Attorney General Bonta Announces $15.5 Million Judgment Against Rent-A-Center

Tuesday, August 2, 2022
Contact: (916) 210-6000, agpressoffice@doj.ca.gov

Tens of thousands of Californians who entered into Preferred Lease agreements with Rent-A-Center will receive restitution 

OAKLAND – California Attorney General Rob Bonta today announced a $15.5 million settlement against Rent-A-Center, one of the nation’s largest rent-to-own companies, for violations of state consumer protection laws relating to unlawful leasing practices and deceptive marketing. An investigation into Rent-A-Center’s “kiosk” business that operates out of traditional retail stores found that the company used an inflated “cash price” for products that was 15% higher than the retail price, potentially costing consumers hundreds of extra dollars, among other violations. As part of the stipulated judgment resolving the Attorney General’s investigation, Rent-A-Center will be required to comply with significant injunctive terms to deter future misconduct, pay $13.5 million in restitution to California consumers, and pay $2 million in civil penalties.

“Rent-A-Center repeatedly relied on deceptive and unlawful tactics to pad its bottom line,” said Attorney General Bonta. “Furnishing a home is expensive, and consumers often hope rent-to-own agreements will lessen the cost, not realizing the total price they pay will end up being much higher. We won't stand by when a company like Rent-A-Center overcharges these hardworking Californians, taking money that is needed for rent, food, or other essential expenses. Today’s judgment will provide critical relief to tens of thousands of Californians — and, importantly, prevent Rent-A-Center from continuing this conduct in the future.”

The rent-to-own industry consists of dealers that rent household goods, such as furniture and appliances, at extremely high prices to low- or moderate-income consumers. The contracts are structured as leases with an option to buy the leased goods. In a typical rent-to-own transaction, a consumer would pay on a weekly or monthly basis for the use of the product. With each new payment, the rental agreement automatically renews for another week or month. Upon fulfillment of the rental terms — usually one-to-three years of periodic payments — the title passes from the rent-to-own dealer to the consumer with the subset of consumers who do ultimately obtain ownership paying a large premium to do so. 

In a complaint filed with the judgment, Attorney General Bonta alleges that Rent-A-Center violated California’s rent-to-own law in operating its business line known as Preferred Lease (formerly known as AcceptanceNOW), through which Rent-A-Center offers a rent-to-own option to customers inside of traditional retail stores. Among other violations, Attorney General Bonta alleges that Rent-A-Center overcharged consumers by inflating the cash price in its Preferred Lease contract by 15% over the true retail price. Attorney General Bonta also alleges that Rent-A-Center misled consumers about the most fundamental aspects of the Preferred Lease product, such as the right to return merchandise at any time with no penalty. 

Today’s judgment will substantially reform Rent-A-Center’s Preferred Lease business model and deter future misconduct with extensive injunctive terms, including:

  • Cash Price Markup: Rent-A-Center is prohibited from charging a cash-price markup. The cash price must match the price advertised to the customer by the retailer;
  • Returns: Rent-A-Center is prohibited from preventing or limiting customer returns in any way;
  • Marketing: Rent-A-Center must clearly and conspicuously disclose that its Preferred Lease program is a rental-purchase transaction. Rent-A-Center must also provide each customer with a “Know Your Rights” document informing consumers about various key terms of their rental-purchase agreement;
  • Employee Training: Rent-A-Center must train employees regarding the Karnette Act generally as well as the specific injunctive terms in the settlement;
  • Monitoring and Reporting: Rent-A-Center will be required to prepare annual reports for the Attorney General describing its efforts to comply with the settlement for three years; and
  • $15.5 Million Payment: Rent-A-Center must provide $13.5 million in restitution to the tens of thousands of Californians who entered into contracts containing the 15% upcharge. Rent-A-Center must also pay $2 million in civil penalties. 

Customers who rented merchandise from Rent-A-Center through its “kiosk” business located inside traditional retailers are eligible for restitution. Eligible individuals will receive a notice at their last known mailing address.

A copy of the complaint is available here. A copy of the stipulated judgment, which is subject to court approval, is available here

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