On a similar note...
On a similar note...
Virginia real estate investor Olivia Quinn says she lost her mortgage because Rent-A-Center, the nation’s largest rent-to-own merchandise company, failed to remove a black mark on her credit report. She had paid what she owed for the bedroom furniture — twice.
Leroy Walton of Georgia settled his rental account with Rent-A-Center in 2013, his records show. But for years after, he says debt collectors pursued him, even threatening him with arrest.
Jessica Gonzalez’s federal lawsuit says she huddled with her two boys in a closet of her Florida home while a Rent-A-Center employee pounded on her house to collect rent on her household goods.
And Andrea Gorman told authorities that Rent-A-Center workers kicked in the front door of her Ohio home after she fell behind on payments for a laptop.
Rent-A-Center customers across the United States are complaining in growing numbers of harassment and wrecked finances after leasing furniture, electronics or appliances from the $3 billion company.
They describe their treatment in thousands of complaints to federal or state watchdog agencies, in lawsuits and in interviews by reporters during a joint investigation by NerdWallet and Raycom Media.
Customers say their credit scores had been damaged unfairly after they settled their accounts.
They say they were hounded by debt collectors over bills paid long ago. Many documented lengthy and unsuccessful attempts to get Rent-A-Center to correct its records.
Debt collectors who took over Rent-A-Center past due accounts told reporters that nearly a third of the consumers they called had records showing their accounts were paid off. But Rent-A-Center’s documents didn’t reflect those payments, said the debt agencies, some of which are taking legal action to collect from the company.
Even Rent-A-Center shareholders have complained, filing a lawsuit against the company 10 months ago that argues shoddy record-keeping in recent years has damaged the business.
In most American industries, harassment over unpaid bills sets off alarms with regulators. But Rent-A-Center relies on exceptions carved out for the entire rent-to-own industry, allowing it to operate outside many consumer protection laws.
The Federal Trade Commission, aware of the industry’s tactics, has issued warnings about the risks of signing rent-to-own agreements.
At the state level, aggressive consumer advocates and government officials, such as Ohio Attorney General Mike DeWine, say the industry needs more regulation.
Anyone considering turning to Rent-A-Center for furniture and appliances should “run — don’t walk — out of that store. Get out of there,” DeWine says.
‘A welcome hand up’
Rent-A-Center is a publicly traded company based in Plano, Texas, that began in 1986 by offering consumers a way to acquire household goods they otherwise couldn’t afford.
Customers agree to rent big-screen TVs, couches, washers and dryers, and other items on a weekly, semimonthly or monthly basis. They typically can terminate their leases at any time and return the goods, or they can continue to pay until they own the items outright.
The opportunity is attractive to low-income households. The company’s mission is to improve the lives of its customers, serving as a “welcome hand up amid a sea of thumbs down,” the company said in an email.
“We believe in empowering those striving to enjoy the American dream, individuals and families that have damaged, limited or no credit, to get the big ticket items they need, when they want and with the payment plans specifically designed to meet their budget requirements.”
The company has two basic business models. It has more than 2,400 stores largely near low-income neighborhoods and military bases.
It also operates as Acceptance Now inside nearly 1,300 independently owned furniture stores, including Ashley Furniture and Rooms to Go. In those showrooms, customers pick out furniture they want but instead of buying it from the store, Acceptance Now buys it for them and leases it back to them, removing the store from any responsibility in disputes.
» MORE: How rent-to-own works
Interviews by NerdWallet and Raycom and complaints to government agencies show that problems arise if a customer falls behind on payments. A missed payment, even one late by as little as a day, can trigger an aggressive response by employees or touch off record-keeping errors at the company, former employees told reporters.
Quinn and Walton missed payments, then caught up. But their accounts were not properly credited, despite repeated calls to the company and to credit bureaus, according to notes they took and shared with reporters.
Other customers who fell behind on payments faced immediate and aggressive harassment, as described by former customers Gonzalez and Gorman.
Chris Korst, Rent-A-Center’s chief administrative officer, said in an email that the company takes consumer complaints seriously. “We strive to provide the highest level of customer service and when we fall short of that expectation, we work equally hard to resolve those issues,” he said.
High cost of rent-to-own
The rent-to-own industry has been controversial for decades, largely because it is a pricey way to buy home goods. Rental companies mark up the prices of goods and structure leases with charges equivalent to extremely high interest rates.
A NerdWallet analysis of Rent-A-Center prices to rent or buy in 48 states and the District of Columbia showed the costs.
A Vizio soundbar with subwoofer retails for $148 at Amazon. It would cost more than five times as much, $779, if lease-purchased in a one-year contract from Rent-A-Center.
At a rental rate of $14.99 a week for the item, a customer could buy it outright by saving the same amount for just 10 weeks.
Rent-A-Center notes that one reason its prices are higher is that they include delivery, setup, service and other benefits. Many retailers don’t offer those services, Rent-A-Center said.
Rent-A-Center’s prices also reflect the risk of doing business with people trying to build credit, a population it says other retailers do not accommodate: “Our model can’t be compared to standard, traditional retailers, who cannot and do not serve those customers with limited means living paycheck to paycheck.”
Company won’t explain charges
Caitlin Six is a financial services employee who signed a contract with Acceptance Now in 2013 to lease furniture from a Rooms to Go near Jacksonville, Florida.
Six, then in her early 20s, chose a sectional sofa, bedroom furniture and two mattresses. She didn’t want to use credit to cover the $2,094.46 cash price.
She liked that Acceptance Now, the Rent-A-Center subsidiary operating within the showroom, did not require a credit check and gave her the freedom to return her merchandise at any time without penalty.
Six signed a three-year contract, agreeing to pay $201.28 a month, according to records reviewed by reporters. She made monthly payments for 15 months. Then she decided she no longer wanted the couch and had Rent-A-Center pick it up.
She asked the company how much she owed for the bedroom furniture and mattresses. Rent-A-Center records show she had already paid $3,030.60. She assumed she was close to paying off her account because she no longer had the couch, which she recalls cost $1,299, or two thirds of the total for the furniture.
Rent-A-Center told her she still owed more than $1,700. Six asked for an itemized statement, but the company would not provide one, she told the Florida attorney general’s office in a 2015 complaint.
She didn’t hear from the company for several months, her complaint said. Then in March 2015 she got a call from Rent-A-Center demanding that she pay $497.06 or the company would pursue theft charges, her complaint said.
Rent-A-Center representatives began showing up at her house, leaving notes threatening to call the police if she didn’t pay or return the “stolen” items, she told reporters in an interview.
Company collectors also called her office and ignored her requests to stop.
» MORE: What debt collectors can and can't do
Those tactics are typical at Rent-A-Center, former managers for the company told reporters. The company wants to keep customers paid up because many have household incomes under $25,000. If they miss a payment or two, they can have a tough time catching up.
Rent-A-Center has strict targets, say the former managers. When they worked for the company, a store’s percentage of past due customers had to be under 6% each week, say the workers, some of whom agreed to interviews only if they were not identified because they had signed nondisclosure agreements with the company.
If stores don’t hit their numbers, managers are required to work extra shifts and can lose their jobs, they say.
Store sales staff doubles as the company’s first-line collectors. They call customers within hours of a missed payment, former Rent-A-Center employees say. The company often sends workers to track down customers late by a week or more.
The Federal Trade Commission received 2,779 complaints about Rent-A-Center and Acceptance Now between January 2016 and June 2017. More than 90% dealt with the company’s aggressive collection tactics, including employees banging on customers’ doors and laying on car horns outside of residences.
Ohio customer Gorman says Rent-A-Center workers kicked in the door of her Lima home after she fell two months behind on a contract for a laptop, which she had nearly paid off.
She says she lost her job and told Rent-A-Center employees that she needed a few more weeks to pay off her account. Instead, workers broke into her home, Gorman told Lima police, citing a neighbor who witnessed the incident.
Gorman filed a complaint with the Ohio attorney general in August 2014. The company disputed her claims. But after that, she says the harassment stopped and she kept her laptop without making any more payments.
The state of Washington filed a lawsuit against Rent-A-Center in 2009, accusing the company of abusive collection practices and other illegal activity.
Affidavits filed in the case say Rent-A-Center workers trespassed, peered in windows and tried to kick in doors.
Rent-A-Center settled the lawsuit in 2010, saying it had done nothing wrong but agreeing to a lengthy list of restrictions on collections practices.
Among other things, Rent-A-Center said its employees would not use abusive language with customers, trespass or visit their workplaces after being told not to do so.
The company also said workers would not threaten legal action unless it had grounds to sue.
Since that settlement, the Washington attorney general has received more than 800 pages of complaints about Rent-A-Center.
Caitlin Six says Rent-A-Center stopped calling her only after she filed her complaint with the state.
The company responded in a May 2015 letter to the Florida Department of Agriculture and Consumer Services. After she returned the couch, the company wrote, it enrolled her in a new 18-month lease at $98.96 a month for the items she kept.
But no one told Six. Rent-A-Center did not copy her on that letter, which NerdWallet obtained from the state. And Six had not signed the new lease, which the company also filed with the state.
That same month Rent-A-Center deemed her charges uncollectible and notified credit bureaus she had outstanding debt, it said in its letter to the state.
The company still hasn’t provided an itemized statement, Six says.
Modern-day debtors prison
Laws in many states allow rent-to-own companies to pursue criminal charges against customers who stop paying and don’t return items swiftly after being asked to do so.
Prosecutors in Florida have criminally charged more than 3,000 people over the last decade for failing to return merchandise, state records show.
In one central Texas county, more than 400 rent-to-own customers have been charged in the last three years, police reports show.
David Strosnider, a former Rent-A-Center manager in Charlotte, North Carolina, says he pursued criminal charges against only those customers who had paid off less than 30% of the merchandise.
“The only ones I sent to criminal court were people who paid only a few payments and then we were unable to get in touch with them,” he wrote in a comment on a blog post in December 2016.
But some Rent-A-Center colleagues were more aggressive, he told a reporter.
David Strosnider, Former Rent-A-Center manager
We had some managers who were filing charges on anybody who didn’t pay their bill.”
“We had some managers who were filing charges on anybody who didn’t pay their bill,” says Strosnider, who worked for Rent-A-Center from 2012 to 2015.
He says Rent-A-Center’s corporate office gave stores “free rein” with delinquent customers. “Their message was, ‘Do whatever you have to do to get your money.’”
In Houston, the Harris County district attorney’s office has filed criminal theft charges against delinquent rent-to-own customers for at least two decades, says Valerie Turner, the county’s chief of consumer fraud.
The district attorney’s office has authority to take such actions under a Texas law passed 40 years ago after lobbying by the rental industry.
Murray Newman, who worked as a Harris County prosecutor from 1999 to 2008, says he could justify theft charges if a customer rented an item, never made a payment and refused to give it back to the company.
But he said Rent-A-Center didn’t make that distinction. It used the district attorney’s office as a collection agency, he said, going after customers who fell behind on payments with no intent to steal.
Rent-A-Center said in an email it uses criminal charges in “extremely limited circumstances” and only when the intent to commit theft is apparent.
“We try every possible way to contact, visit and work with our customers, and view filing charges as a last resort,” the company said. “These restrictions are clearly communicated in our training materials, as is the process for internal review of accounts prior to any action being initiated.”
Lasting damage to customers
Many Rent-A-Center customers say their credit scores and their psyches have suffered after they paid their bills because Rent-A-Center lost records of their transactions or made them difficult to access.
Between January 2016 and June 2017, 674 people filed complaints with the Federal Trade Commission about problems with Acceptance Now, according to records obtained by NerdWallet and Raycom Media.
Nearly one-third had asked Acceptance Now for a record of their payment history or verification they owed money. The company’s representatives failed to provide it, often saying they had no way of doing so, former customers said.
Ten percent of those 674 customers said errors ended up on their credit reports.
“I have called Acceptance Now and they claim to not have any paperwork on me, and they are listing that I owe $2,161 on my credit report,” a Florida customer wrote. The customer asked for an itemized bill and to have the credit report corrected. (The FTC records did not list consumers’ names or the outcome of the complaints.)
Other customers wrote that their bills kept rising despite payments and alleged that the company was not applying their payments properly. One Ohio customer paying $50 a month discovered that Acceptance Now was crediting the account just $47.19 monthly.
“When I asked the representative why she was only applying $47.19, she stated, ‘because you are so far behind I had to play with the numbers to get the closest it would let me get,’” the complaint said.
Rent-A-Center shareholders filed a federal lawsuit against the company in December 2016 over problems with its system for tracking customer payments. The complaint, filed in U.S. District Court in Texas, said Rent-A-Center had difficulty starting a new point of sale system in 2015, causing “severe harm” to company operations.
The company introduced the system despite repeated internal warnings about its flaws, leading to outages that caused customers to fall behind on their rental agreements, the shareholders allege in court filings. Rent-A-Center tried to get the case dismissed but a judge denied its request.
Companies that mishandle customer records can be subject to penalties by state or federal regulators, Ohio Attorney General DeWine says. He led a 2015 push by state attorneys general to force credit reporting agencies to fix inaccuracies on consumers’ credit reports.
DeWine urged consumers who have been harmed by Rent-A-Center to contact their state attorney general.
“This is an industry that needs regulation,” he said in an interview. “This is an industry that is really hurting poor people.”
Rent-A-Center’s systems have also harmed middle-income consumers, including thousands of Acceptance Now customers who reported calls from debt collectors long after they paid their debts.
Walton, the Rent-A-Center customer from Georgia, told reporters that he had been called by at least five debt collectors about bills he paid in full.
Walton bought a dining room set and sectional sofa at an American Signature Furniture store in Lithonia, Georgia, in 2012, signing an agreement with Acceptance Now. After several months, he fell behind on payments when he quit work to care for a sick friend, he said.
Walton, 54, paid off the $2,035.93 owed on his account in March 2013, according to bank records he showed NerdWallet.
Two years later, he says collectors called asking for money. They identified themselves as lawyers and said they planned to sue him, he says.
Walton offered to show them the paid-off receipt. The collectors then told him to call American Signature Furniture because the debt appeared on his credit report, he says.
Walton said he did, and an employee told him the payment must have been applied to the wrong account and that he should call Rent-A-Center.
Walton says he made dozens of calls to Rent-A-Center and Acceptance Now in 2015, many of which went unreturned. He kept notes of his correspondence, which he shared with reporters.
He spoke to a Rent-A-Center district manager, who asked why his payments had been late and hung up, Walton’s notes show. He left many messages for a regional director but never got a call, says Walton, whose notes contain the full names of both managers.
In late 2015 another debt collector called, saying his company had purchased Walton’s debt. Walton showed the collector his records. Soon, his credit record was restored.
He thought the matter was resolved. But in February of this year, a third debt collector left threatening voicemails for Walton’s sister and nephew, he says.
The messages warned that Walton would be arrested if he didn’t pay, he says.
Walton did nothing in response. So far the debt has not reappeared on his credit report, he says.
Even debt collectors are angry
Walton and other consumers don’t know why their accounts were mishandled. But two debt collectors have records that provide a window into the company.
In late 2014, as Acceptance Now was expanding its leasing program, it deemed more than 18,000 accounts seriously in arrears and sold them to collection agencies.
Problems began immediately, debt collectors said. Customer after customer told collection agents they had paid off their debt, sometimes voluntarily, sometimes under duress, sometimes as the result of a civil court action.
Branden Vigliotti is a Houston debt buyer and president of Lismore Holdings, which purchased those 18,000 Acceptance Now accounts and handed off about half of them to a second company to help collect on the debt.
Of the roughly half Vigliotti kept, he said at least 1,800 turned out to owe nothing, or about 1 in 5. An additional 770 customers had been sued and later paid to settle their debts, according to Vigliotti’s research, which NerdWallet reviewed.
Vigliotti says Rent-A-Center could not produce records showing those resolutions. According to its records, the debts remained outstanding.
The numbers may have been worse for the second company, Southwestern Investors Group of Hamburg, New York. Southwestern placed the accounts with Element Global Services, a collection agency in Buffalo, New York.
Element’s collectors noticed inaccurate records beginning in early 2015, says Eric Westermeyer, a former chief operating officer at the company. Westermeyer asked his staff to document the responses.
Forty-five of the first 100 customers said they had settled up, according to records Westermeyer shared with a reporter. One customer claimed to have served jail time in Pinellas County, Florida, for not paying $3,383.
The pattern continued for two years. At least one-third of the 8,200 customers his company contacted had no balance on their accounts, Westermeyer says.
Adam Parks, Board member of the Receivables Management Association, a debt buyers and collectors trade group
They were continuing to collect on accounts that weren’t theirs and not crediting consumers. To me it’s fraud.”
Southwestern Investors Group and Element Global Services filed a lawsuit against Rent-A-Center and Lismore Holdings in October 2015.
The New York state complaint said the companies spent about $1 million for a Rent-A-Center portfolio sold as genuine debt. But many accounts were worthless, the complaint said. (The contract Vigliotti signed to purchase the accounts includes buyer-beware clauses.)
Rent-A-Center would not comment on the allegations, citing the pending litigation. But the company told reporters “there is a substantial risk that you may have been misinformed as to the facts.”
Rent-A-Center filed papers in January asking a New York federal court, where the case had been transferred, to compel arbitration or to dismiss the matter, arguing that because Southwestern and Element were not parties to its agreement with Lismore, they lack standing to assert a claim. The case is in arbitration.
Adam Parks, who worked with Vigliotti, said point of sales systems at many Acceptance Now locations had difficulty tracking accounts and showing when they were paid off.
Some stores continued to accept customers’ money even after their accounts were sold to debt collectors, says Parks, who is on the board of the Receivables Management Association, an industry trade group for debt buyers and collectors.
That’s not legal. A company typically relinquishes all claims to an account once it is sold to a debt collector.
“They were continuing to collect on accounts that weren’t theirs and not crediting consumers,” Parks says.
“To me it’s fraud,” he says. “I don’t know how you can slice it any other way.”
Paid twice but credit wrecked
Olivia Quinn is the Virginia woman who says she lost her mortgage despite twice paying off her debt for a $989.98 bedroom set.
She got the items at a Kane’s Furniture store in Clearwater, Florida, in 2011 before moving to Virginia. She thought Kane’s had handled the transaction and wasn’t told her agreement was with Rent-A-Center or Acceptance Now.
In 2012, after her records show she made payments totaling nearly $1,500, she says she called Kane’s to pay off the account. The Kane’s manager said he would credit her payment, she says. She considered the issue closed.
But she says that three years later a collection agency in Amherst, New York, called to say she owed more than $1,600 to Acceptance Now.
At the time, she didn’t associate the debt with her Kane’s furniture. But because she was shopping for a house and needed good credit, she accepted the debt company’s offer to settle up for $799, she says.
The collector, Huntington Debt Holding LLC, sent her a payoff letter, which she showed reporters.
A few months later, as she was applying for a mortgage, she says her loan officer warned that her credit report showed an outstanding Acceptance Now balance of $1,698.
It sounded like the debt for her furniture, again. Her inquiries soon revealed that her Kane’s furniture had been paid for through Rent-A-Center.
With her mortgage hanging in the balance, Quinn spoke to employees of both companies and of the debt collector — nearly 20 people in all, according to notes she showed reporters.
A Kane’s spokeswoman told reporters the company has no record of the transaction. Quinn says Rent-A-Center employees refused to accept the payoff letter, saying they would not clear up her credit unless she paid Rent-A-Center directly.
Armed with records showing she paid more than $3,000 for the furniture, more than triple the cash price, she refused.
That’s when she says her mortgage fell through. The $1,698 debt is still on her credit report.
Alex Richards, a reporter at NerdWallet, Jill Riepenhoff, an investigative producer at Raycom Media, Jay Root, a reporter at The Texas Tribune, and Josh Salman, a reporter at the Sarasota Herald-Tribune, contributed to this report.
Photo of Olivia Quinn (top) by Julia Rendleman.
Photo of Leroy Walton by Dustin Chambers.