it, the National Consumer Law Center opposes it, the 
U.S. Public Interest Research Group opposes it.
  Who favors it? It is the rent-to-own industry, that has put the word 
``consumer'' in the front of the bill. So I think this is a little bit 
deceptive in its marketing and its advertising.
  Now, what about the attorneys general of the various States? I do 
know that the original bill as introduced was opposed by every single 
attorney general of every single State.
  The bill has been amended and it has been improved, there is no 
question about that. But I know of no attorney general who has 
privately or publicly changed his or her opinion. Maybe you do. But all 
I do know is that at least with respect to the original bill, every 
single attorney general opposed it. So I think that is of some 
relevance, too, as we determine whether we want to pass a bill, 
especially if that bill will be preemptive.
  Now, the question is, is the bill preemptive or not? You have 
differences of opinion, so let us go to the language of the bill. As I 
read it, it sounds pretty preemptive to me. On page 33, line 21, (b), 
``State laws relating to characterization of transaction. 
Notwithstanding the provisions of subsection (a), this title shall 
supersede any state law that, (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.''
  The States that have that will be superseded, and every single State 
in the Union will be precluded from doing that in the future. I say to 
the gentleman from Alabama, if that is not preemption, I do not know 
what it is.
  Now, there are a lot of other difficulties, too, other than the issue 
of preemption. The issue of cash price is one of them. There have been 
studies done about the percentage of individuals who do not really 
rent, but ultimately wind up owning. The studies can be interpreted 
differently and they differ, but, suffice to say, a significant number 
do wind up owning it.
  The fact of the matter is, if they were to go to some department 
store, they might be able to buy a TV set for $200, and, unfortunately, 
they wind up paying closer to $800 or $1,000 for it, and they think 
they are getting a good deal. They need to be protected. Some States 
attempt to protect them, and we would preclude that, and we certainly 
would apply that to all the States.
  If we are going to have Federal legislation, we must deal with that 
cash-price issue. We must deal with what the total cost of ownership 
would be, because too many individuals across America are being taken 
to the cleaners right now.
  We have an important business in our society, the rent-to-own 
business. It should exist and it can serve a valuable

[[Page 16968]]

function for certain clients, but only if we legislate consumer 
protections. We probably could get there through a process of 
negotiation, but we have not as of today.
  Mr. Chairman, I urge everyone to oppose final passage of this bill.
  Mr. BACHUS. Mr. Chairman, I yield such time as he may consume to the 
gentleman from North Carolina (Mr. Jones), one of the sponsors of the 
legislation. North Carolina has been mentioned as one of the four 
States, and there are sponsors of this legislation from the State of 
North Carolina.
  Mr. JONES of North Carolina. Mr. Chairman, since we have been talking 
about attorneys general around the United States, I must tell you one 
of my very best friends whom I served with for 10 years in the North 
Carolina House of Representatives is the Attorney General of North 
Carolina. His name is Roy Cooper. We have talked about a couple of 
other issues, but never did this come up. Maybe the other 49 are very 
concerned, but he has not shared that concern with me.
  Let me tell just briefly the history of this issue as it relates to 
legislation dealing with the rent-to-own business. This goes back to a 
bill that was introduced 10 years ago by Congressman LoRocco from the 
West. That was 10 years ago, and, finally, after 10 years, right or 
wrong, we have brought this legislation to the floor. I certainly 
respect my friends on the other side of this issue, and I mean that 
most sincerely.
  This consumer rent-to-own purchase agreement act, I do want to 
restate, represents the largest category of consumer transactions 
currently unregulated by the Federal Government. I mention that because 
we held hearings in the subcommittee of the gentleman from Alabama (Mr. 
Bachus). I do not know if we had three or four, but I know there were 
several discussions. The gentlewoman from California (Ms. Waters) was 
very proactive. I disagree, but I respect her ability and her positions 
on this issue.
  I think that the rent-to-own business, quite frankly, has wanted to 
work with the Congress on this legislation. Does it go far enough? 
Maybe not, but is it a step in the right direction? I think it is. 
Several comments have been made about the rent-to-own industry and just 
how bad some people think it is, and I would like to read just a couple 
of survey comments from the Federal Trade Commission, survey of rent-
to-own customers, and this is April of 2000. I believe that the Clinton 
administration was the administration in the year 2000.
  Let me read, in a couple of minutes, some of their surveys of those 
people who do rent the rent-to-own equipment. Sixty-seven percent of 
consumers intended to purchase the merchandise when they began the 
rent-to-own transaction, and 87 percent of the customers intending to 
purchase actually did purchase. So that sounds like to me a satisfied 
customer. I cannot imagine anyone not satisfied that would buy the 
product. Seventy-five percent of rent-to-own customers were satisfied 
with their experience with rent-to-own transactions. Seventy-five 
percent.
  They also state that nearly half of all rent-to-own customers have 
been late making a payment. Sixty-four percent of late customers 
reported that the treatment they received from the store when they were 
late was either very good or good, and another percent, 20 percent, 
reported that the treatment was fair. So, Mr. Chairman, in that case 84 
percent of the people that were late in their payments said that they 
had an experience with the business that was very positive.
  I want to close with this minute by reading a letter from four of my 
colleagues from the Democratic side that I think would rate with anyone 
as being a friend of the consumer in this country. It is the gentleman 
from New York (Mr. Towns), the gentleman from New York (Mr. Meeks), the 
gentleman from Maryland (Mr. Wynn), the gentleman from Louisiana (Mr. 
Jefferson) and the gentleman from South Carolina (Mr. Clyburn). They 
sent a letter out on September 17. That is this week, obviously. I want 
to read, in closing, one paragraph:
  ``H.R. 1701 will help consumers in several ways. Most importantly, 
like the Truth in Lending Act and the Consumer Leasing Act, the bill 
improves disclosures so that consumers can understand the full costs of 
this transaction and make better decisions about spending their money. 
For example, about 30 states do not require any price tag disclosures 
of total costs, and H.R. 1701 will fix that. It prohibits mandatory 
purchase of insurance from merchants and other unfair charges. It 
forbids abusive collection practices. It provides moderate or 
substantial expansion of reinstatement rights in about 40 states. It 
authorizes enforcement by the FTC and State attorneys general.''
  And they close by saying this, the gentleman from New York (Mr. 
Towns), the gentleman from New York (Mr. Meeks), the gentleman from 
Louisiana (Mr. Jefferson), and the gentleman from South Carolina (Mr. 
Clyburn) close this way, by saying to their colleagues, ``We urge you 
to consider the merits of H.R. 1701 carefully, and we seek your support 
for its passage.''
  Mr. BACHUS. Mr. Chairman, I reserve the balance of my time.
  Ms. WATERS. Mr. Chairman, I yield 4 minutes to the gentlewoman from 
Ohio (Mrs. Jones).
  Mrs. JONES of Ohio. Mr. Chairman, I thank the gentlewoman from 
California for yielding me this time.
  I have prepared comments, but before I get to them let me say that it 
is really wonderful that the gentleman from Maryland (Mr. Wynn), the 
gentleman from Louisiana (Mr. Jefferson), the gentleman from South 
Carolina (Mr. Clyburn), and the gentleman from New York (Mr. Meeks) and 
the gentleman from New York (Mr. Towns) would write a letter, but I am 
the gentlewoman from Ohio and there is the gentlewoman from California 
(Ms. Waters) and the gentlewoman from California (Ms. Lee) and the 
gentleman from New York (Mr. LaFalce) and a number of great Members of 
this Congress who oppose this legislation.
  Secondly, I do not care what a survey said about 67 percent intending 
to purchase or 87 percent did purchase. They are consumers, and as a 
Member of Congress, I am here to protect the consumers from the State 
of Ohio, California, New York, and anywhere else, and just because they 
responded to a survey as such does not mean they are being protected.
  A few days ago, Mr. Chairman, I stopped by one of those fancy coffee 
shops that serve enough coffee variations for nearly everybody's 
peculiar tastes. Instead of going with my usual black with two sugars, 
I decided to be a bit more adventuresome and ordered a double-decaf-
triple-blend-nondairy-double-latte-hazelnut-cappuccino. But when I got 
my customized drink, I had to sift through a thick layer of fluffy foam 
in order to get to a few sips of coffee that were actually in my cup. 
All in all, my coffee adventure was a big letdown, just like H.R. 1701 
is also a letdown, and once you sift through the fluff, it is clear 
that this bill advances the interests of the rent-to-own industry while 
leaving its customer in a haze of disinformation.
  The gentlewoman from California (Ms. Waters) and the gentleman from 
New York (Mr. LaFalce), my esteemed colleagues, have offered several 
amendments that would address the abuses in what can rightfully be 
classified as legal loanshark rates. Without their amendments, the 
rent-to-own industry becomes a form of debt slavery where customers pay 
and pay and pay but in the end they may never get anything for their 
money.
  We have heard the horror stories about the rent-to-own customers 
ultimately paying up to five times an item's actual cost before they 
can own it. Some in the industry have tried to skirt the issue of 
interest rates by claiming that these are not actually credit sales. 
But those claims conveniently ignore the ultimate goal of most rent-to-
own customers, to own the product. The fundamental issue comes down to 
disclosure and H.R. 1701's advocates have tried to paint a picture of 
the excessive burdens that will come with disclosing some basic facts 
and answering simple questions about these

[[Page 16969]]

transactions. But what is so burdensome about answering questions, as 
many of our amendments would do, such as what is the cash price if I 
buy today? Is that burdensome? Or what is my early purchase option? Or 
what is the effective interest rate if I make my weekly or monthly 
payment until I own the item? It is almost like those insurance 
policies that people of color used to buy in Alabama and they come by 
every day and pay 25 cents a week and month after month after month for 
30 years and when they die they cannot even be put in the ground. What 
about what is the cost of any insurance of the services I pay? Or what 
about what are the guarantees in effect while I am still paying under a 
rent-to-own and after I purchase the item? Simple questions that we all 
want an answer to. The answers to these questions will allow customers 
to make better informed decisions when they are choosing between using 
a rent-to-own service or to buy an item outright. Where is the burden 
in that?
  While I recognize the rent-to-own industry may serve a legitimate 
purpose by allowing customers to have an item for only short periods of 
time or consider alternatives when deciding whether to purchase, H.R. 
1701 as it stands right now only serves to advance the special 
interests of many of the economic scavengers in the rent-to-own 
industry who are looking to have a feast on unwitting consumers.

                              {time}  1300

  I urge my colleagues to vote against this legislation.
  Mr. BACHUS. Mr. Chairman, I reserve the balance of my time.
  Ms. WATERS. Mr. Chairman, I yield 4 minutes to the gentlewoman from 
California (Ms. Lee).
  Ms. LEE. Mr. Chairman, I want to thank my colleague, the gentlewoman 
from California (Ms. Waters), for yielding me this time and also for 
her clarity in leading the charge against this special interest, 
anticonsumer legislation. Her hard work and clear understanding of this 
legislation has really brought focus to this debate and to this very 
deceitful bill. I also want to thank our ranking member on the 
committee, the gentleman from New York (Mr. LaFalce), for his 
leadership and his dedication to really try to fix this very badly 
broken bill.
  Now, when our committee considered this bill, I supported numerous 
amendments to improve it, but, of course, to no avail. Last night 
Members sought an opportunity to offer several meaningful amendments to 
the bill here today, but the Committee on Rules only allowed two. So 
what are we left with? A bad, broken bill that is in desperate need of 
repairs.
  That is why I rise today in strong opposition to the underlying bill, 
the so-called rent-to-own bill, and in strong support of the Waters and 
LaFalce amendments. A more accurate name for the bill in its present 
state might be rent-at-your-own-risk or rent-until-you-could-have-
owned-it-three-times-over, because this bill fails to provide real 
consumer protections against unscrupulous operators who charge 
exorbitant rates to low-income people for items really that a wealthy 
person could buy with their credit card for a mere fraction of the 
price.
  Concerns over the business practices of the rent-to-own industry are 
very real. These merchants entice vulnerable low- and moderate-income 
consumers to acquire household goods with no credit checks, no 
qualification, and low payments, and disguise the true cost of the 
transaction.
  Here are just a few of the enticements commonly used; we have no 
doubt heard them before: ``Bad credit? No problem''; ``Need a TV? Come 
on down''; ``Get it today, enjoy it tonight''; ``The sooner you come 
in, the more money you will save.''
  Well, perhaps on the other hand, if you do not live in a minority 
neighborhood, you may have never heard these ads.
  These aggressive and alluring ads stress affordability and immediate 
rewards, only while completely ignoring the actual cost of acquiring 
the merchandise over the contract's term, which usually ends up being 
significantly higher than the cost of buying the merchandise through 
credit cards or more conventional means.
  Though much of this bill merely duplicates existing weak rent-to-own 
laws in many States, it really has an insidious core. At the heart of 
this bill lies preemption language that would kill stronger State laws 
in four States, Minnesota, New Jersey, Wisconsin, and Vermont, that 
still treat rent-to-own as a credit transaction. So if this bill is 
enacted, all States would be required to treat rent-to-own sales as if 
they were leases subject to minimum disclosures, and the few remaining 
consumer protections in those four States would actually be lost.
  No wonder this bill is opposed by all of the consumer groups, 
including Consumers Union, Consumers Federation of America, National 
Consumer Law Center, ACORN, U.S. PIRG, and others. No wonder all 52 
State attorneys general oppose this bill.
  Congress should really be working for true consumer protections for 
all Americans in rent-to-own transactions, not assaulting the laws of 
four States and creating a Federal ceiling on the regulation of the 
industry.
  Frankly, this bill is simply another in the long line of well-titled, 
good-sounding, anti-consumer bills that the majority deems appropriate 
to spend our time discussing when the end of the fiscal year is right 
around the corner and the majority of this Chamber's work on 
appropriations has yet to be done.
  So I urge all Members to stand up for consumers today by voting for 
the Waters and LaFalce amendments and oppose this sham industry bill.
  Mr. BACHUS. Mr. Chairman, this legislation passed out of the 
Subcommittee on Financial Institutions and Consumer Credit, which I 
chair, on a vote of 24 to four.
  Mr. Chairman, I yield 3\1/2\ minutes to the gentleman from 
Connecticut (Mr. Maloney), my Democratic colleague on the full 
committee.
  Mr. MALONEY of Connecticut. Mr. Chairman, I rise to urge my 
colleagues to support the Consumer Rental Purchase Agreement Act, H.R. 
1701. The bill before us is the product of many months of hard work by 
many Members. I especially want to thank the gentleman from North 
Carolina (Mr. Jones) and my Committee on Financial Services colleagues 
on both sides of the aisle for their constructive input in producing a 
bipartisan, consumer-friendly piece of legislation.
  Let me be clear. This bill establishes a Federal floor for rent-to-
own disclosures and consumer rights, and preserves States' options to 
regulate costs and other disclosures. That is, States can still apply 
further economic and substantive safeguards such as regulating maximum 
rental costs, allowable fees, and fair collection practices, should 
they decide to do so.
  In April of 2000, the Federal Trade Commission issued a staff report 
that addresses many of the issues surrounding the rent-to-own industry. 
Generally speaking, the FTC report concluded that clear and 
comprehensive disclosures of the rental-purchase transaction would 
benefit both the industry and consumers. That is what this bill does.
  Additionally, the FTC made some recommendations regarding the types 
of disclosures that would benefit the consumer the Consumer Rental 
Purchase Agreement Act before us today begins to implement those 
recommendations. Let me quote or cite a few examples.
  Again, H.R. 1701 establishes a Federal floor, assuring that more 
protective State laws continue in force and can be enacted in the 
future. Secondly, the bill expands and assures that the consumer's 
acquisition rights will be preserved after a missed payment if the 
consumer acts to reinstate the lease within a specified period of time. 
The bill prohibits mandatory charges for damage waiver. It requires 
price tags and labels and clarifies what should be included on those 
price tags and labels. It requires more accurate cost disclosures, and 
it requires the disclosure of whether or not the equipment is new or 
used.
  The bill prohibits merchants from imposing a balloon payment or any

[[Page 16970]]

other special fee to acquire ownership, and it prohibits abusive 
practices and provides stringent liability and enforcement mechanisms. 
The bill gives enforcement power to both the FTC and to the State 
attorneys general, and the bill ties criminal and civil liabilities and 
penalties for violations to the requirements for the Truth in Lending 
Act and the Consumer Leasing Act.
  My good friends who oppose this legislation are simply wrong. This 
legislation creates a Federal floor. For all of the good things that 
they would like to achieve, in addition to what this bill does, can in 
fact be done at the State level; and I would submit to them that right 
now there is no Federal structure for the regulation of this industry. 
What this bill does is create the Federal structure for the regulation 
of this industry, for the benefit of the consumer, and creates an 
opportunity in the future to add additional protections as those 
protections are argued successfully through the congressional process. 
So this is a great opportunity for the consumer that we offer here 
today in this legislation.
  Is this bill good for industry? Of course it is good for industry, 
because it creates that mandatory minimum Federal floor which helps 
create the national marketplace in which this activity can take place. 
That is the benefit of a continental market. But is it good for the 
consumer? Of course it is good for the consumer, because it establishes 
rights that consumers do not have now, takes no rights away, and gives 
the opportunity for additional rights, either to be granted by the 
States or to be granted by the Congress of the United States.
  Mr. Chairman, this is a very important step forward for consumers in 
this country, as well as a step forward for our economy.
  Ms. WATERS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, I would like to correct a few things. My colleague, the 
gentleman from Alabama, listed the FTC and cited the FTC report I think 
as support for the legislation. The FTC responded that they did not 
support a need for Federal legislation at this time. I just wanted to 
clear the record of that.
  Also, I want to clear up some statements that were made by my 
colleague relative to preemption. We have a letter from the State of 
Wisconsin that says that this proposal would block all future State 
efforts to protect rent-to-own customers within the context of consumer 
credit regulation. They also go on to say that the substitute's 
approach to preemption is in conflict with the fundamental principle 
underlying the attorneys general letter of September 5, 2001.
  So I do not want the Members of Congress to believe that somehow 
preemption is not a question. It certainly is still a question and, 
certainly, there is preemption.
  Mr. Chairman, I want to share with my colleagues that some of the 
amendments that I attempted have been alluded to by other Members who 
have talked about this bill. I want to share with my colleagues that I 
tried to amend this legislation that would basically place a cap on 
total price. My amendment was based on New York and Iowa law which 
requires that a percentage of the periodic payment be devoted to 
equity. My amendment would have provided that 75 percent of each 
payment would count as an ownership interest in the property, and that 
the customer would acquire full ownership of the property when he or 
she had paid an amount equal to 133 percent of the cash price.
  Well, that was opposed; and that is what some of my colleagues were 
talking about when they talked about the exorbitant prices.
  Also, I would like to point out that I tried desperately to do 
something about the abusive practices with an amendment, and I cited 
some of the things that happened with these repossessions. Many of the 
rent-to-own contracts have clauses which attempt to sanction the entry 
into the customer's residence when the customer is not even at home. 
The contract currently used by a large company provides, and I quote, 
that ``the lessor shall have the right forthwith and without prior 
notice to enter any premises where said property is located and take 
immediate possession of said property without the necessity of any 
legal or judicial process,'' and ``the lessee shall be obligated to 
reimburse the lessor for any and all expenses related to any reasonable 
effort to repossess the property, including reasonable attorneys' 
fees.''
  This industry is unconscionable.
  Mr. Chairman, I yield 2 minutes to the gentleman from New York (Mr. 
LaFalce).
  Mr. LaFALCE. Mr. Chairman, there are a number of difficulties with 
this bill. We could deal with those difficulties if we had more time 
and willingness, and if we were negotiating it, rather than an attempt 
to negotiate it with the industry. If we just proceed with this bill, I 
think it is dead for this Congress. I do not think it will see the 
light of day in the Senate.
  What are some of the issues? Well, first of all, preemption is an 
issue. I read off the specific provisions of the bill that preclude 
preemption. The gentleman from Wisconsin (Mr. Sensenbrenner), the 
chairman of the Committee on the Judiciary, wrote an excellent opinion 
explaining the difficulties he has because of preemption. These are not 
make-believe arguments; they are consumer protections that are 
preempted. States cannot do it. State laws are superseded. We need to 
deal with that issue.
  Now, I actually do not think that those are the primary concerns of 
the rent-to-own industry. What are their primary concerns which 
probably only a handful of Members, at best, would even be aware of?

                              {time}  1315

  First, it is not so much the APR consumer protections, it is the 
treatment, the tax treatment of the rent-to-own contract. It is not 
that the IRS has said this is a lease to be written off for 3 years, it 
is that the rent-to-own industry got Congress to put a provision in the 
Tax Code that says a rent-to-own contract shall, by definition, be a 
lease, and shall be allowed a 3-year write-off. They are afraid that 
some provision of the Federal or State law might alter that treatment. 
We can deal with that.
  They are also concerned, too, about if it is considered to be a 
credit sale, it might not be considered an asset of theirs. If it is 
not an asset of theirs, they might not have the security that is 
available to obtain cash flow financing from financial institutions. So 
that is another concern. I think that is something that could be dealt 
with, too.
  In other words, we could deal with their business problems while 
still having good Federal standards for consumer protection and 
allowing the States to go further. This bill does not do it.
  Mr. BACHUS. Mr. Chairman, I yield 3 minutes to the gentlewoman from 
New York (Mrs. Kelly).
  Mrs. KELLY. Mr. Chairman, I thank the gentleman from Alabama (Mr. 
Bachus) for yielding time to me.
  Mr. Chairman, I rise in strong support of H.R. 1701. This is 
bipartisan legislation which would create a nationwide floor for rent-
to-own contracts. In turn, this floor would create greater 
opportunities and flexibility for consumers to choose from when 
acquiring new products.
  What kind of flexibility? Rent-to-own consumers do not need to commit 
to any specified amount of time to use these products. One example 
would be consumers who like to test out different products before 
deciding which product they will purchase. Rent-to-own gives them an 
opportunity to do that by just allowing the consumers to determine 
which of these products best suits their needs before purchasing that 
product.
  In addition, rent-to-own allows consumers to obtain products they may 
only need for a short time. For instance, a consumer may want a giant 
screen TV for just the fall football season. They could engage in a 
rent-to-own contract for the fall, and at the end, simply return the 
TV, no questions asked, and end the agreement right on the spot.

[[Page 16971]]

  Another example is particularly helpful for parents of children 
interested in taking music lessons on an instrument. These parents can 
obtain the instrument the child is interested in with a rent-to-own 
agreement. If the child loses interest, parents can simply return the 
instrument and stop making payments. Many school districts in the 
United States of America have this sort of thing in place.
  Rent-to-own represents a viable and simple alternative for many 
Americans not looking to purchase a product. However, rent-to-own also 
represents an option for many Americans who lack credit or who do not 
have the funds to purchase a product they otherwise would be unable to 
obtain, so they do it slowly, with a rent-to-own contract.
  In essence, this legislation is about ensuring greater options for 
consumers. As a body, I believe it is our mission to create more and 
not limit choices and opportunities for consumers.
  Those opposed to this legislation claim the bill would override State 
law and harm consumers. That is a gross distortion. While this 
legislation would create a new floor for consumer protections in the 
States, in no way would the bill change any State law which is stronger 
than the standards written in the bill, nor would this bill prevent any 
State from enacting even stronger consumer protections for these 
leasehold agreements. What the bill does is create a floor of strong 
consumer protections from which States can work to help consumers who 
want to take advantage of rent-to-purchase opportunities.
  I urge my colleagues on both sides of the aisle to join us in support 
for this legislation to give all consumers better protections in these 
contracts, and a lot more options in the market.
  Ms. WATERS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, what is behind this bill? Not a desire to create a 
Federal floor of consumer protections for rent-to-own customers, as the 
majority views allege. If Members really believe that the rent-to-own 
people are in here doing all of this fighting because they want to 
provide consumer protection for the people that they have been 
literally ripping off and abusing all of these years, then I guess I do 
have a bridge I want to sell them.
  This is an effort to avoid hundreds of millions of dollars in legal 
penalties imposed by courts from precisely those States whose laws it 
would preempt. Since 1997, legal actions responding to State consumer 
law violations have produced legal judgments and settlements against 
the Nation's largest rent-to-own chain, Rent-a-Center, Incorporated, 
amounting to $30 million in Minnesota, $16 million in Wisconsin, and 
more than $60 million in New Jersey.
  Unable to win under these State laws, or to overturn them at the 
State level, the rent-to-own industry is simply calling on Congress to 
preempt them. All of the national consumer organizations oppose H.R. 
1701, as has been indicated, as an inadequate standard to protect 
vulnerable consumers from misleading lease arrangements that really 
mask installment sales at exorbitant rates of interest. That is what 
this is all about.
  If Members travel through Washington, D.C. in the poorest areas, or 
any of these cities, Members will see the check cashing industry, the 
payday loan industry, the rent-to-own industry, where they put their 
operations, where people are the poorest and most vulnerable, people 
who are desperate, who do not ask the questions, and who are willing to 
do everything they can to make those weekly payments without asking, 
what is the bottom line? What do they add up to?
  Mr. Chairman, we cannot allow the Congress of the United States to be 
used to shield these rip-off rent-to-own dealers. We cannot allow this 
industry, I do not care how powerful they think they are, how much 
money they think they have, to come in here and use the Congress of the 
United States to keep ripping off people who expect some protection 
from us.
  If we cannot stop this legislation on the floor of Congress, we are 
not worth our salt. I would simply say to the Members of Congress, it 
is preemption, it is abusive, it is exorbitant. This is the worst of 
the worst.
  Again, for all people who went home and said to their constituents, 
forgive me about Enron, I did not know any better; forgive me about 
WorldCom, I did not know any better; yes, I am going to be about 
corporate responsibility; no, I will not allow the rip-off of the 
citizens of the country anymore, what are they going to tell their 
consumers and their citizens and their constituents when they go home 
after they have voted for this?
  We are not going to let Members forget it. This is an area that some 
of us are going to have to spend priority time on: predatory lending. 
Everybody that falls under that banner, they have had free rein in 
America for too long, and people are suffering from it.
  The assets, the hopes, and aspirations are being drained out of poor 
communities. They will never catch up. They will never be able to have 
a savings account. They will never have money to pay down on a home 
because they have been ripped off, dribble by dribble, buck by buck.
  I do not care whether it is Democrats or Republicans, this is not a 
bipartisan bill. Do not give me the name of any Democrats who support 
it, because they are just as bad as those on the opposite side of the 
aisle who support this. I do not care what color they are, I do not 
care where they come from. As a matter of fact, I intend to expose 
every legislator, black, green, purple, I do not care what they are, 
that supports this kind of legislation. They have too much power. The 
people have invested too much in the Members of Congress for them to 
take their power and use it in this fashion. Not only is it 
unconscionable, but I daresay it is criminal to do so.
  So they can name all the people who they want to name who supposedly 
support it, they can fashion their arguments in any way they want to 
call preemption, nonpreemption. They do not even try to defend against 
the abuses. They do not even try to defend against the exorbitant price 
because they cannot. It is just that bad.
  Shame on us if we allow this legislation to get out of here. Shame on 
us who are elected by the people of this country, expecting us to give 
them some minimal protection. Many of them do not know about all of the 
fancy, highfalutin corporate relationships we have around here, but 
many of them do know that on a day-to-day basis they have to go to 
these little businesses because they think they have no place else to 
go to get a little help. They think we are looking out for them. I ask 
the Members of Congress to reject this legislation.
  Mr. BACHUS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, I am not sure whether I am sort of tan or yellow or 
whatever I am, but whatever I am, I want to agree with the gentlewoman 
from California (Ms. Waters) about one thing. She has outlined a number 
of abuses. She has argued about a number of people that are being 
ripped off. I agree. But what she is saying has nothing to do with this 
bill, because this bill absolutely increases consumer protection.
  Mr. Chairman, I yield 2 minutes to the gentleman from Texas (Mr. 
Sandlin) to close, one of 24 Members of the Committee, after 4 days of 
hearings and markup, who voted overwhelmingly for this bill.
  Mr. SANDLIN. Mr. Chairman, I am glad that the House is finally 
considering this bipartisan legislation to establish Federal oversight 
of the rent-to-own industry. Contrary to what we have heard today, many 
of my poor constituents, my consumers, have absolutely no access to 
consumer products without the rent-to-own industry.
  As we have all heard today, currently there is no Federal oversight 
or regulation of the rental purchase industry. The lack of a Federal 
consumer protection statute for this growing industry is inexcusable; 
it is unconscionable.
  While H.R. 1701 may not be a perfect piece of legislation, it 
represents a vast improvement over the inadequate status quo that has 
been referred to today.
  According to an April 2000 Federal Trade Commission staff report, the

[[Page 16972]]

rent-to-own industry serves approximately 3 million Americans and 
generates nearly $4.5 billion in revenues. It is time for Congress to 
enact a Federal statute governing this growing industry that will 
subject rent-to-own merchants to Federal oversight and reasonable 
minimum standards for contracts and point-of-rental disclosures.
  By establishing a Federal floor for rental purchase agreements, H.R. 
1701 will strengthen consumer protections in 32 States, including the 
State that I am from in Texas.
  At the same time, I have read this measure and this measure does not 
preempt State statutes that provide consumers with even tougher 
protections for consumers, including disclosures intended to give 
rental purchase consumers all the information necessary to make 
intelligent decisions. They can make those intelligent decisions, and 
they do have more protections. This is pro-consumer in Texas and across 
the country.
  Ironically, the opponents of a uniform Federal standard for the rent-
to-own industry, which would regulate the industry under the Truth in 
Lending Act, are usually the most forceful advocates of Federal 
protection for consumers. Far from being a weakening of consumer 
protections, as some opponents of this measure contend, H.R. 1701 
merely codifies rulings by both the Federal Reserve Board and the 
Internal Revenue Service that treat rental purchase tax credits as 
lease sales.
  This is pro-consumer, it is pro-protection. It increases the ability 
of consumers to have information to make intelligent decisions about 
the purchases they have, and it gives the poor, the disadvantaged, the 
unfortunate the opportunity to have access to consumer products that 
they could get absolutely no other way.
  I urge my colleagues to pass this long overdue measure. Let us get 
some regulation in this industry. Let us help our consumers.
  Mr. Chairman, as an original cosponsor of the Consumer Rental 
Purchase Agreement Act, I am glad that the House is finally considering 
this bipartisan legislation to establish federal oversight of the rent-
to-own industry.
  As we have all heard today currently there is no federal oversight or 
regulation of the rental purchase industry. The lack, of a federal 
consumer protection statute for this growing industry is inexcusable, 
and while H.R. 1701 may not be a perfect piece of legislation, it 
represents a vast improvement over the inadequate status quo.
  According to an April 2000 Federal Trade Commission staff report, the 
rent-to-own industry serves approximately 3 million Americans and 
generates nearly $4.5 billion in annual revenues.
  In Texas alone, the rent-to-own industry generates nearly $500 
million in annual revenues and employees 7,500 people. It is time for 
Congress to enact a federal statute governing this growing industry 
that will subject rent-to-own merchants to federal oversight and 
reasonable minimum standards for contract and point-of-rental 
disclosures.
  By establishing a federal floor for rental purchase agreements, H.R. 
1701 will strengthen consumer protections in 32 states, including 
Texas, that currently afford consumers weaker safeguards than those 
contained in the Consumer Rental Purchase Agreement Act. At the same 
time, this measure does not preempt state statues that provide 
consumers with even tougher protections for consumers, including 
disclosures intended to give rental purchase customers all the 
information necessary to make intelligent decisions.
  Ironically, opponents of a uniform, federal standard for the rent-to-
own industry, which would regulate the industry under the Truth-in-
Lending Act, are usually the most forceful advocates of federal 
protections for consumers. Far from being a radical weakening of 
consumer protections, as some opponents of this measure contend, H.R. 
1701 merely codifies rulings by both the Federal Reserve Board and 
Internal Revenue Service that treat rental-purchase transactions as 
lease sales.
  I urge my colleagues to pass this long-overdue measure on behalf of 
rental-purchase consumers across the country.
  Mr. STARK. Mr. Chairman, I rise today in opposition to H.R. 1701, the 
so-called Consumer Rental Purchase Agreement Act.
  This bill has nothing to do with protecting consumers. It doesn't 
help the most financially vulnerable Americans that often rely on rent-
to-own agreements just to afford some of the most basic necessities for 
their families.
  This bill is more about letting the $5 billion dollar a year rent-to-
own industry get out from under strict consumer protection standards in 
force in several states. This shouldn't come to anyone's surprise 
considering the Republican leadership's track record of giving 
corporate interests a free ride at the expense of America's working 
families.
  Proponents of this bill are right in pointing out that rent-to-own 
agreements are not subject to any federal standard. But, their effort 
to create a new national standard is severely misguided. Not only does 
it overturn tougher consumer protection laws already in place in most 
states. But, it will also prevent some states from regulating these 
transactions altogether.
  In addition, this bill doesn't include important disclosure 
requirements mandating that rent-to-own businesses inform consumers of 
the total cost of entering into these agreements. This undermines the 
basic principle of a free market by barring Americans from shopping 
competitively and making informed choices.
  We should do more to demand accountability from the rent-to-own 
industry. This bill simply gives them a shelter to play games with 
financing gimmicks and impose hidden fees on vulnerable consumers.
  I think Congress owes more to America's working families than to 
conspire in another corporate scam. I urge my colleagues to stand up 
for consumers and vote down this misguided bill.
  Ms. SCHAKOWSKY. Mr. Chairman, today I rise in strong opposition to 
H.R. 1701. I urge my colleagues to join me in opposing this anti-
consumer legislation. I want to thank Representative Waters for her 
tireless work on behalf of consumers. Every national consumer rights 
organization and 52 state and extraterritorial Attorney Generals oppose 
this bill. I should also note that there is bipartisan opposition to 
this bill. The Judiciary Committee Chairman has stated that ``H.R. 1701 
is a misguided attempt to preempt the existing laws of virtually every 
state.'' I could not agree more.
  This legislation sacrifices consumer protections for the sake of a 
politically connected industry that is notorious for exploiting 
consumers. We should not preempt strong consumer protection laws in 
Minnesota, New Jersey, Wisconsin, and Vermont. This bill would also 
effectively stop states from passing strong consumer protections in the 
future.
  The $5 billion a year rent to own industry offers goods and services 
to people who do not have the credit or money to buy goods at the 
regular sales price. I should note that this industry that already 
receives special treatment by the IRS. The IRS grants the Rent to Own 
Industry a three-year depreciation schedule. The horse racing business 
is the only other industry that has a three-year depreciation schedule. 
This legislation will give this industry even more ``special 
treatment.''
  H.R. 1701 effectively allows the rent to own industry to hide the 
true costs of its transactions by hiding interest rates. Consumers 
should know the final cost of a deal they have agreed to.
  This industry provides goods to those who are unable to 
conventionally purchase goods. We in Congress should work to strengthen 
and not weaken protections for families that are struggling to make 
ends meet. Low-income people predominately use this market. It is 
estimated that over 30% receive some form of public assistance, 59% 
earn less than $25,000 and 73% have a high school degree or less. These 
consumers frequently end up paying 10 to 15 times of the rental price. 
On average it takes a consumer 77 weeks to own the good.
  Consumers are deceived by low monthly installment rates. People 
should absolutely know what they are getting into when they agree to 
buy an item over a long period of time. This legislation will make it 
even harder for consumers to get fair and accurate information about 
their obligations. We in Congress should work to strengthen, not weaken 
protections for working families. This legislation will effectively 
increase low-income people's debt. Join me in voting against this anti-
consumer legislation and voting for the motion to recommit that is 
being offered by the gentlelady from California.
  Mr. PAUL. Mr. Chairman, H.R. 1701, the Consumer Rental Purchase 
Agreement bill, rewrites every rent-to-own contract in the nation to 
conform to the dictates of federal politicians and bureaucrats. This 
bill thus represents another usurpation by Congress of powers reserved 
by the 9th and 10th amendments of the Constitution to the states and 
the people.
  Rent-to-own transactions provide many low-income individuals an 
affordable means of obtaining durable goods, such as furniture, 
appliances and computers. Rent-to-own also provides a way of obtaining 
luxury items for a short time. For example, someone who cannot

[[Page 16973]]

afford a big screen TV can use a rent-to-own contract to obtain such a 
TV to watch the Super Bowl.
  Proponents of H.R. 1701 admit the benefits of rent-to-own but fret 
that rent-to-own transactions are regulated by the states, not the 
federal government. Proponents of this legislation claim that state 
regulations are inadequate, thus making federal regulations necessary. 
My well-intentioned colleagues ignore the fact that Congress has no 
legitimate authority to judge whether or not state regulations are 
adequate. This is because the Constitution gives the federal government 
no authority to regulate this type of transaction. Thus, whether or not 
state regulations are adequate is simply not for Congress to judge.
  Some may claim that H.R. 1701 respects states' rights, because it 
does not preempt those state regulations acceptable to federal 
regulators. However, Mr. Chairman, this turns the constitutional 
meaning of federalism on its head. After all, the 10th amendment does 
not limit its protections to state laws approved of by the federal 
bureaucracy.
  In addition to exceeding Congress's constitutional authority, H.R. 
1701, like all federal regulatory schemes, could backfire and harm the 
very people it was intended to help. This is because any regulation 
inevitably raises the cost of doing business. These higher costs are 
passed along to the consumer in the form of either higher prices or 
fewer choices. The result of this is that marginal customers are priced 
out of the market. These consumers may prefer to sign contracts that do 
not meet federal standards as opposed to not having access to any rent-
to-own contracts, but the Congress will deny them that option. 
According to the proponents of H.R. 1701, if people cannot obtain 
desired goods and services under terms satisfactory to the government, 
they are better off being denied those goods and services. Mr. 
Chairman, this type of ``government knows best'' legislation represents 
the worst type of paternalism and is totally inappropriate for a free 
society.
  In conclusion, H.R. 1701 exceeds Congress's constitutional authority 
by regulating areas constitutionally left to the states. It also raises 
the cost of forming rent-to-own contracts and thus will deny those 
contracts to consumers who desire them. I therefore urge my colleagues 
to reject this paternalistic and unconstitutional bill.
  Mr. SHOWS. Mr. Chairman, the rent-to-own industry provides an 
important service for those who cannot afford the initial expense of 
durable good purchases, such as furniture, washing machines, and 
televisions, and for those who are looking for temporary home 
furnishings. Many Mississippians rely on the convenience and 
accessibility of rent-to-own products. Nationally, rental and rent-to-
own transactions total $5.3 billion each year. Because the rent-to-own 
industry provides such a vital service to so many people across the 
U.S., I am proud to support the Consumer Rental-Purchase Agreement Act 
on the floor of the House today.
  The Consumer Rental-Purchase Agreement Act of 2002 (H.R. 1701) 
protects those consumers who opt to rent or rent-to-own. Because these 
types of transactions are short-term leases not covered by the Consumer 
Leasing Act or the Truth in Lending Act, H.R. 1701 fills a gap in 
federal regulation of consumer transactions.
  H.R. 1701 regulates the rent-to-own industry by establishing federal 
regulatory framework for rent-to-own transactions. The legislation 
establishes a federal ``floor'' of minimum consumer protection for 
rent-to-own consumers in every state. This federal ``floor'' provides 
for consumer disclosures while still allowing states to impose price 
caps, fee limits, and other protections.
  H.R. 1701 protects consumer rights. The bill extends the 
reinstatement period that preserves a consumer's acquisition rights 
after missing payments. It restricts the types of fees that merchants 
may charge, such as balloon payments for multiple late fees. The bill 
prevents merchants from requiring that customers purchase their damage 
waiver or insurance as a condition of the rental. It also prohibits 
abusive collection practices and protects customers from waiving their 
legal claims.
  H.R. 1701 protects states' rights to regulate and establish business 
standards in the rent-to-own industry. The bill improves on the 
existing rent-to-own retail standards in more than 40 states but 
assures that more protective state laws continue in force. States can 
and do restrict rental costs and require further disclosures. H.R. 1701 
also ensures the uniform definition of the transaction as a short-term 
lease with a purchase option (not an outright sale or secured 
transaction), consistent with current federal tax treatment and 
statutes in 46 states. The bill does not prevent states form imposing 
on rent-to-own transactions economic limits like those applied in state 
regulation of long-term leases or consumer credit.
  The bill provides for more complete and accurate consumer 
disclosures, adopting several policy recommendations made by the 
Federal Trade Commission in a recent study of the industry. For 
example, H.R. 1701 requires that merchandise bear a price tag or label 
disclosing the ``total cost'' of the rental, including mandatory fees 
or charges, as well as the rental payment amount and number of payments 
to acquire ownership. Only 18 states currently require any type of 
price tag or label disclosure, and even fewer include all of the 
information mandated by H.R. 1701.
  I am a proud cosponsor of this bipartisan legislation, which raises 
the standards of disclosure in the rent-to-own industry and ensures 
that consumers are protected during these transactions. As a member of 
the Committee on Financial Services, I voted in favor of this 
legislation on June 27th, which passed the committee with bipartisan 
support and was reported favorably to the full House, 29-9.
  I am proud to support this bill on the floor of the House today 
because it guarantees that the relationship between rent-to-own 
retailers and consumers maintains its integrity and best serves each 
side's financial stake in rent or rent-to-own transactions.
  Ms. JACKSON-LEE of Texas. Mr. Chairman, today I speak out in 
opposition to H.R. 1701. This bill does great harm to our nation's 
consumers while protecting the rent-to-own industry with weak 
regulations that are not suited to the true nature of the type of 
transaction these contracts really represent--credit-sales contracts.
  Once again, we hasten to pass a bill that unfairly places the 
interests of common consumers below the interests of industry and 
business. Unfortunately, there are those in the rent-to-own business 
who create these contracts without providing full disclosure to the 
consumers who use them--consumers who ultimately intend to own the 
television, furniture or other good contemplated in the rent-to-own 
agreement. When these consumers fail to make payment, instead of giving 
them reasonable terms and conditions prolonging the contract, or 
reinstating the contract owners of these contracts often take 
possession of these goods--even after the consumers has made 
significant payments under the contract in excess of the actual cost of 
the goods.
  The measure also raises another issue that Republicans often use as a 
battle cry when they support regulation that oppresses the rights of 
individuals or threatens what they term as undue burdens on business 
and industry. I cannot count the number of times that I have heard 
Republicans raise the issue of states rights arguing that states know 
best and decrying Federal encroachment upon state matters. However, 
when they want to elevate the rights of our nation's industries over 
the rights of individual consumers, states rights goes right out of the 
door. This measure tramples on the decisions of state regulators to 
regulate rent-to-own contracts as credit sales and turns federalism on 
its head. H.R. 1701 would preempt strong state laws regulating rent-to-
own contracts from New Jersey, Minnesota, Wisconsin and Vermont. This 
measure preempts stronger state laws regulating rent-to-own contracts 
and is opposed by 52 state and territorial Attorneys General.
  Consumer advocates oppose this measure. Furthermore, all of the 
government witnesses during the Judiciary Subcommittee on Commercial 
and Administrative Law on this bill, including witnesses representing 
the Wisconsin Attorney General, the Federal Trade Commission and the 
Federal Reserve declined to recommend action on H.R. 1701, further 
making the argument that this is nothing more than a giveaway to the 
industry. Yet, we still see this measure progressing in the House.
  I do not believe at this juncture, in our nation's history, that this 
legislation reflects Congressional concern for a nation with a stagnant 
economy and teetering on the brink of war. At a time when all of our 
nation's citizens are particularly concerned for their well being we 
should not pass legislation that will allow industry to capitalize on 
those citizens with the most exposure to these turbulent times. For 
these reasons I do not support H.R. 1701, and if present, I would have 
voted ``no.''
  The CHAIRMAN pro tempore (Mr. Hefley). All time for general debate 
has expired.
  Pursuant to the rule, the amendment in the nature of a substitute 
recommended by the Committee on Financial Services, amended by the 
amendment recommended by the Committee on the Judiciary, printed in the 
bill shall be considered as an original bill for the purpose of 
amendment under the 5-minute rule and shall be considered as read.

[[Page 16974]]

  The text of the committee amendment in the nature of a substitute, as 
amended, is as follows:

                               H.R. 1701

       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. 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' 
     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 
     such 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, 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 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 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

[[Page 16975]]

     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 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 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 lease 
     term.
       ``(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 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 
     subparagraph paragraph (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) 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 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.
       ``(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 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 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 appropriate, the 
     merchant shall--
       ``(1) deliver, 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

[[Page 16976]]

     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;
       ``(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 or catalog 
     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.
       ``(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] 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.
       ``(b) 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, to prevent 
     its circumvention, and to facilitate compliance with its 
     requirements.
       ``(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

[[Page 16977]]

     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.''.

  The CHAIRMAN pro tempore. No amendment to the committee amendment in 
the nature of a substitute is in order except those printed in House 
Report 107-661. Each amendment may be offered only in the order printed 
in the report, by a Member designated in the report, shall be 
considered as read, and shall be debatable for the time specified in 
the report, equally divided and controlled by the proponent and an 
opponent, shall not be subject to amendment, and shall not be subject 
to a demand for division of the question.
  It is now in order to consider amendment No. 1 printed in House 
Report 107-661.


                 amendment no. 1 offered by mr. lafalce

  Mr. LaFALCE. Mr. Chairman, I offer an amendment.
  The CHAIRMAN pro tempore. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 1 offered by Mr. LaFalce:
       Page 5, strike line 5 and all that follows through line 8, 
     and insert the following new paragraph:
       ``(4) Cash price.--
       ``(A) In general.--The term `cash price' means the price at 
     which a merchant, in the ordinary course of business, would 
     offer to sell for cash the property that is the subject of 
     the rental-purchase agreement, as determined by the Board 
     pursuant to this paragraph.
       ``(B) Determination of cash price.--The Board shall 
     determine in regulation the formula or criteria for 
     calculating the cash price of a product that is the subject 
     of the rental-purchase agreement, which shall approximate the 
     equivalent fair market value of the product if offered under 
     a cash or credit sale, as adjusted to reflect additional 
     charges or services, if any, that the Board determines are 
     appropriate for purposes of rental-purchase transactions.
       ``(C) Minimum cash price.--Notwithstanding subparagraph 
     (B), the cash price determined by the Board pursuant to 
     subparagraph (B) shall not be less than an amount equal to 
     twice the documented actual acquisition cost of the property 
     to the merchant, which shall include the cost of shipment, 
     refurbishing or other charges, as determined by the Board; 
     except that, a merchant shall not be precluded from selling a 
     product for cash for an amount that is less than the cash 
     price determined under this paragraph.
       ``(D) Adjustment for used property.--The cash price of used 
     or previously rented property that is the subject of the 
     rental-purchase agreement shall be determined by adjustment 
     of the cash price determined under this paragraph according 
     to such formula or criteria as the Board shall prescribe by 
     regulation.
       ``(E) Periodic adjustment required.--The Board shall, by 
     regulation, periodically review and revise, as necessary, the 
     formula or criteria for determining cash price under this 
     paragraph in response to changes in merchant costs, market 
     conditions, or other factors determined by the Board.
       Page 17, beginning on line 4, strike ``either by payment of 
     the total cost'' and all that follows through line 7, and 
     insert ``in accordance with section 1006;''
       Page 18, beginning on line 8, strike `` or any early 
     payment option provided in the rental purchase agreement,''.

       Page 18, strike line 12 and all that follows through line 
     17 and insert the following new subsection:
       ``(b) Transfer of Ownership.--
       ``(1) Scheduled payments.--The consumer shall acquire 
     ownership of the rental property upon payment of periodic 
     payments totaling more than an amount, 50 percent of which 
     equals the cash price of the rental property.
       ``(2) Early payment option.--The consumer shall acquire 
     ownership of the rental property, at any time after the 
     initial payment, upon payment by the consumer of an amount 
     equal to the amount by which the cash price of the leased 
     property exceeds 50 percent of all previous payments under 
     the rental-purchase agreement.
       Page 18, beginning on line 23, strike ``, or any early 
     purchase option amount provided in the rental-purchase 
     agreement, as applicable''.
       Page 19, line 4, strike ``Rights'' and insert 
     ``Documents''.
       Page 19, beginning on line 6, strike `` or any early 
     purchase option amount provided in the rental-purchase 
     agreement, as appropriate''.

  The CHAIRMAN pro tempore. Pursuant to House Resolution 528, the 
gentleman from New York (Mr. LaFalce) and a Member opposed each shall 
control 10 minutes.

[[Page 16978]]

  The Chair recognizes the gentleman from New York (Mr. LaFalce).
  Mr. LaFALCE. Mr. Chairman, I yield myself such time as I may consume.

                              {time}  1330

  Mr. LaFALCE. Mr. Chairman, before I get to the specifics of the 
amendment before us, let me just make a couple of points.
  Some individuals have said there is no Federal protection; therefore, 
we need something to protect consumers. Let me underscore again the 
fact that every single consumer organization that I am aware of opposes 
this bill, and they are very pro-consumer. These organizations such as 
Consumers Union, the Consumers Federation of America, et cetera, they 
are pretty pro-consumer and they are adamantly opposed to this bill. So 
when individuals come to the floor and say that this is a consumer 
bill, there is a disconnect. And I ask people to draw their own 
conclusions as to what the cause of the disconnect is.
  Secondly, some individuals keep getting up here and saying there is 
no preemption whatsoever; the States can do anything they want to. 
Again, I ask them to go to page 32 of the bill and 33, lines 20 through 
7 on page 33 where it specifically says that notwithstanding the 
provisions of the rest of the bill, this title shall supersede any 
State law that does the following, and then it ticks it off including 
the disclosure of a percentage rate calculation, including a time-price 
differential, an annual percentage rate, an effective annual percentage 
rate, that, if a State law calls for it, eliminates a State law. If a 
State wants to pass legislation, it is precluded.
  Do not come to this floor with a straight face and say that the 
States can do anything they want when this language is in here. If you 
come to the floor, read this language.
  Unfortunately, the Committee on Rules is not offering us the 
opportunity to correct those deficiencies with an appropriate 
amendment. That means whatever happens with respect to the amendment 
the bill is still going to be defective.
  They have permitted me to deal with one issue and that is the issue 
of cash price. And this is a rather large issue. It is going to be a 
controversial one, I understand that. But such a significant percentage 
of consumers who rent do wind up owning, that we have to ask what is 
the price of their ownership, and are they aware of it, and should we 
permit the rental industry to charge such an enormous price to the 
consumers, most of whom are the poorest in our society?
  First of all, let us ask, well, what does it usually cost to own 
something? There have been a few studies. First of all, let me quote to 
you from a document put out by the U.S. PIRG, the Public Interest 
Research Group. They did a study, the average outright cash price for a 
19-inch color TV at a department store would be $217; at a rent-to-own, 
$415. The average cost to rent to own a 19-inch color TV, that is 
outright; but the average cost at the department store $217. At the 
rent-to-own, $746. That is the total average cost, $746 as opposed to 
$217 at a department store. And I could go on and on and on.
  More recently, a study was done by a professor at the Rochester 
Institute of Technology, Professor Robert Manning. He wrote the book 
``Credit Card Nation.'' He has a chapter in that book dealing with the 
rent-to-own industry. He says that the total Circuit City credit cost 
for a 19-inch Magnavox television was $231, whereas, the total cost 
under the rental purchase contract was $779. Unbelievable.
  For a $190 Fisher 4-head VCR, the total retail credit cost at Circuit 
City would be $236.22 versus a total cost of $935.33 at Rent-a-Center.
  This is unconscionable. Almost everybody who winds up owning 
property, and that is a significant number, and the gentleman himself 
has used figures of around 70 or 80 percent, I am not sure exactly what 
the accurate percentage is but it is significant, are winding up paying 
three, four, five times the cost of what it would be someplace else. I 
think we need to deal with that.
  At present there are at least 12 States that currently impose some 
form of restriction on the cost consumers must pay to acquire ownership 
of rent-to-own merchandise. Over half these State impose limits on 
total rental costs and fees, while others provide an early purchase 
option that permits consumers who have access to cash to reduce the 
overall cost of the transaction.
  But by far the simplest approach I have found for limiting total 
ownership cost under rent-to-own arrangements is that included in New 
York State law as well as in the rent-to-own statutes of Ohio and 
Nebraska. Under this approach, a consumer is assured of acquiring 
ownership of the rental property whenever their total rental payments 
reach an amount that is equal to two times or twice the stated cash 
price of the property. Now, this can be accomplished by making all 
scheduled payments or by a lump sum early-purchase option payment. This 
approach helps to limit the costs consumers must pay to own a product 
while also assuring a reasonable return for the merchants of roughly 
twice the retail cost.
  Now, unfortunately, even this approach has run into problems in my 
own State of New York as rent-to-own merchants have sought to inflate 
the cash price of products in order to increase the total purchase 
price. So a product might be $200 at a department store, they call the 
cash price $400; and, therefore, they are able to charge $800 rather 
than the $200. So despite the intent of the law to have the cash price 
reflect local retail prices, rent-to-own merchants have often set the 
cash price at a much higher level than they would charge consumers to 
purchase the product outright.
  Inflating the cash prices serves two purposes for rent-to-own 
merchants. It inflates the total cost consumers will ultimately pay to 
acquire ownership of the rental property, and it discourages consumers 
from making outright purchases of merchandise and encourages longer 
term, more costly rentals.
  My amendment would make the ownership cost limitation in New York and 
Ohio State law presently the minimum standard of protection in the 
bill. Consumers who have made rental payments equal to twice the cash 
price of the rental property would be entitled to full ownership of the 
property. But in order to make this work as a national standard, the 
amendment would also direct the Federal Reserve Board, who would be 
responsible for the totality of this legislation, to issue regulations 
providing detailed criteria or a formula calculating the cash price for 
rental property together with additional criteria for adjusting the 
cash price for previously used property.
  The Federal Reserve Board has acted in other circumstances to 
promulgate regulations dealing with truth and lending, et cetera, so I 
think they certainly would be able to do this.
  Now, let me first say that with respect to preemption, this bill 
would not preempt the State laws dealing with cash price. I will get 
that out front. Nor would it preclude the States on their own from 
adopting some cash price restrictions in the future.
  The difficulty is there is no good cash price law right now because 
of the ability of the rent-to-own industry to determine what cash price 
is and the trend is going in the other direction. If we are going to 
pass Federal legislation, we ought to get it right. We ought to protect 
the consumer. And it seems to me that the only bargaining power we are 
going to have is now. Once you pass any Federal legislation, I think it 
will be impossible as a political matter to strengthen it. There will 
be so much opposition. And so, if we are going to protect the consumer, 
we cannot do it later. It has got to be done as a condition of the 
passage of this particular bill. Otherwise, in my judgment, politically 
you will forfeit the opportunity to get it right in the future. And 
that is why this amendment, if we are going to go forward, ought to be 
included in the bill.
  In its original form, H.R. 1701 provided no substantive equity or 
ownership protections for consumers. It provided no legal assurance 
that upon making all required rental payments

[[Page 16979]]

a consumer will actually acquire ownership of the rented property. It 
offered no assurance that the consumer will not have to pay additional 
fees or meet additional conditions to acquire ownership. And it 
provided no assurance that, even after making all payments, the 
consumer will be given the appropriate documentation of ownership and 
any applicable warranties for the property.
  Fortunately, I was able to offer several amendments that corrected 
these problems with the bill. However, equally serious problems were 
not resolved in fact that the bill does nothing to limit the outrageous 
costs that many consumers must pay over time to acquire ownership of 
merchandise under rent-to-own arrangements.
  These costs can be substantial, and are often obscured from consumers 
by promotions that highlight only the low, and seemingly affordable 
weekly rental rate, while hiding total cost figures in confusing small 
print.
  At least twelve states currently impose some form of restriction on 
the cost consumers must pay to acquire ownership of rent-to-own 
merchandise. Over half these states impose limits on total rental costs 
and fees, while others provide an early purchase option that permits 
consumers who have access to cash to reduce the overall cost of the 
transaction.
  By far the simplest approach I have found for limiting total 
ownership costs under rent-to-own arrangements is that included in New 
York State law, as well as in the rent-to-own statutes of Ohio and 
Nebraska. Under this approach, a consumer is assured of acquiring 
ownership of the rental property whenever their total rental payments 
reach an amount that is equal to two times, or twice, the stated cash 
price of the property.
  This can be accomplished by making all scheduled payments or by a 
lump sum early purchase option payment. This approach helps to limit 
the costs consumers must pay to own a product, while also assuring a 
reasonable return for the merchant of roughly twice the retail cost.
  Unfortunately, this approach has run into problems in New York as 
rent-to-own merchants have sought to inflate the cash price of products 
in order to increase the total purchase price. Despite the intent of 
the law to have the cash price reflect local retail prices, rent-to-own 
merchants often set the cash price at a much higher level than they 
would charge consumers to purchase the product outright.
  Inflating the cash prices serves two purposes for rent-to-own 
merchants--it inflates the total cost consumers will ultimately pay to 
acquire ownership of the rented property, and it discourages consumers 
from making outright purchases of merchandise and encourages longer 
term, more costly, rentals.
  My amendment would make the ownership cost limitation in New York and 
Ohio State law the minimum standard of protection in the bill. 
Consumers who have made rental payments equal to twice the cash price 
of the rental property would be entitled to full ownership of the 
property.
  To make this work as a national standard, the amendment also directs 
the Federal Reserve Board to issue regulations providing detailed 
criteria or a formula calculating the cash price for rental property, 
together with additional criteria for adjusting the cash price for 
previously used property. The Board would, in effect, provide a basis 
for determining cash price for rental-purchase transactions in much the 
same way it established a framework for determining annual percentage 
rates (APR) calculations for credit transactions thirty years ago.
  Under the amendment, the calculation provided by the Board would 
assure a cash price at least to two times the merchant's acquisition 
cost, plus any supplemental costs the Board considers appropriate. The 
cash price would be set more uniformly at or near comparable retail 
prices for consumers in all parts of the country. And it would assure a 
total return for the merchants at somewhere near four times acquisition 
costs--a rate of return that most retail merchants would envy.
  I would emphasize again that this is only the minimum standard for 
protecting consumers from excessive ownership costs. All states would 
continue to have the option of providing additional cost protections 
for consumers within their state.
  We've made considerable progress in the bill in a pro-consumer 
direction. My amendment takes it a step further by assuring that the 
total cost of acquiring ownership of rent-to-own merchandise is 
reasonable for both the consumer and the merchant.
  My amendment is entirely consistent with what proponents describe as 
the purpose of the bill. It takes the best approach currently in State 
law, sets it as the minimum federal protection, and continues to permit 
states to add whatever additional protections they consider necessary 
to adequately protect consumers.
  I think this is a reasonable and balanced approach and I would urge 
its adoption.
  Mr. Chairman, I reserve the balance of my time.
  Mr. BACHUS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, I rise in opposition to the amendment.
  Mr. Chairman, this amendment, and I think the gentleman from New York 
(Mr. LaFalce) was accurate in basically much of what he said, and what 
he said was, I believe that we ought to have a price control; we ought 
to have price restriction. And 12 States do have that in their State 
legislation. And after we pass this legislation today, if the State 
chooses to pass it, those price restrictions will still be in place. 
There is no preemption.
  As I have said repeatedly on the floor of this House in this debate 
here today, the only thing, the only thing that is preempted is the 
decision by four judges in four States, three or four States, there is 
a question in one of the States, whether to call this credit sales. And 
we have come down on the side of what the great body of evidence, all 
the State legislatures who have considered this as for tax treatment, 
IRS, how they have treated it, as a lease. And as I said, we have to 
make that decision if we are to have Federal regulation. We have done 
that.
  And in those four States, there are three States, they are absolutely 
right, if this is an important protection for consumers in this State 
then that is taken away. However, I will tell you that in Wisconsin 
because of legislation, all the rent-to-own stores are closing or have 
closed so they are not giving anybody in Wisconsin that approach, did 
not give them any choice. It basically drove the industry out.
  I applaud the gentlewoman from California (Ms. Waters) for her 
honesty. She has said, I do not like this industry. I do not want them 
in business. And she has been upfront about that. As far as the 
consumer groups that we keep hearing about, when this legislation was 
introduced, they came to the Hill en mass and they said, We like some 
of what is in here, but I will tell you what we do not like, we do not 
like preempting those States with stronger laws and we are not going to 
support legislation until that is done.
  Now, I would not have co-sponsored the bill. I did not introduce the 
bill. It came to my committee and at that time before 4 or 5 days of 
hearing, that is what they came to me and said. They said, Absolutely 
we will not support it unless that is in it. Put that in it and we will 
talk to you.
  We had Members on both sides that did not like the fact that we 
preempted certain protections in certain States. So we have backed up, 
and we did not preempt any of those consumer protection laws. They are 
not preempted.
  The attorney general of Alabama in a letter that he wrote me this 
week said, ``If enacted, the legislation employed would set the floor 
for consumer protection while leaving intact existing State regulations 
that offer greater protection to consumers; and going forward under 
this legislation, any State legislature that chooses to do so can enact 
additional protection for its citizens that go beyond what is included 
in H.R. 1701.''
  Now, that is absolutely a fact. I do not think there is any argument 
there. I applaud the gentlewoman from California (Ms. Waters). I 
applaud the other gentlewoman from California in that they have been 
opposed to this legislation and that they will be opposed to this 
legislation from now on. They want these stores closed. And there may 
be other Members of the body that want that.
  There may be others that want price restrictions. Twelve States have 
opted for it. I really do not understand this. I do not understand how 
38 States have said we do not want price restrictions. Yet the 
gentleman from New York (Mr. LaFalce), who said, We are preempting what 
four States have done, now gets up with an amendment that changes the 
law in 38 States. Where is the consistency there?

                              {time}  1345

  When this proposal came up we went to the Federal Reserve. The 
gentleman

[[Page 16980]]

from New York has said the Federal Reserve will set these cash prices 
formulas. Can my colleagues imagine when the Federal Reserve heard 
about an amendment that the Federal Reserve would have to start taking 
all their time and going around and setting these maximum prices? Do I 
need to inform this body they are opposed to having to do this? 
Absolutely they are opposed to it.
  As the FTC concluded in its report, and I have it on page 98, we 
talked about all these exorbitant and excessive profits. The FTC looked 
at that, page 98, and what they said is they said there are almost no 
barriers to entering this business. They said a person can get a store 
front, a delivery truck and an inventory of household merchandise, and 
they can enter the industry. They said because there are no barriers to 
entering this industry, if people are making a big profit, somebody 
else will come in down the street and open up, and they said that 
excessive profits can be maintained only if there are significant 
barriers to entering, to collusion, or some type of anticompetitive 
barrier. There do not appear to be any significant barriers to entry 
that would prevent new firms from entering the rent-to-own industry. 
That is what they concluded.
  They said no evidence that excessive profits, and they said, 
therefore, and the issue here was price restrictions, until it is shown 
that there are some barriers to introduction in this industry or some 
States erect barriers to people getting into the industry, and I know 
of none, that price restrictions that are contemplated, they should be 
explored more fully but they should not be enacted.
  Another thing, the consumer groups, and my colleagues know these same 
consumer groups, it is interesting, if we look back at some of the 
important legislation that this Congress has passed, legislation 
including the Consumer Leasing Act, Fair Debt Collection Act, Fair 
Reporting Act, these consumer groups, it never was good enough for 
them. They always opposed them. They always wanted a little more. They 
push for it but they wanted something else and they urge, and they will 
continue even though we have 46 States, we do nothing about strong 
protection, we increase protection. We increase protections in all 50 
States. As I said, some of the four States that call this a credit sale 
do not require people to put a price tag on there. We require that.
  One of the consumer groups said the terrible abuse, the gentlewoman 
from California (Ms. Waters) pointed this out, to her credit, was that 
these people go in and they do not know what they are paying for this. 
There are 40 States throughout who do not require any disclosure today 
at where the item is as to the price they are paying, 40 States, 
including some that set the price.
  This legislation requires point-of-rental disclosures as to price, 
something that the consumer groups say is badly needed. This 
legislation does it. They oppose it.
  They say they want preemption because 12 States have gone beyond what 
we establish. They do not want us to interfere with those 12 States. So 
we did not. They are still opposed to it and they will be opposed to it 
ad infinitum, and that is okay. That is their right, but the one thing 
that we do not need in this body is we do not need to misrepresent this 
thing as a bill that does not increase consumer protection because it 
absolutely does. In 46 States it absolutely does, and four where they 
have the credit sales thing, one can argue that that effectively keeps 
people from going to rent-to-own stores. So in those four States, it 
might aid the industry, but in the other States it will not because it 
establishes new requirements, and because I am one of those 46 States I 
will be on the floor voting for this.
  The CHAIRMAN pro tempore (Mr. Hefley). All time for debate has 
expired.
  The question is on the amendment offered by the gentleman from New 
York (Mr. LaFalce).
  The question was taken; and the Chairman pro tempore announced that 
the noes appeared to have it.
  Mr. LaFALCE. Mr. Chairman, I demand a recorded vote.
  The CHAIRMAN pro tempore. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from New York 
(Mr. LaFalce) will be postponed.
  It is now in order to consider Amendment No. 2 printed in House 
Report 107-661.


                 amendment no. 2 offered by ms. waters

  Ms. WATERS. Mr. Chairman, I offer an amendment.
  The CHAIRMAN pro tempore. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 2 offered by Ms. Waters:
       Page 19, line 22, strike ```A rental-purchase agreement'' 
     and insert ```(a) In General.--A rental-purchase agreement''.
       Page 21, after line 13, insert the following new 
     subsection:
       ``(b) Continued Applicability of Existing Law.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     risk of any loss, damage, or destruction of the property that 
     is the subject of a rental-purchase agreement shall remain 
     with the merchant throughout the period such agreement is in 
     effect and any rental-purchase agreement, or any waiver or 
     other form of agreement between the merchant and the 
     consumer, that purports to shift the burden of any such risk, 
     and the cost of insuring against any such risk, to the 
     consumer shall be null and void.
       ``(2) Exception for loss, damage, or destruction for which 
     the consumer is directly responsible.--Paragraph (1) shall 
     not apply with respect to any loss, damage, or destruction 
     that was deliberately caused by the consumer or that occurred 
     due to the negligence of the consumer.

  The CHAIRMAN pro tempore. Pursuant to House Resolution 528, the 
gentlewoman from California (Ms. Waters) and the gentleman from Alabama 
(Mr. Bachus) each will control 10 minutes.
  The Chair recognizes the gentlewoman from California (Ms. Waters).
  Ms. WATERS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, I would first like to start this presentation by 
thanking the gentleman from Wisconsin (Mr. Sensenbrenner) who was on 
the floor today to help oppose this legislation. As my colleagues know, 
the gentleman from Wisconsin (Mr. Sensenbrenner) and I do not always 
get along on all of the issues that come before us, but he is a man of 
impeccable integrity, and I would like to thank him for taking the 
floor today in opposition to the legislation that is before us.
  Also, before I get into the debate on this amendment, I would like to 
thank my colleague from Alabama, and while I have been very, very 
pointed in my discussion about this, I do respect him. I have worked 
with him on debt relief. I have worked with him, along with many of the 
church organizations of the world, to do something about debt relief 
for poor countries. Today, I would ask him to do some domestic debt 
relief and work with me to make sure that we relieve the poor citizens 
of this Nation from the awful burden of debt that has been placed on 
them by these rip-off industries, and certainly the rent-to-own falls 
within that category.
  Let me say this. I had four amendments before the Committee on Rules. 
I was denied three of them, but as I said earlier, I was thrown a bone 
and allowed to present this one amendment. As unbelievable as it is, 
given everything that we have learned about the rent-to-own industry, 
the preemption, the abusive practices, all of that, let me add one more 
to the list of unbelievable practices.
  Under the common law of bailment, a merchant is responsible for 
damage to property unless the customer is neglectful or fails to 
exercise ordinary care. Typically, rental-purchase agreements 
contractually shift all responsibility for damages to the customer in a 
rent-to-own business. The merchant sells a liability damage waiver to 
the customer which effectively makes customers pay for responsibility 
that is not theirs. This amendment would ban this shifting of the 
liability to the consumer and prohibits the charging of a fee for 
ensuring the customer against loss. There is an exception for loss, 
damage or destruction that is deliberately caused by the consumer that 
is a result of consumer negligence.

[[Page 16981]]

  Imagine this. A person has got this contract with the rent-to-own 
industry. They need this television or whatever it is, refrigerator, 
whatever. Not only do they have an arrangement that is not considered a 
credit sales contract arrangement and so they do not have to disclose 
anything, they do not have to disclose what the interest is on it, and 
this industry just can charge whatever they want to charge that person. 
Then they say to the person, now, they are responsible for this item 
and we have a little something that is built into this contract that we 
want the person to pay. We want the person to pay some amount. What 
amount? Any amount that they decide. In some States the amount that 
they charge the customer is equal to the amount that they are paying 
weekly to rent this particular item, but they can do this, and they do 
not have to disclose it.
  It was so bad that in committee, what they decided is, say, well, at 
least they have to tell the consumer that they are going to charge them 
this damage waiver liability coverage in the contract. In my home State 
of California, we forbid this practice altogether. We forbid it 
altogether. It is wrong that they should shift this liability all to 
the consumer and the rent-to-own company takes no responsibility, 
charges whatever it wants, does not have to disclose it, and we just 
let this practice go on.
  So we would try with this amendment to stop the practice altogether. 
I know that it seems that we cannot say much more about the bad 
practices. Why would we preempt the States from taking the opportunity 
to fix what is wrong? We do not need to come over the top with some 
Federal legislation that would then preempt them from doing it the way 
they want to do it.
  This business about saying that we are helping the States and we are 
helping the consumer, we are not preempting them, is absolutely 
misleading the Members of Congress about what this is all about. If we 
really want to help the States, allow them to present public policy 
that will work in their States. For those States that do not have it, 
they will. Give them a chance. Do not preempt them. Do not create this 
so-called floor that my colleagues are talking about.
  I have never seen any one industry with so much that is wrong with 
it, and I sincerely believe that some of my colleagues who are trying 
to help the industry may have been duped. They did not know it was this 
bad. They did not understand that it really was preemption. They did 
not know about some of these abusive practices. They did not know about 
this, what do we call it, LDW. They did not know that people were being 
given contracts where they had to pay for this kind of coverage, and 
most people, even if we tell them, if they want it, we are going to 
charge a person whatever amount they decide to charge them as a fee 
just in case they damage this equipment, they do not know they could 
say no, even if we put it in the bill. They just assume that if they do 
not do it they will not be able to get this desperately needed item 
that they are going after.
  This amendment was made by the Committee on Rules. I could come to 
the floor and take it up. I do not know if my friends on the opposite 
side of the aisle are going to oppose it or if they are going to 
support it. It is just one other thing that I would like to point out 
that is so bad about this industry, as we wrap up today on this floor, 
all of the problems with rent-to-own.
  I hope that they would just show a sign of support for the consumers 
and say we will give my colleagues this one, but it does not make any 
difference. It is still a bad bill. It is still a terrible bill with 
all of the preemption in it, with all of the abusive practices allowed, 
all of which we have talked about so much today.
  Again, I would again thank my colleague on the Committee on the 
Judiciary, the gentleman from Wisconsin (Mr. Sensenbrenner), the chair 
of the Committee on the Judiciary. He would not come to this floor and 
oppose this legislation unless it was serious. He would not come to 
this floor and easily embrace those on the opposite side of the aisle 
that he is oftentimes in disagreement with unless he felt very strongly 
about it. The gentleman from Wisconsin (Mr. Sensenbrenner) does not 
simply oppose his colleagues. He does not do that without giving 
serious thought to it. When he came here today and said this is a bad 
bill, something is wrong with this bill, I would hope that the Members 
on the opposite side of the aisle would respect the chairman of the 
Committee on the Judiciary who, too, had this bill in the Committee on 
the Judiciary.
  We are talking about two committees here today, the Committee on 
Financial Services, and it was in the Committee on the Judiciary.

                              {time}  1400

  This is not something that he is speculating about from afar. The 
gentleman from Wisconsin (Mr. Sensenbrenner) had this in committee and 
had an opportunity to go through it, understands it very well and is 
opposed to it because the gentleman sees it for what it is.
  Again, I do not want to put my colleagues on the spot, and I have the 
highest respect for the gentleman from Alabama (Mr. Bachus). I have 
worked with the gentleman and I know in many instances he has had to 
work very hard to do the right thing on some issues. I would simply 
appeal to the gentleman to do the right thing. I do not care who in the 
leadership is pushing this bill. I do not care who the industry is 
friends with, what letters the Congress of the United States got from 
what sector or section. The fact of the matter is our constituents 
should be premier. They should be number one. Even if we were going to 
err, we need to err on the side of the constituents. If Members think 
for a moment there are bad things in this industry, as the gentleman 
from Alabama (Mr. Bachus) has said, and yes, there are some bad things. 
He agreed to that, but then err on the side of the constituents. My 
colleague from Alabama said I do not like this business. That is an 
understatement. I am not here simply because I do not like the 
business. I am here because I have the power as one Member of Congress 
to go on the floor of Congress and say what is wrong with them. They 
are ripping off our constituents. They are charging exorbitant prices. 
There is no disclosure, and we should not let them do it.
  Mr. BACHUS. Mr. Chairman, I yield 6 minutes to the gentlewoman from 
New York (Mrs. Kelly).
  Mrs. KELLY. Mr. Chairman, before I address the Waters amendment, let 
me say a few things about the LaFalce amendment.
  The LaFalce amendment runs counter to our economy and would subvert 
the free market. The amendment requires rent-to-own merchants all to 
offer the same cash price for their products, and these prices would be 
set by the Federal Reserve Board. I have to wonder why we have to 
impose such a duty on the Federal Reserve Board. The Federal Reserve is 
tasked with broad mandates to ensure the overall health of the economy 
through sound monetary policy. The last thing we need is for the 
Federal Reserve to become an appraiser and set prices for the rent-to-
own industry.
  Second, the amendment would harm competition in the rent-to-own 
industry. I do not see anyone advocating that a car lease would have a 
cash price set by the Federal Reserve. Why? Because we know that a 
competitive car lease market benefits the consumer. When an industry 
all has the same base price for a product, that is known as collusion. 
A merchant not fairly setting a price on their own but being required 
to set it at their competition's level, that is illegal. When airlines 
set their ticket prices, it is illegal. When they put such a practice 
into law on a rent-to-own lease, it is also wrong. I think that my 
colleagues should join me in support of the free market and oppose the 
LaFalce amendment.
  Mr. Chairman, now let me speak to the Waters amendment, which I also 
oppose. My colleague from California has here an amendment that would 
remove the responsibility of a consumer to care for the merchandise 
that they received through a rental purchase

[[Page 16982]]

agreement. The agreement would effectively preempt contract law that is 
already in place and established in 49 States. In effect the merchant, 
who is not in possession of the property, would be responsible for the 
damage to it. This amendment would take away any responsibility for the 
consumer to care for the product that they are renting. Does anyone 
know of any agreement in which the holder of a rental piece of property 
would not be responsible for the damage that they do to it while it is 
in their possession?
  I believe the amendment would effectively kill the industry; and in 
these slow economic times, I do not think we should be looking to 
eliminate more jobs. The rental purchase industry is a credible option 
for many Americans who would not otherwise have the opportunity to 
obtain the products that they need.
  Personally, I learned to play the violin on a rent-to-own violin. It 
provided an enormous amount of joy in my life because my folks could 
not afford to buy me a violin when I was in grade school. They did a 
rent-to-purchase agreement. There are kids all over the Nation who do 
this.
  Our mission in Congress should be to increase opportunities for 
people, not to limit consumer opportunities. Let me be clear on another 
point. Because of an amendment from the gentleman from North Carolina 
(Mr. Jones), the bill allows merchants to include liability damage 
waivers as part of the rental purchase contracts only after disclosing 
to the consumer that they need not purchase this coverage in order to 
enter into the rental purchase agreement itself. The bill is clear that 
the consumer has been given the choice, and we need to support the 
choice by voting against the Waters amendment.
  Mr. BACHUS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, one thing I would like to point out, I have great 
respect for the gentleman from Wisconsin (Mr. Sensenbrenner), who did 
speak against this legislation. I would point out to the gentlewoman 
from California (Ms. Waters) that what the gentleman said was we do not 
need any Federal legislation regulating this industry. That is not what 
the gentlewoman from California (Ms. Waters) has said or what the 
gentleman from New York said, or what all of these consumer groups have 
said.
  What they have said is we need to regulate this industry. There is 
certainly not disagreement among the opponents. I think some of the 
opponents want the present state of affairs where there is absolutely 
no regulation in a number of States to continue. There are others that 
want to put this industry out of business, and then there are those of 
us in the middle who believe this is a legitimate business. We may 
never go there as customers. There are a lot of stores I do not go in 
as a customer, but I do not try to close them down because 15 million 
Americans do go there. There are Members of this body who think if they 
do that they are crazy and we ought to protect them by stopping them 
from going in those stores.
  I would say to the gentleman from New York (Mr. LaFalce) that I went 
in a store in Manhattan a few weeks ago. There were a lot of things in 
that store I cannot afford. I simply turned around and walked out 
because the price was not right. There are people that might want to 
pay that. There were many people paying that much for those items. I 
could not do it. I made a decision. People are free to come in and 
leave. People are free to make choices in America.
  There does need to be some minimum protection for those customers. 
Whether this legislation passed or not, people are going to continue to 
go in rent-to-own stores. They are going to continue to operate in 
almost all our States. When they do, I think they ought to be 
protected. And this legislation does not preempt any of the strong 
consumer protection laws that exist. It preempts none of them except 
the characterization as a credit sale, and we have been over and over 
that in those four States. It does that.
  Now, let me talk about the amendment for a minute because this 
amendment is another example of we do not want to preempt, but here is 
an amendment that we want to use to preempt. It is a preempting 
agreement. It preempts the law of 49 States.
  What the gentlewoman from California (Ms. Waters) has offered here is 
an amendment that would overturn the long-established contract law in 
49 States and make the law of California the national standard. It 
would apply the law of California.
  Right now in the legislation we have, what she is advocating is the 
law of California and once this passes, if it passes, will continue to 
be the law in California. But we will not put that law on the other 49 
States because what California does, it says when there is a rent-to-
own agreement or a rent-to-purchase agreement, or the consumer leases 
something, they cannot shift the liability for that property onto the 
customer except, and there is an exception, and I do not want to 
misrepresent this, it says if the customer deliberately causes damage 
to the item or it occurs due to the consumer's negligence, then the 
merchant can get his money back.
  The gentlewoman and I agree on that. If somebody goes out and they 
rent a TV, they get home and they get mad at their wife and throw the 
TV at their wife or husband, they have to pay for the television. She 
and I agree that is the thing to do. But we do not agree if the husband 
or the wife rents the TV, the wife takes the TV home, the husband picks 
up the TV and throws it out the window, then I think the merchant ought 
not have to pay for that. She says no, no. That was not the customer, 
that was the husband of the customer.
  I believe when something is rented and taken home, if the next door 
neighbor comes in and they destroy it, or the renter's son or daughter 
destroys it, the renter has it and it is destroyed, I think the renter 
ought to be responsible for that, and 49 States say they ought to be 
responsible for that.
  I can tell Members, we all respect California and their position on 
this; but this is something California feels ought to be the law. I can 
tell Members in Alabama, if I rent something to somebody and their dog 
chews it up or their wife breaks it or their next door neighbor 
destroys it, or even somebody comes in and steals it from them, I do 
not feel like that is the merchant's responsibility. I feel it is the 
customer's responsibility. I happen to believe that.
  The legislatures and the courts of 49 States agree with me. 
California is different. This legislation says that is right. The law 
of California stays in place because we do not preempt any of those 
laws. Now what that does is that means it drives up the cost for 
everybody in California. If California wants to make that decision, 
that is fine. I do not agree.
  I want to close simply by thanking the gentleman from Ohio (Chairman 
Oxley) for his leadership on this bill, again thanking the gentleman 
from North Carolina (Mr. Jones) for his leadership, and the gentleman 
from Connecticut (Mr. Maloney) for what I think is a very important 
piece of consumer protection. It does not go as far as some have urged, 
but it does not preempt States that go further. It establishes a floor 
in those States that have weak or no protection.
  Mr. Chairman, I yield back the balance of my time.
  The CHAIRMAN pro tempore (Mr. Hefley). The question is on the 
amendment offered by the gentlewoman from California (Ms. Waters).
  The question was taken; and the Chairman pro tempore announced that 
the noes appeared to have it.
  Ms. WATERS. Mr. Chairman, I demand a recorded vote.
  The CHAIRMAN pro tempore. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentlewoman from California 
(Ms. Waters) will be postponed.


          Sequential Votes Postponed in Committee of the Whole

  The CHAIRMAN pro tempore. Pursuant to clause 6 of rule XVIII, 
proceedings will now resume on those amendments on which further 
proceedings were postponed in the following order: amendment No. 1 
offered by the gentleman from New York (Mr.

[[Page 16983]]

LaFalce), amendment No. 2 offered by the gentlewoman from California 
(Ms. Waters).
  The Chair will reduce to 5 minutes the time for the second electronic 
vote.


                 Amendment No. 1 Offered by Mr. LaFalce

  The CHAIRMAN pro tempore. The pending business is the demand for a 
recorded vote on the amendment offered by the gentleman from New York 
(Mr. LaFalce) on which further proceedings were postponed and on which 
the noes prevailed by voice vote.
  The Clerk will redesignate the amendment.
  The Clerk redesignated the amendment.


                             Recorded Vote

  The CHAIRMAN pro tempore. A recorded vote has been demanded.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 184, 
noes 232, not voting 16, as follows:

                             [Roll No. 392]

                               AYES--184

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldacci
     Baldwin
     Barcia
     Barrett
     Becerra
     Bentsen
     Berkley
     Berman
     Berry
     Bishop
     Blumenauer
     Bonior
     Borski
     Boswell
     Boucher
     Brady (PA)
     Brown (OH)
     Capps
     Capuano
     Cardin
     Carson (IN)
     Carson (OK)
     Clay
     Clayton
     Clement
     Clyburn
     Condit
     Costello
     Coyne
     Crowley
     Cummings
     Davis (CA)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Dooley
     Doyle
     Edwards
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank
     Frost
     Gephardt
     Gonzalez
     Gordon
     Green (TX)
     Gutierrez
     Harman
     Hastings (FL)
     Hill
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Holt
     Honda
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Johnson, E. B.
     Jones (OH)
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Kucinich
     LaFalce
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Lowey
     Luther
     Lynch
     Maloney (NY)
     Markey
     Mascara
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Mollohan
     Moran (VA)
     Morella
     Murtha
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Phelps
     Platts
     Pomeroy
     Price (NC)
     Rahall
     Reyes
     Rivers
     Rodriguez
     Roemer
     Rothman
     Roybal-Allard
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Schakowsky
     Schiff
     Scott
     Serrano
     Sherman
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Solis
     Spratt
     Stark
     Strickland
     Stupak
     Tanner
     Thompson (MS)
     Thurman
     Tierney
     Turner
     Udall (NM)
     Velazquez
     Visclosky
     Waters
     Watson (CA)
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                               NOES--232

     Aderholt
     Akin
     Armey
     Bachus
     Baker
     Ballenger
     Barr
     Bartlett
     Barton
     Bass
     Bereuter
     Biggert
     Bilirakis
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boozman
     Boyd
     Brady (TX)
     Brown (SC)
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Castle
     Chabot
     Chambliss
     Coble
     Collins
     Combest
     Cooksey
     Cox
     Cramer
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis (FL)
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeMint
     Diaz-Balart
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Everett
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Fossella
     Frelinghuysen
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goss
     Graham
     Granger
     Graves
     Green (WI)
     Greenwood
     Grucci
     Gutknecht
     Hall (TX)
     Hansen
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hobson
     Hoekstra
     Holden
     Hooley
     Horn
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hyde
     Isakson
     Issa
     Istook
     Jenkins
     John
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Kanjorski
     Keller
     Kelly
     Kennedy (MN)
     Kerns
     King (NY)
     Kirk
     Knollenberg
     Kolbe
     LaHood
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Maloney (CT)
     Manzullo
     Matheson
     McCrery
     McHugh
     McInnis
     McKeon
     Mica
     Miller, Dan
     Miller, Gary
     Miller, Jeff
     Moore
     Moran (KS)
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Paul
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Pombo
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reynolds
     Riley
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Ross
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Schaffer
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shows
     Shuster
     Simpson
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Stearns
     Stenholm
     Sullivan
     Sununu
     Sweeney
     Tancredo
     Tauscher
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Terry
     Thomas
     Thompson (CA)
     Thornberry
     Thune
     Tiahrt
     Tiberi
     Toomey
     Towns
     Udall (CO)
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Young (AK)
     Young (FL)

                             NOT VOTING--16

     Blagojevich
     Brown (FL)
     Bryant
     Conyers
     DeLay
     Hilleary
     Kingston
     Miller, George
     Mink
     Portman
     Rangel
     Roukema
     Rush
     Simmons
     Stump
     Watts (OK)

                              {time}  1438

  Ms. GRANGER and Messrs. CALVERT, FRELINGHUYSEN, EHLERS, SMITH of 
Texas, WELDON of Pennsylvania, SULLIVAN and TERRY changed their vote 
from ``aye'' to ``no.''
  So the amendment was rejected.
  The result of the vote was announced as above recorded.


                Announcement By The Chairman Pro Tempore

  The CHAIRMAN pro tempore (Mr. Hefley). Pursuant to clause 6 of rule 
XVIII, the Chair announces that he will reduce to a minimum of 5 
minutes the period of time within which a vote by electronic device 
will be taken on the second amendment.


                 Amendment No. 2 Offered by Ms. Waters

  The CHAIRMAN pro tempore. The pending business is the demand for a 
recorded vote on the amendment offered by the gentlewoman from 
California (Ms. Waters) on which further proceedings were postponed and 
on which the noes prevailed by voice vote.
  The Clerk will redesignate the amendment.
  The Clerk redesignated the amendment.


                             Recorded Vote

  The CHAIRMAN pro tempore. A recorded vote has been demanded.
  A recorded vote was ordered.
  The CHAIRMAN pro tempore. This will be a 5-minute vote.
  The vote was taken by electronic device, and there were--ayes 157, 
noes 255, not voting 20, as follows:

                             [Roll No. 393]

                               AYES--157

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baldacci
     Baldwin
     Barcia
     Barrett
     Becerra
     Bentsen
     Berkley
     Berman
     Berry
     Bishop
     Bonior
     Borski
     Boucher
     Brady (PA)
     Brown (OH)
     Capps
     Capuano
     Carson (IN)
     Clay
     Clayton
     Clyburn
     Condit
     Coyne
     Crowley
     Cummings
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Dicks
     Dingell
     Doggett
     Doyle
     Edwards
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank
     Gephardt
     Gonzalez
     Green (TX)
     Gutierrez
     Hastings (FL)
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Holt
     Honda
     Horn
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Johnson, E. B.
     Jones (OH)
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kirk
     Kleczka
     Kucinich
     LaFalce
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lofgren
     Lowey
     Luther
     Maloney (NY)
     Markey
     Mascara
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McHugh
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Moore
     Moran (VA)
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Pomeroy
     Price (NC)
     Rahall
     Reyes
     Rivers
     Rodriguez
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Schakowsky
     Schiff
     Scott
     Serrano
     Slaughter
     Solis
     Spratt

[[Page 16984]]


     Stark
     Strickland
     Stupak
     Thompson (MS)
     Thurman
     Tierney
     Towns
     Turner
     Udall (CO)
     Udall (NM)
     Waters
     Watson (CA)
     Watt (NC)
     Waxman
     Wexler
     Woolsey
     Wu
     Wynn

                               NOES--255

     Aderholt
     Akin
     Armey
     Bachus
     Baird
     Baker
     Ballenger
     Barr
     Bartlett
     Barton
     Bass
     Bereuter
     Biggert
     Bilirakis
     Blumenauer
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boozman
     Boswell
     Boyd
     Brady (TX)
     Brown (SC)
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Cardin
     Carson (OK)
     Castle
     Chabot
     Chambliss
     Clement
     Coble
     Collins
     Combest
     Costello
     Cox
     Cramer
     Crane
     Crenshaw
     Culberson
     Cunningham
     Davis (CA)
     Davis (FL)
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeLay
     DeMint
     Deutsch
     Diaz-Balart
     Dooley
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Everett
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Fossella
     Frelinghuysen
     Frost
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Gordon
     Goss
     Graham
     Granger
     Graves
     Green (WI)
     Greenwood
     Grucci
     Gutknecht
     Hall (TX)
     Hansen
     Harman
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hill
     Hobson
     Hoekstra
     Holden
     Hooley
     Hostettler
     Houghton
     Hoyer
     Hulshof
     Hunter
     Hyde
     Inslee
     Isakson
     Issa
     Istook
     Jenkins
     John
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Kanjorski
     Kelly
     Kennedy (MN)
     Kerns
     Kind (WI)
     King (NY)
     Knollenberg
     Kolbe
     LaHood
     Latham
     LaTourette
     Leach
     Lewis (KY)
     Linder
     Lipinski
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Lynch
     Maloney (CT)
     Manzullo
     Matheson
     McCrery
     McInnis
     McIntyre
     McKeon
     Mica
     Miller, Dan
     Miller, Gary
     Miller, Jeff
     Mollohan
     Moran (KS)
     Morella
     Murtha
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Paul
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Phelps
     Pickering
     Pitts
     Platts
     Pombo
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reynolds
     Riley
     Roemer
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Ross
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Schaffer
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherman
     Sherwood
     Shimkus
     Shows
     Shuster
     Simpson
     Skeen
     Skelton
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Snyder
     Souder
     Stearns
     Stenholm
     Sullivan
     Sununu
     Sweeney
     Tancredo
     Tanner
     Tauscher
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Terry
     Thomas
     Thompson (CA)
     Thornberry
     Thune
     Tiahrt
     Tiberi
     Toomey
     Upton
     Visclosky
     Vitter
     Walden
     Walsh
     Wamp
     Watkins (OK)
     Weldon (FL)
     Weldon (PA)
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Young (AK)
     Young (FL)

                             NOT VOTING--20

     Blagojevich
     Brown (FL)
     Bryant
     Conyers
     Cooksey
     Cubin
     Hilleary
     Keller
     Kingston
     Lewis (CA)
     Miller, George
     Mink
     Rangel
     Roukema
     Simmons
     Stump
     Velazquez
     Watts (OK)
     Weiner
     Weller

                              {time}  1447

  So the amendment was rejected.
  The result of the vote was announced as above recorded.
  Stated against:
  Mr. WELLER. Mr. Chairman, on rollcall No. 393, I was unavoidably 
detained. Had I been present, I would have voted ``no.''
  Mr. McHUGH. Mr. Chairman, on rollcall No. 393, I inadvertently voted 
``aye.'' I would like the Record to show that I meant to vote ``no.''
  The CHAIRMAN pro tempore (Mr. Hefley). There being no further 
amendment in order, the question is on the committee amendment in the 
nature of a substitute.
  The committee amendment in the nature of a substitute was agreed to.
  Accordingly, the Committee rose; and the Speaker pro tempore (Mr. 
LaHood) having assumed the chair, Mr. Hefley, Chairman pro tempore of 
the Committee of the Whole House on the State of the Union, reported 
that that Committee, having had under consideration the bill (H.R. 
1701) 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, pursuant to House Resolution 528, he reported the bill 
back to the House with an amendment adopted by the Committee of the 
Whole.
  The SPEAKER pro tempore. Under the rule, the previous question is 
ordered.
  The question is on the committee amendment in the nature of a 
substitute.
  The committee amendment in the nature of a substitute was agreed to.
  The SPEAKER pro tempore. The question is on the engrossment and third 
reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.


                motion to recommit offered by ms. waters

  Ms. WATERS. Mr. Speaker, I offer a motion to recommit.
  The SPEAKER pro tempore. Is the gentlewoman opposed to the bill?
  Ms. WATERS. Mr. Speaker, yes, I am opposed to the bill in its current 
form.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:

       Ms. Waters moves that the bill H.R. 1701, the Consumer 
     Rental Purchase Agreement Act, be recommitted to the 
     Committee on Financial Services with instructions that the 
     Committee report the bill forthwith to the House with the 
     following amendment:
       Page 32, strike line 17 and insert ``This''.
       Page 33, line 13, strike ``Except as provided in subsection 
     (b), for'' and insert ``For''.
       Page 33, strike line 21 and all that follows through page 
     34, line 9 (and redesignate the subsequent subsection 
     accordingly).

  Ms. WATERS (during the reading). Mr. Speaker, I ask unanimous consent 
that the motion be considered as read and printed in the Record.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentlewoman from California?
  There was no objection.
  The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from 
California (Ms. Waters) is recognized for 5 minutes on her motion to 
recommit.
  Ms. WATERS. Mr. Speaker, I yield myself such time as I may consume.
  I suppose most of the Members present here today heard the debate 
that we have just finished on H.R. 1701. My motion to recommit sends 
H.R. 1701 back to the Committee on Financial Services with instructions 
to amend the bill in one key respect: to strike a provision in H.R. 
1701 that preempts the States from applying credit or installment sales 
standards to regulate rent-to-own transactions.
  This is the provision that my colleagues heard the gentleman from 
Wisconsin (Mr. Sensenbrenner) come to the floor and talk about today. 
It is because of that provision that the chairman of the Committee on 
the Judiciary decided to vote against the bill when this bill was 
marked up in the Committee on the Judiciary. I think that is a very 
important point.
  Mr. Speaker, I suppose most of the Members on the floor heard the 
debate. We talked about a lot of things that are wrong with the rent-
to-own legislation, H.R. 1701. We spoke about preemption, abusive 
practices, about attempts to force the consumers to accept all of the 
liability on the contracts. But we talked mostly about preemption.
  Proponents of H.R. 1701 say that the bill does not preempt State 
laws, but they are absolutely wrong. Section 1018 of the bill expressly 
supersedes State laws that regulate rental purchase agreements as a 
security interest, credit sale, retail installment sale, conditional 
sale, or any and all other forms of consumer credit that treats a 
rental purchase agreement as the creation of a debt or extension of 
credit. Section 1008 of the bill also expressly supersedes State laws 
that require the disclosure of percentage rate calculation, including a 
time-price differential and annual percentage rate, or an effective 
annual percentage rate. Because of the bill's restrictions, rental-
purchase transactions cannot be subjected to the State usury laws and 
finance charge limits, as well as APR and other disclosures. As a 
result, the bill preempts the strongest State laws in Wisconsin, 
Minnesota, New Jersey, and Vermont

[[Page 16985]]

and prevents other States from adopting similar legislation in the 
future.
  Since 1997, legal actions responding to State consumer law violations 
have produced legal judgments or settlements against the Nation's 
largest rent-to-own chain amounting to $16 million in Wisconsin, $60 
million in New Jersey, and $30 million in Minnesota. Why should 
Congress cancel out stronger State laws supported by all of the 
consumer groups and literally all of the States' attorneys general? 
Consumers need more, not less, protection from predatory financial 
practices.
  Mr. Speaker, the Members may not be paying attention, but they ought 
to. They ought to pay attention because we have just been roundly 
criticized because of what we did not do with major corporations in 
America. Many people pleaded ignorance that they had supported the 
efforts of Enron and WorldCom and Quest and all of those other major 
corporations that have been found to be gaming the system, corporations 
that put their pensioners at risk. People who were paying into their 
401(k)s thought they had protected their future; but, in fact, they had 
been supporting their companies while the heads of those corporations, 
the majors in those corporations were literally exercising their stock 
options and getting richer and richer.
  Well, we can tell the American people that we really did not 
understand, that we really were not paying attention; but we cannot 
keep doing it. We cannot keep saying, oh, I made a mistake.
  Right on the heels of this great debacle in America, we find 
ourselves confronted with predatory lenders that come in all stripes 
and sizes. We know that the pay-day lenders are on every corner in 
inner cities and little towns and now lined up outside of our American 
Army bases where they are luring people in to get these small loans.
  The SPEAKER pro tempore. The gentlewoman's time has expired.
  Ms. WATERS. Mr. Speaker, I would respectfully request that I be 
allowed the time that has been interfered with by the Members on the 
floor who have not respected the Speaker's gavel. The Speaker has taken 
up at least a minute of my time, and I would like to have it restored 
to me.
  The SPEAKER pro tempore. The gentlewoman from California (Ms. Waters) 
is recognized for 30 additional seconds to conclude her remarks.
  Ms. WATERS. Mr. Speaker, the rent-to-own industry has come to this 
House, and they have gotten support to try and preempt States that have 
stronger consumer protection laws. We should not allow it to happen. It 
is unconscionable that we are allowing them to rip off the most 
vulnerable in our society with these rent-to-own contracts that are 
charging $800 and $900 for a $169 television, and on and on it goes.

                              {time}  1500

  We have the opportunity to do something about it today. I would ask 
that we allow this bill to be recommitted so that it can be fixed.
  Mr. BACHUS. Mr. Speaker, I rise to seek time in opposition.
  The SPEAKER pro tempore (Mr. LaHood). The gentleman from Alabama (Mr. 
Bachus) is recognized for 5 minutes.
  Mr. BACHUS. Mr. Speaker, the body has just heard a lot of 
information. It was probably about equally divided between information 
that is not relevant to the legislation before us and misinformation 
about the legislation. It is very hard in 5 minutes to rebut all of 
that.
  First, let me say that this has nothing to do with WorldCom, Enron, 
and Quest. Those companies are not in the rent-to-own industry, so any 
confusion, I hope we dispel that right up front.
  What the gentlewoman is talking about is the rent-to-own industry. It 
is the largest industry in America that is not regulated. The States 
are pretty much divided: One-third of them have no regulation, one-
third of them have weak-to-moderate regulation, and one third of them 
have strong regulation.
  What this legislation does, it leaves in place all consumer 
protection legislation at the State level, all. It leaves all those 
laws passed by the State legislature, all, and I will explain that, all 
of them in place. It simply has a floor. It requires certain things. If 
the State has a stronger provision, that is applicable. If the State 
has a weaker provision, the Federal standard applies.
  Today, over 40 States do not require that they put a price tag on a 
rent-to-own item. Every consumer group has condemned this. This 
legislation will require a price tag so the consumer knows what he is 
paying, what it is costing him.
  In every State, in 46 States, the legislatures have looked at these 
transactions and they have said that it is not a consumer credit sale. 
It is not a credit sale, it is a lease or a lease-purchase or a rent-
to-own. It is not a credit sale.
  But judges in three courts around the country have said, no, it is a 
credit sale. It is a consumer credit transaction, and we are going to 
apply all the Federal law that applies to those transactions to this. 
We are going to apply all the Federal laws that apply to those 
transactions, including an APR statement, a disclosure statement.
  The FTC, in a fairly exhaustive study, looked at that, and the 
Federal Reserve and the FTC said that requiring these APR statements 
and these consumer disclosures which are required for credit sales, 
when we apply them to rent-to-own, we confuse or mislead the customer. 
California does not do it, New York does not do it; but judges, not 
State legislatures, judges in three or four States have said we are 
going to do that.
  This legislation does change the law in Wisconsin, New Jersey, and 
one other State, Vermont. It changes it in those three States by saying 
that it is not a credit sale. It does not repeal any law that the 
legislatures passed. It does invalidate a judge-made law in those 
States. But in no case, in no case other than in those four States, 
three or four States, does it make any change in the law.
  Furthermore, Mr. Speaker, and I have said that repeatedly during this 
debate, there is nothing in this legislation that prevents a State from 
passing any law that they want to pass to ban or put additional 
restrictions on these sales, except to mischaracterize it as a consumer 
credit transaction. These people are going in and they are renting 
property, that is what they say, and they do not think they are 
applying for a loan. Those regulations should not apply to them.
  The gentlewoman from California (Ms. Waters) has asked us to really 
apply the law of four States to the law of 46 States. I say, resist 
this motion to recommit and let us get on with protecting the people, 
the 15 million Americans that use these rent-to-own transactions.
  The SPEAKER pro tempore. Without objection, the previous question is 
ordered on the motion to recommit.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to recommit.
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.


                             Recorded Vote

  Ms. WATERS. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. Pursuant to clause 9 of rule XX, the Chair 
will reduce to 5 minutes the minimum time for any electronic vote on 
the question of passage.
  This will be a 15-minute vote followed by a 5-minute vote.
  The vote was taken by electronic device, and there were--ayes 190, 
noes 227, not voting 15, as follows:

                             [Roll No. 394]

                               AYES--190

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldacci
     Baldwin
     Barcia
     Barrett
     Bass
     Becerra
     Bentsen
     Berkley
     Berman
     Berry
     Bishop
     Blumenauer
     Bonior
     Borski
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brown (OH)
     Capps
     Capuano
     Cardin
     Carson (IN)
     Carson (OK)
     Clay
     Clayton
     Clyburn
     Condit
     Coyne
     Crowley
     Cummings
     Davis (CA)
     Davis (FL)
     Davis (IL)
     Davis, Jo Ann
     DeFazio

[[Page 16986]]


     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Doyle
     Edwards
     Ehlers
     Ehrlich
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Ferguson
     Filner
     Ford
     Frank
     Frelinghuysen
     Gephardt
     Gonzalez
     Graham
     Green (TX)
     Green (WI)
     Gutierrez
     Harman
     Hastings (FL)
     Hill
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Holt
     Honda
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Johnson, E. B.
     Jones (OH)
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Kucinich
     LaFalce
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     LoBiondo
     Lofgren
     Lowey
     Luther
     Lynch
     Maloney (NY)
     Markey
     Mascara
     Matheson
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McNulty
     Meehan
     Meek (FL)
     Menendez
     Millender-McDonald
     Mollohan
     Moran (VA)
     Morella
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Paul
     Payne
     Pelosi
     Petri
     Pomeroy
     Price (NC)
     Rahall
     Ramstad
     Rangel
     Rivers
     Rodriguez
     Roemer
     Rothman
     Roybal-Allard
     Rush
     Ryan (WI)
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Saxton
     Schakowsky
     Schiff
     Scott
     Sensenbrenner
     Serrano
     Slaughter
     Smith (WA)
     Snyder
     Solis
     Spratt
     Stark
     Strickland
     Stupak
     Tancredo
     Tauscher
     Thompson (CA)
     Thompson (MS)
     Thurman
     Tierney
     Towns
     Udall (CO)
     Udall (NM)
     Upton
     Velazquez
     Visclosky
     Waters
     Watson (CA)
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu

                               NOES--227

     Aderholt
     Akin
     Armey
     Bachus
     Baker
     Ballenger
     Barr
     Bartlett
     Barton
     Bereuter
     Biggert
     Bilirakis
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boozman
     Brady (TX)
     Brown (SC)
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Castle
     Chabot
     Chambliss
     Clement
     Coble
     Collins
     Combest
     Costello
     Cox
     Cramer
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Tom
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Dooley
     Doolittle
     Dreier
     Duncan
     Dunn
     Emerson
     English
     Everett
     Flake
     Fletcher
     Foley
     Forbes
     Fossella
     Frost
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Gordon
     Goss
     Granger
     Graves
     Greenwood
     Grucci
     Gutknecht
     Hall (TX)
     Hansen
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hobson
     Hoekstra
     Holden
     Hooley
     Horn
     Hostettler
     Hoyer
     Hulshof
     Hunter
     Hyde
     Isakson
     Issa
     Istook
     Jenkins
     John
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Kanjorski
     Keller
     Kelly
     Kennedy (MN)
     Kerns
     King (NY)
     Kirk
     Knollenberg
     Kolbe
     LaHood
     Lampson
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     Lipinski
     Lucas (KY)
     Lucas (OK)
     Maloney (CT)
     Manzullo
     McCrery
     McHugh
     McInnis
     McIntyre
     McKeon
     Meeks (NY)
     Mica
     Miller, Dan
     Miller, Gary
     Miller, Jeff
     Moore
     Moran (KS)
     Murtha
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Pence
     Peterson (MN)
     Peterson (PA)
     Phelps
     Pickering
     Pitts
     Platts
     Pombo
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Regula
     Rehberg
     Reyes
     Reynolds
     Riley
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Ross
     Ryun (KS)
     Schaffer
     Schrock
     Sessions
     Shadegg
     Shaw
     Shays
     Sherman
     Sherwood
     Shimkus
     Shows
     Shuster
     Simpson
     Skeen
     Skelton
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Stearns
     Stenholm
     Sullivan
     Sununu
     Sweeney
     Tanner
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Thune
     Tiahrt
     Tiberi
     Toomey
     Turner
     Vitter
     Walden
     Walsh
     Wamp
     Watkins (OK)
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Wynn
     Young (AK)
     Young (FL)

                             NOT VOTING--15

     Blagojevich
     Brown (FL)
     Bryant
     Conyers
     Cooksey
     Hilleary
     Houghton
     Kingston
     McKinney
     Miller, George
     Mink
     Roukema
     Royce
     Simmons
     Stump

                              {time}  1522

  Messrs. LoBIONDO, SAXTON, FRELINGHUYSEN and FERGUSON changed their 
vote from ``no'' to ``aye.''
  So the motion to recommit was rejected.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore (Mr. LaHood). The question is on the passage 
of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.


                             Recorded Vote

  Ms. WATERS. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. This will be a 5-minute vote.
  The vote was taken by electronic device, and there were--ayes 215, 
noes 201, answered ``present'' 1, not voting 15, as follows:

                             [Roll No. 395]

                               AYES--215

     Ackerman
     Aderholt
     Akin
     Armey
     Bachus
     Baker
     Ballenger
     Barr
     Bartlett
     Bentsen
     Bereuter
     Berkley
     Biggert
     Bilirakis
     Boehlert
     Boehner
     Bonilla
     Bono
     Boozman
     Brady (TX)
     Brown (SC)
     Burr
     Burton
     Buyer
     Calvert
     Camp
     Cantor
     Capito
     Carson (OK)
     Castle
     Chabot
     Chambliss
     Clay
     Clement
     Clyburn
     Coble
     Collins
     Combest
     Cox
     Cramer
     Crane
     Crenshaw
     Cunningham
     Davis, Jo Ann
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Dooley
     Dreier
     Duncan
     Dunn
     Emerson
     English
     Everett
     Fletcher
     Forbes
     Ford
     Fossella
     Frost
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gonzalez
     Goode
     Goodlatte
     Gordon
     Goss
     Granger
     Graves
     Greenwood
     Grucci
     Gutknecht
     Hall (TX)
     Hansen
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Herger
     Hobson
     Holden
     Hooley
     Horn
     Hostettler
     Houghton
     Hoyer
     Hulshof
     Hunter
     Hyde
     Inslee
     Isakson
     Issa
     Jenkins
     John
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Kanjorski
     Keller
     Kelly
     King (NY)
     Kirk
     Knollenberg
     Kolbe
     LaHood
     Lampson
     Larson (CT)
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     Lucas (KY)
     Lucas (OK)
     Maloney (CT)
     Manzullo
     Matheson
     McCrery
     McHugh
     McIntyre
     McKeon
     Meeks (NY)
     Mica
     Miller, Dan
     Miller, Gary
     Moore
     Moran (KS)
     Murtha
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Ortiz
     Osborne
     Ose
     Otter
     Oxley
     Pence
     Peterson (MN)
     Peterson (PA)
     Phelps
     Pickering
     Pitts
     Pombo
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Regula
     Rehberg
     Reyes
     Reynolds
     Riley
     Rogers (KY)
     Ros-Lehtinen
     Ross
     Royce
     Ryun (KS)
     Sandlin
     Schrock
     Sessions
     Shadegg
     Shaw
     Shays
     Sherman
     Sherwood
     Shimkus
     Shows
     Shuster
     Simpson
     Skelton
     Smith (TX)
     Spratt
     Stearns
     Stenholm
     Sullivan
     Sununu
     Sweeney
     Tancredo
     Tanner
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Thune
     Tiahrt
     Tiberi
     Toomey
     Towns
     Turner
     Vitter
     Walsh
     Wamp
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wu
     Wynn
     Young (AK)
     Young (FL)

                               NOES--201

     Abercrombie
     Allen
     Andrews
     Baca
     Baird
     Baldacci
     Baldwin
     Barcia
     Barrett
     Barton
     Bass
     Becerra
     Berman
     Berry
     Bishop
     Blumenauer
     Blunt
     Bonior
     Borski
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brown (OH)
     Cannon
     Capps
     Capuano
     Cardin
     Carson (IN)
     Clayton
     Condit
     Costello
     Coyne
     Crowley
     Cubin
     Culberson
     Cummings
     Davis (CA)
     Davis (FL)
     Davis (IL)
     Davis, Tom
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Doolittle
     Doyle
     Edwards
     Ehlers
     Ehrlich
     Engel
     Eshoo
     Etheridge
     Farr
     Fattah
     Ferguson
     Filner
     Flake
     Foley
     Frank
     Frelinghuysen
     Gephardt
     Gilman
     Graham
     Green (TX)
     Green (WI)
     Gutierrez
     Harman
     Hastings (FL)
     Hefley
     Hill
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Hoekstra
     Holt
     Honda
     Israel
     Istook
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Johnson, E. B.
     Jones (OH)
     Kaptur
     Kennedy (MN)
     Kennedy (RI)
     Kerns
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Kucinich
     LaFalce
     Langevin
     Lantos
     Larsen (WA)
     Lee
     Levin
     Lewis (GA)
     Lipinski
     LoBiondo
     Lofgren
     Lowey
     Luther
     Lynch
     Maloney (NY)
     Markey
     Mascara
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McInnis
     McKinney

[[Page 16987]]


     McNulty
     Meehan
     Meek (FL)
     Menendez
     Millender-McDonald
     Miller, Jeff
     Mollohan
     Moran (VA)
     Morella
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Owens
     Pallone
     Pascrell
     Pastor
     Paul
     Payne
     Pelosi
     Petri
     Platts
     Pomeroy
     Price (NC)
     Rahall
     Ramstad
     Rangel
     Rivers
     Rodriguez
     Roemer
     Rogers (MI)
     Rohrabacher
     Rothman
     Roybal-Allard
     Rush
     Ryan (WI)
     Sabo
     Sanchez
     Sanders
     Sawyer
     Saxton
     Schaffer
     Schakowsky
     Schiff
     Scott
     Sensenbrenner
     Serrano
     Skeen
     Slaughter
     Smith (MI)
     Smith (NJ)
     Smith (WA)
     Snyder
     Solis
     Souder
     Stark
     Strickland
     Stupak
     Tauscher
     Thompson (CA)
     Thompson (MS)
     Thurman
     Tierney
     Udall (CO)
     Udall (NM)
     Upton
     Velazquez
     Visclosky
     Walden
     Waters
     Watson (CA)
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Wolf
     Woolsey

                        ANSWERED ``PRESENT''--1

       
     Callahan
       

                             NOT VOTING--15

     Blagojevich
     Brown (FL)
     Bryant
     Conyers
     Cooksey
     Evans
     Hilleary
     Kingston
     Miller, George
     Mink
     Roukema
     Simmons
     Stump
     Watkins (OK)
     Weller

                              {time}  1532

  Mr. TAYLOR of North Carolina changed his vote from ``no'' to ``aye.''
  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.
  Stated for:
  Mr. WATKINS of Oklahoma. Mr. Speaker on rollcall No. 395 I was 
unavoidably detained. Had I been present, I would have voted ``aye.''

                          ____________________