S03449 Summary:

BILL NO    S03449 

SAME AS    No same as 

SPONSOR    THOMPSON

COSPNSR    

MLTSPNSR   

Amd SS500, 501, 502, 504 & 505, Per Prop L

Provides for greater protections to consumers in rental purchase agreements;
defines certain terms, including "lease charge" and "trade area"; provides
greater disclosure to consumer regarding the amount, number and times at which
various payments relating to such an agreement are due and owing; makes various
provisions regarding the method and information required to be disclosed in
advertising for such agreements; provides for a right of reinstatement upon
repossession.
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S03449 Actions:

BILL NO    S03449 

03/07/2007 REFERRED TO JUDICIARY
01/09/2008 REFERRED TO JUDICIARY
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S03449 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          3449
 
                               2007-2008 Regular Sessions
 
                    IN SENATE
 
                                      March 7, 2007
                                       ___________
 
        Introduced  by Sen. THOMPSON -- read twice and ordered printed, and when
          printed to be committed to the Committee on Judiciary
 
        AN ACT to amend the personal property  law,  in  relation  to  providing
          consumers with greater protection in rental purchase agreements
 
          The  People of the State of New York, represented in Senate and Assem-

        bly, do enact as follows:
 
     1    Section 1. Subdivisions 2 and 6 of section 500 of the personal proper-
     2  ty law, as added by chapter 792 of the laws of 1986, are amended and two
     3  new subdivisions 7 and 8 are added to read as follows:
     4    2. "Cash price" means the average price at which [a merchant,  in  the
     5  ordinary  course of business, would offer to sell the merchandise to the
     6  consumer for cash on] the merchandise, or merchandise  of  substantially
     7  the same kind, quality, or quantity, is offered for sale by a reasonable
     8  number of merchants in the trade area during the sixty days prior to the
     9  date of the rental-purchase agreement.
    10    6.  "Rental-purchase  agreement"  means  an  agreement  for the use of

    11  merchandise by a consumer for primarily personal, family,  or  household
    12  purposes,  for an initial period of four months or less, that is renewa-
    13  ble with each payment after the initial  period  and  that  permits  the
    14  [lessee]  consumer  to  become the owner of the property, whether or not
    15  the consumer is obligated to complete the payments on the agreement.  An
    16  agreement that complies with this article is not  a  retail  installment
    17  sales contract, agreement, or obligation as defined in this chapter [or]
    18  nor  a  security  interest  as  defined  in  subdivision thirty-seven of
    19  section 1-201 of the uniform commercial code.
    20    7. "Lease charge" means the charge to be paid by the consumer for  the

    21  privilege  of entering into a rental-purchase agreement over the maximum
    22  period which the agreement could run  under  its  terms,  including  all
    23  renewals  or  extensions, less the cash price. The term does not include
    24  any amount for which the consumer may be liable for loss or damage,  any
    25  late  charges, reinstatement fees, early termination fees, or other fees
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD01589-02-7

        S. 3449                             2
 
     1  or  charges  for  installation,  delivery,  service,  repair,  or  other

     2  services  incidental  to  the  agreement.  Such  charge shall be clearly
     3  presented as a percentage of the cash price.
     4    8.  "Trade  area"  means  the  geographical area in which the merchant
     5  solicits or makes rental-purchase agreements.
     6    § 2. Paragraphs (e) and (f) of subdivision 3 and subdivisions 4, 6 and
     7  7 of section 501 of the personal property law, as added by  chapter  792
     8  of  the  laws  of  1986, are amended and a new paragraph (g) is added to
     9  subdivision 3 to read as follows:
    10    (e) requiring the payment of a late charge or reinstatement fee unless
    11  a periodic payment is delinquent for more than three days for agreements
    12  that are renewed on week by week terms and  seven  days  for  agreements
    13  that  are  renewed  on  month by month terms[,]; provided, however, that

    14  neither Saturdays, Sundays,  nor  federally-recognized  holidays  during
    15  which  the  United States postal service is not open to the public shall
    16  count toward the three or seven day totals, and the charge or fee is  in
    17  an  amount  not  more  than the greater of ten percent of the delinquent
    18  amount or three dollars for agreements that are renewed on week by  week
    19  terms  and  not  more  than the greater of ten percent of the delinquent
    20  amount or five dollars for agreements that are renewed on month by month
    21  terms. In the event that multiple items are leased to a consumer  pursu-
    22  ant  to  more  than  one rental-purchase agreement, any late fee imposed
    23  pursuant to this section shall not exceed ten percent of  the  total  of
    24  the periodic payments that are delinquent[.];

    25    (f)  requiring  a  payment in addition to regular periodic payments in
    26  order to acquire ownership of  the  merchandise  or  requiring  periodic
    27  payments  totalling more than the cost to acquire ownership, as provided
    28  in section five hundred three of this article[.]; and
    29    (g) requiring the payment of a lease charge in excess  of  twenty-five
    30  percent of the cash price per annum.
    31    4.  Only  one  late  charge or reinstatement fee may be assessed for a
    32  delinquent periodic payment, regardless of the period  during  which  it
    33  remains in default. No merchant shall assess a late charge for a period-
    34  ic  payment made in full on its due date or within three days for agree-
    35  ments that are renewed on week by week terms or seven  days  for  agree-
    36  ments that are renewed on month by month terms when the only delinquency

    37  is  attributable  to  late  fees  assessed on earlier periodic payments;
    38  provided, however, that neither Saturdays, Sundays, nor federally-recog-
    39  nized holidays during which the United States postal service is not open
    40  to the public shall count toward the three or seven day  totals.    With
    41  respect  to  payments  accepted  by  mail  or  by  store deposit box, no
    42  merchant shall assess a late fee for payments which are  post-marked  or
    43  received before the expiration of the applicable delinquency periods.
    44    6.  This section does not prevent a merchant from attempting to repos-
    45  sess merchandise during the reinstatement period[,]  provided  in  para-
    46  graph  (b)  of subdivision five of this section. The consumer's right to
    47  reinstate an agreement does not expire because of such  a  repossession.

    48  Upon  repossession,  the  merchant  shall  provide written notice to the
    49  consumer of the consumer's right to reinstate the agreement pursuant  to
    50  paragraph (b) of subdivision five of this section and the final date for
    51  payments  necessary  for  reinstatement pursuant to such paragraph along
    52  with the appropriate amount due. On reinstatement,  the  merchant  shall
    53  provide the consumer with the same merchandise or substitute merchandise
    54  of  comparable  quality  and  condition.  If  substitute  merchandise is
    55  provided, the merchant shall provide the consumer with  the  disclosures
    56  required in subdivision seven of this section.

        S. 3449                             3
 
     1    7.  A  rental-purchase  agreement  must  disclose in a conspicuous and
     2  informative fashion:

     3    (a)  a  brief  description  of  the merchandise provided sufficient to
     4  identify the merchandise to the consumer and the merchant, including  an
     5  identification number, if applicable;
     6    (b) whether the merchandise is new or used[,]; provided, however, that
     7  it  shall  not  be  a  violation  of  this  section to indicate that the
     8  merchandise is used if it is actually new;
     9    (c) [the amount and timing  of  rental-purchase  payments]  the  total
    10  amount to be paid by the consumer prior to or at the consummation of the
    11  rental-purchase  agreement, using the term "amount due at contract sign-
    12  ing". The merchant shall itemize each component of the total  amount  by

    13  type  and  amount,  including  any  refundable security deposit, advance
    14  periodic payment, and amount of any down payment;
    15    (d) the total number of payments and the total  amount  that  must  be
    16  paid  to  acquire  ownership  of  the merchandise, which amount shall be
    17  explicitly labelled "total cost".  This amount is the sum of  the  total
    18  amount  due at signing provided pursuant to paragraph (c) of this subdi-
    19  vision (less any refundable  amounts),  the  total  amount  of  periodic
    20  payments  (less any portion of the periodic payment paid at the time the
    21  agreement is signed), and other charges or fees disclosed  and  assessed
    22  pursuant to paragraph (f) of this subdivision;
    23    (e)  the  amount and purpose of any payment, charge, or fee, including

    24  the lease charge, in addition to the regular periodic payments;
    25    (f) whether or not the consumer is liable for loss or  damage  to  the
    26  merchandise and, if so, the maximum amount for which the consumer may be
    27  liable,  which in the case of loss shall in no event be greater than the
    28  price the consumer would have paid to exercise an early purchase  option
    29  pursuant  to  this  article.  In  the case of damage to the merchandise,
    30  other than normal wear and tear, the consumer [shall be] is  liable  for
    31  the lesser of: (1) the price the consumer would have paid to exercise an
    32  early purchase option pursuant to this article or (2) the actual cost of
    33  the  repair  [as  determined by the merchant], reduced by all discounts,

    34  paid by the merchant or (3) two itemized estimates of the cost  of  such
    35  repair;
    36    (g)  that  the  consumer  does not acquire ownership rights unless the
    37  consumer has complied with the ownership terms of the agreement;
    38    (h) the cash price of the merchandise; [and]
    39    (i) a statement of the conditions under which a consumer may  exercise
    40  an  early  purchase  option and under which the merchant or consumer may
    41  otherwise terminate the [lease] rental purchase agreement;
    42    (j) the number, amount, and due dates or periods of payments scheduled
    43  under the rental-purchase agreement, and the total dollar amount of  the
    44  periodic payments;
    45    (k) the term of the rental-purchase agreement, with a description such

    46  as  "the  number of periods of payments in your agreement before you own
    47  the merchandise";
    48    (l) a statement specifying whether the consumer  or  the  merchant  is
    49  responsible  for maintaining or servicing the merchandise, together with
    50  a brief description of such responsibility;
    51    (m) a statement of the merchant's standards for wear and use (if any),
    52  which must be reasonable; and
    53    (n) a statement identifying all express warranties and guarantees from
    54  the manufacturer or merchant with respect to the merchandise that  apply
    55  to the consumer.

        S. 3449                             4
 
     1    § 3. Section 502 of the personal property law, as added by chapter 792
     2  of the laws of 1986, is amended to read as follows:

     3    §  502.  Availability.  Every rental purchase agreement shall indicate
     4  that a consumer at his or her written  request  shall  be  permitted  to
     5  review  a  completed  rental-purchase  agreement for up to [twenty-four]
     6  seventy-two hours prior to signing.
     7    § 4. Section 504 of the personal property law, as added by chapter 792
     8  of the laws of 1986, is amended to read as follows:
     9    § 504. Early purchase option. At any time, after the initial  payment,
    10  the  consumer  may  acquire  ownership  of  the property by tendering an
    11  amount equal to the cash price of the merchandise minus  [fifty  percent
    12  of]  all  previous [rental-purchase] payments made under the rental-pur-
    13  chase agreement, not including the portion of any such payments  attrib-

    14  utable  to  the lease charge, other charges for any amount for which the
    15  consumer may be liable for loss or damage, late  charges,  reinstatement
    16  fees,  early  termination  fees, other fees or charges for installation,
    17  delivery,  service,  repair,  or  other  services  incidental   to   the
    18  agreement.
    19    § 5. Section 505 of the personal property law, as added by chapter 792
    20  of the laws of 1986, is amended to read as follows:
    21    § 505. Advertisement. 1. An advertisement for a rental-purchase agree-
    22  ment  [that  refers to or states the amount of a payment or the right to
    23  acquire ownership of any one particular item under the agreement]  shall
    24  clearly and conspicuously state:
    25    (a) that the transaction advertised is a rental-purchase agreement;

    26    (b)  the  total  number of payments and the total amount to be paid to
    27  acquire ownership, which  amount  shall  be  explicitly  labeled  "total
    28  cost"; [and]
    29    (c)  the  circumstances under which the consumer can acquire ownership
    30  rights;
    31    (d) that the merchandise offered may be new or used; and
    32    (e) the lease charge.
    33    2. [An advertisement for personal property available  through  rental-
    34  purchase agreements that refers to more than one appliance or particular
    35  item  and includes information on periodic payment amounts shall include
    36  a representative item available at that amount and  shall  conspicuously
    37  state:
    38    (a) that the merchandise offered may be new or used;

    39    (b) that transaction advertised is a rental-purchase agreement; and
    40    (c)  that  the  consumer  does not acquire ownership rights unless the
    41  consumer complies with the ownership terms of the agreement.
    42    3.] Every item displayed or offered under a rental-purchase  agreement
    43  shall have clearly and conspicuously indicated in arabic numerals, so as
    44  to  be  readable  and  understandable  by visual inspection, each of the
    45  following affixed to the item:
    46    (a) the cash price of the merchandise;
    47    (b) the amount of the periodic payment and the total number of period-
    48  ic payments required for ownership; [and]
    49    (c) the total amount  that  must  be  paid  to  acquire  ownership  of
    50  merchandise, which amount shall be explicitly labeled total cost; and
    51    (d) the lease charge.

    52    §  6.  This  act shall take effect on the ninetieth day after it shall
    53  have become a law and shall apply to  all  agreements  entered  into  or
    54  offered on or after such date.
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