Georgia AG’s Stroke with Rent-A-Center is a Lesson in State Authority | Kelley Drye & Warren LLP
In late January, Georgia Attorney General Chris Carr reached a settlement with Rent-A-Center regarding various alleged deceptive practices in its rent-to-own business, including its debt collection and disclosure practices. general. You may be thinking, “I don’t work in the hire-purchase business, so why is this business important to me?” AG Carr’s settlement, which took the form of a Voluntary Compliance Assurance (VCA), includes many important points you should consider regardless of your industry, especially if you operate in multiple states. . And with the application of the state consumer protection AG which should increase in 2022 – knowing how MAs might approach an investigation is more important than ever.
So what can we learn from this Georgian colony? Many.
Strokes have their pros and cons. Voluntary compliance assurances (or in some jurisdictions, cessation assurances) are legally permitted in many states as a means of resolving Attorney General consumer protection investigations. Often seen as something lighter than a court-ordered judgment and a form of appellate settlement in many cases, AVC statutes like Georgia’s can include express language that they cannot be used as admission. But know their limitations – depending on the state, CVAs can still be filed in court with contemptible violations. Additionally, a CVA may not include a full release — Georgia’s statute and settlement with Rent-A-Center allows the AG to reopen the case in the event of a future violation of their agreement.
Even a regulated industry may be subject to UDAP laws. It can be difficult to navigate the various exemptions from the Unfair and Deceptive Acts and Practices of the State Acts. It is important not to assume that just because your industry is heavily regulated by another state law (such as Georgia’s lease-purchase law) it is exempt from general compliance with the UDAP. Additionally, behavior that is exempt in one state’s UDAP law may not be in another. Since UDAP enforcement is State AG’s consumer protection bread and butter, be sure to know your exposure in any given state.
State GAs remain concerned about first party debt collection practices. While the federal Fair Debt Collection Practices Act may largely exempt companies from collecting their own debts, state laws may cover first-party debt collection practices. Even the absence of a specific state law may not absolve your practices – Georgia AVC alleged that Rent-A-Center’s practices, which included repeated phone calls and threatening consumers with criminal prosecution , constituted unfair and deceptive practices under their UDAP law.
State MAs will carefully review consumer disclosures and consent, especially for recurring charges. as we have Previously reported, state GAs have focused on automatic renewals, particularly in response to new state laws requiring clear disclosure and express consent. The Georgia stroke focused on two recurring charges imposed by Rent-A-Center. First, the AG alleged that the Loss and Damage Waivers were falsely offered as “insurance” or “warranty programs.” Second, the AG alleged that club membership fees continued after a hire-purchase agreement was entered into without proper disclosure. The lack of clear and visible disclosure of material terms calls into question the adequacy of consumer consent and will be an easy target for state MGAs.
Enforcement can be expensive, but there could be an opportunity to save if you put your money where your mouth is. While Georgia AVC is seeking payment of more than $300,000 in penalties, fees and costs, the agreement also provides that a final payment of more than half that amount may be waived if there is no has no default in the next two years. Including a provision like this in a settlement not only saves a company money in the long run, but also demonstrates its commitment to following the detailed injunction and presenting itself as a good corporate citizenship to regulators.
Georgia’s stroke is a great reminder of the extent of state AG authority and the kind of penalties you could face if you find yourself on their radar. Whether you are currently under investigation or not, it is a good idea to take a close look at your business practices to ensure they are compliant.