Senate Bill No. 476
(By Senators Anderson, Dittmar, Dalton, Felton and Boley)
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[Introduced March 22, 1993; referred to the Committee
on the Judiciary.]
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A BILL to amend and reenact section one hundred nine, article
seven, chapter forty-six-a of the code of West Virginia, one
thousand nine hundred thirty-one, as amended; and to further
amend said chapter by adding thereto a new article,
designated article nine, all relating to the regulation of
agreements for rental purchases of personal property.
Be it enacted by the Legislature of West Virginia:
That section one hundred nine, article seven, chapter forty-
six-a of the code of West Virginia, one thousand nine hundred
thirty-one, as amended, be amended and reenacted; and that said
chapter be further amended by adding a new article, designated
article nine, all to read as follows:
ARTICLE 7. ADMINISTRATION.
§46A-7-109. Injunctions against unconscionable agreements and
fraudulent or unconscionable conduct.
(1) The attorney general may bring a civil action to
restrain a creditor or a person acting in his or her behalf fromengaging in a course of:
(a) Making or enforcing unconscionable terms or provisions
of consumer credit sales or consumer loans;
(b) Fraudulent or unconscionable conduct in inducing
consumers to enter into consumer credit sales or consumer loans;
or
(c) Fraudulent or unconscionable conduct in the collection
of debts arising from consumer credit sales or consumer loans.
(2) In an action brought pursuant to this section the court
may grant relief only if it finds:
(a) That the respondent has made unconscionable agreements
or has engaged or is likely to engage in a course of fraudulent
or unconscionable conduct;
(b) That the agreements or conduct of the respondent have
caused or are likely to cause injury to consumers; and
(c) That the respondent has been able to cause or will be
able to cause the injury primarily because the transactions
involved are credit transactions.
(3) In applying this section, consideration shall be given
to each of the following factors, among others:
(a) Belief by the creditor at the time consumer credit sales
or consumer loans are made that there was no reasonable
probability of payment in full of the obligation by the debtor;
(b) In the case of consumer credit sales, knowledge by the
seller at the time of the sale of the inability of the buyer to
receive substantial benefits from the property or services sold;
(c) In the case of consumer credit sales, gross disparity
between the price of the property or services sold and the value
of the property or services measured by the price at which
similar property or services are readily obtainable in credit
transactions by like buyers;
(d) The fact that the creditor contracted for or received
separate charges for insurance with respect to consumer credit
sales or consumer loans with the effect of making the sales or
loans, considered as a whole, unconscionable; and
(e) The fact that the respondent has knowingly taken
advantage of the inability of the debtor or lessee reasonably to
protect his or her interests by reason of physical or mental
infirmities, ignorance, illiteracy or inability to understand the
language of the agreement, or similar factors.
(4) In an action brought pursuant to this chapter, a charge
or practice expressly permitted by this chapter is not
unconscionable.
ARTICLE 9. RENTAL -- PURCHASE AGREEMENTS.
§46A-9-101. Short title.
This article may be known and cited as "The West Virginia
Rental-Purchase Agreement Act."
§46A-9-102. Definitions.
For the purposes of this article:
(a) "Cash price" means the price at which a lessor in the
ordinary course of business would offer the property that is the
subject of a rental-purchase agreement to the lessee for cash onthe date of the rental-purchase agreement and may include sales
taxes.
(b) "Lessee" means an individual who rents personal property
under a rental-purchase agreement.
(c) "Lessor" means a person who, in the ordinary course of
business, regularly rents, offers to rent or acts as an agent for
the rental property under a rental-purchase agreement.
(d) "Property" means the personal property that is the
subject of a rental-purchase agreement.
(e) "Rental-purchase agreement" means an agreement for the
use of property by an individual lessee for personal, family or
household purposes, for an initial period of four months or less,
that is automatically renewable with each payment after the
initial period and that permits, but does not obligate, the
lessee to become the owner of the property. An agreement that
complies with this article may not be construed as, nor be
governed by, the laws relating to:
(1) A "consumer credit sale" as defined in paragraph (a),
subdivision (13), section one hundred two, article one of this
chapter;
(2) A "security interest" as defined in subdivision (39),
section two hundred one, article one, chapter forty-six of this
code;
(3) The "sale of goods" as defined in subdivision (37),
section one hundred two, article one of this chapter; or
(4) A "consumer lease" as defined in paragraph (a),subdivision (14), section one hundred two, article one of this
chapter.
§46A-9-103. General requirements of disclosure.
A lessor shall disclose all of the following in a clear and
conspicuous manner:
(a) A brief description of the rental property, sufficient
to identify the property to the lessee and lessor and a statement
as to whether the property is new, used or previously rented. If
a rental-purchase agreement is for multiple items of property, a
description of each item may be provided in a separate statement
incorporated by reference in the rental-purchase agreement or
primary disclosure statement;
(b) The total amount of initial payment, including any
advance payment, delivery charge or any trade-in allowance to be
paid by the lessee at or before consummation of the rental-
purchase agreement;
(c) The amount and timing of rental payments;
(d) The amount of all other charges, individually itemized,
payable by the lessee to the lessor, that are not included in the
rental payments;
(e) The party who is liable for loss, damage in excess of
normal wear and tear or destruction of the rental property;
(f) That the lessee is responsible for obtaining insurance
or waiver liability coverage on any property obtained through a
lease-purchase agreement;
(g) The right of the lessee to reinstate, as provided insection one hundred five of this article and the amount or method
of determining the amount of the delinquency charges,
reinstatement fee or delivery charge for reinstatement;
(h) The party responsible for maintaining or servicing the
rental property and a brief description of the responsibility;
(i) The conditions upon which the lessee or lessor may
terminate the rental-purchase agreement prior to the expiration
of the rental term;
(j) The total of all initial payments, all rental payments,
and all other charges necessary to acquire ownership of the
rental property;
(k) That the lessee has the option to purchase the rental
property during the rental term and at what price, or by what
formula or method the purchase price will be determined;
(l) The cash price of the personal property that is the
subject of the rental-purchase agreement;
(m) That if any part of a manufacturer's warranty exists on
the rental property when a lessee acquires ownership of the
property and said warranty, by its terms, is transferrable, the
warranty will be transferred to the lessee;
(n) A notice in a prominent place in at least twelve-point
type or in legible print with letters at least one-eighth inch in
size, in substantially the following form: "Notice: This
rental-purchase agreement gives you specific legal rights. It is
set forth in "The Consumer Credit and Protection Act." The
consumer protection division of the West Virginia attorneygeneral's office enforces the act. In addition your rights can
be enforced by private legal action."
Every rental-purchase agreement shall be in writing. The
information required by this section shall be disclosed by the
lessor prior to the signing of the rental-purchase agreement by
the lessee and shall be disclosed either in the rental-purchase
agreement or on a dated, separate piece of paper that identifies
the rental-purchase agreement and the parties to it.
The disclosures required by this section shall be printed or
typed and numerical amounts and percentages shall be stated in
figures. All information required by this section shall be
stated in a clear and coherent manner, using words and phrases of
common meaning. The information shall be appropriately divided
and captioned by its sections.
A lessor may disclose information that is not required by
this section if the additional information is not stated, used or
placed in a manner that will contradict, obscure or detract
attention from the required information.
§46A-9-104. Prohibited provisions.
A rental-purchase agreement may not contain any provision:
(a) Requiring a confession of judgment;
(b) Authorizing a lessor or an agent of the lessor to commit
a breach of the peace in the repossession of property; or
(c) Waiving any defense, counterclaim or right the lessee
may have against the lessor or an agent of the lessor.
§46A-9-105. Reinstatement.
(a) A lessee who fails to make timely rental payments has
the right to reinstate the original rental-purchase agreement
without losing any right or options previously acquired under the
rental-purchase agreement within three rental terms after the
expiration of the last rental term for which the lessee made a
timely payment if the lessee surrenders the rental property to
the lessor when the lessor or its agent requests him or her to
surrender the rental property in accordance with the rental
agreement.
(b) Before reinstating a rental-purchase agreement, a lessor
may require a lessee to pay any unpaid rental payments,
delinquency charges not to exceed five percent of any unpaid
rental balance, a reasonable reinstatement fee of not more than
five dollars and delivery charge if redelivery of the rental
property is necessary.
(c) If reinstatement occurs pursuant to this section, the
lessor shall provide the lessee with either the same property
rented by the lessee prior to reinstatement or substitute
property that is of comparable quality and condition. If
substitute property is provided, the lessor shall provide the
lessee with all of the disclosures required under the provisions
of section one hundred three of this article.
§46A-9-106. Early purchase option.
A rental-purchase agreement shall provide that at any time
after the initial payment, the lessee may acquire ownership of
the rental property by complying with the terms of an earlypurchase option which must be clearly set forth in the rental-
purchase agreement.
§46A-9-107. Exempted transactions.
This article does not apply to:
(a) Agreements for the rental of property in which the
person who rents the property has no legal right to become the
owner of the property at the end of the rental period;
(b) A lease of a safe deposit box;
(c) Commercial leases or leases entered into by a
corporation or other business entity; or
(d) Any unit of the federal, state, county or municipal
government.
§46A-9-108. Enforcement.
(a) A lessee who has suffered a loss as a result of a
violation of this article by a lessor is entitled to recover from
the lessor compensatory damages, reasonable attorney's fees and
court costs and in addition, a civil penalty in an amount not
less than one hundred dollars nor more than one thousand dollars.
(b) A lessor may not be held liable in any action brought
under this section if he or she shows that the violation was not
intentional and resulted from a bona fide error, notwithstanding
the maintenance of procedures reasonably adopted to avoid any
such error. A bona fide error includes, but is not limited to,
clerical, calculation, computer malfunction and programming and
printing errors: Provided, That an error of legal judgment with
respect to a person's obligations under section one hundred threeof this article is not a bona fide error.
(c) A lessor shall not be deemed to have violated this
article, if within sixty days after discovering the error, and
before an action is filed in accordance with the provisions of
this section or written notice of the error is received from the
consumer, the lessor notifies the consumer of the error and makes
whatever adjustments in the account necessary to assure that the
consumer shall not be required to pay an amount in excess of the
amounts actually disclosed. This provision applies whether the
discovery of the error was made through the lessor's own
procedures, or otherwise.
(d) An action may not be brought under this section more
than one year after the occurrence of the act, method or practice
which is the subject of the action or more than one year after
the last payment in a transaction involving the method, act or
practice which is the subject of the action, whichever shall last
occur.
§46A-9-109. Severability.
If any clause, sentence, paragraph, subdivision, subsection,
section or part of this article is held to be unconstitutional or
void, the unconstitutionality or voidness does not affect, impair
or invalidate other provisions or applications of this article
and to this end the provisions of every clause, sentence,
paragraph, subdivision, subsection and section of this article
are declared to be severable.
NOTE: The purpose of this bill is to prescribe and enforce
meaningful consumer protection regarding rent-to-own
transactions. This bill also creates the West Virginia
Rental-Purchase Agreement Act.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.
§46A-9-101 thru 109 is new; therefore, strike-throughs and
underscoring have been omitted.