Provides for greater protections to consumers in rental purchase agreements; defines certain terms; 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.
STATE OF NEW YORK
________________________________________________________________________
557--C
2009-2010 Regular Sessions
IN SENATE(Prefiled)
January 7, 2009
___________
Introduced by Sens. ADAMS, PARKER, VALESKY -- read twice and ordered
printed, and when printed to be committed to the Committee on Judici-
ary -- committee discharged, bill amended, ordered reprinted as
amended and recommitted to said committee -- committee discharged,
bill amended, ordered reprinted as amended and recommitted to said
committee -- recommitted to the Committee on Judiciary in accordance
with Senate Rule 6, sec. 8 -- committee discharged, bill amended,
ordered reprinted as amended and recommitted to said committee
AN ACT to amend the personal property law, in relation to providing
consumers with greater protection in rental purchase agreements; and
to repeal certain provisions of such law relating thereto
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Legislative findings and intent. The legislature finds and
2 declares that merchants that lease personal property pursuant to
3 rental-purchase agreements, commonly referred to as rent-to-own agree-
4 ments, provide a unique transaction that is popular with many consumers.
5 The legislature also finds that rent-to-own merchants provide credit-
6 constrained consumers with the ability to obtain high quality goods and
7 the flexibility to terminate agreements at any time without further
8 obligation.
9 The legislature also finds that article 11 of the personal property
10 law fails to provide rent-to-own merchants with appropriate regulatory
11 guidance with respect to how such merchants are to set cash prices. The
12 legislature further finds and declares that there is a need to clarify
13 article 11 of the personal property law to ensure that rent-to-own
14 merchants set cash prices at fair and reasonable levels.
15 The legislature also finds that consumers need clear and useful
16 disclosures in order to make informed decisions regarding rent-to-own
17 agreements.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD03472-20-0
S. 557--C 2
1 Therefore, it is the intent of the legislature to require rent-to-own
2 merchants to provide consumers with enhanced disclosures and to imple-
3 ment fair and reasonable methods for use by rent-to-own merchants in
4 setting cash prices, ensuring that rent-to-own customers pay fair prices
5 and providing much-needed regulatory guidance to rent-to-own merchants.
6 § 2. Subdivisions 2 and 6 of section 500 of the personal property law,
7 as added by chapter 792 of the laws of 1986, are amended and seven new
8 subdivisions 7, 8, 9, 10, 11, 12 and 13 are added to read as follows:
9 2. "Cash price" means the price [at which a merchant, in the ordinary
10 course of business, would offer to sell the merchandise to the consumer
11 for cash on the date] of the merchandise described in the rental-pur-
12 chase agreement that the consumer may pay in cash to the merchant at the
13 inception of the rental-purchase agreement to acquire ownership of such
14 merchandise.
15 6. "Rental-purchase agreement" means an agreement for the use of
16 merchandise by a consumer for primarily personal, family, or household
17 purposes, for an initial period of four months or less, that is renewa-
18 ble with each payment after the initial period and that permits the
19 [lessee] consumer to become the owner of the property. An agreement
20 that complies with this article is not a retail installment sales
21 contract, agreement, or obligation as defined in this chapter [or] nor a
22 security interest as defined in subdivision thirty-seven of section
23 1-201 of the uniform commercial code.
24 7. "Cost of rental" means the difference between the total of payments
25 necessary to acquire ownership under the rental-purchase agreement and
26 the cash price of the rental merchandise that is subject to the rental-
27 purchase agreement.
28 8. "Fee" means any payment, charge, fee, cost, or expense, however
29 denominated, other than a rental payment.
30 9. "Appliance" means and includes any refrigerator, freezer, range
31 including any cook top or oven, microwave oven, washer, dryer, dishwash-
32 er, or room air conditioner or air purifier or other machine for routine
33 household tasks.
34 10. "Electronic set" means and includes any television, radio, camera,
35 video game, computer system or any type of device for the recording,
36 storage, copying, printing, transmission, display, or playback of any
37 sound or image.
38 11. "Merchant's cost" means the documented actual cost, including
39 actual freight charges, of the rental merchandise to the merchant from a
40 wholesaler, distributor, supplier, or manufacturer and net of any
41 discounts, rebates, and incentives that are vested and calculable as to
42 a specific item of merchandise at the time the merchant accepts delivery
43 of the merchandise.
44 12. "Total of payments" means the total amount of periodic payments
45 necessary to acquire ownership of the merchandise that is the subject of
46 the rental-purchase agreement if the consumer makes all regularly sched-
47 uled payments.
48 13. "Periodic payment" means a payment to be made by a consumer for
49 the right of the possession and use of merchandise for a specific rental
50 period, but does not include taxes imposed on such payment.
51 § 3. Subdivisions 5, 6 and 7 of section 501 of the personal property
52 law, as added by chapter 792 of the laws of 1986, are amended and a new
53 subdivision 8 is added to read as follows:
54 5. A rental-purchase agreement must provide that:
55 (a) a charge in addition to periodic payments, if any, must be reason-
56 ably related to the cost of a service performed;
S. 557--C 3
1 (b) a consumer who fails to make a timely payment may reinstate an
2 agreement without losing rights or options previously acquired and with-
3 out incurring any charges, other than rental charges for the time he
4 possessed the property, except for those charges provided for in para-
5 graph (e) of subdivision three of this section [five hundred one of this
6 article] by making the required payment before the later of seven days
7 or half the number of days in a regular payment period after the due
8 date of the payment; [and]
9 (c) if the merchandise is returned or voluntarily surrendered by the
10 consumer, other than through judicial process, during the applicable
11 reinstatement period set forth in paragraph (b) of this subdivision, the
12 consumer's right to reinstate the agreement as set forth in paragraph
13 (b) of this subdivision shall be extended for a period of not less than
14 [thirty days] one year after the date of the return of the merchandise.
15 [If a consumer has paid one-half the total of payments necessary to
16 acquire ownership, the right to reinstate the agreement shall be
17 extended for a period of not less than sixty days after the date of the
18 return of the merchandise. If a consumer has paid three-quarters of the
19 total of payments necessary to acquire ownership, the consumer's rights
20 to reinstate the agreement shall be extended for a period of not less
21 than one hundred eighty days after the return of the merchandise.]
22 6. This section does not prevent a merchant from attempting to repos-
23 sess merchandise during the reinstatement period[,] provided in para-
24 graph (b) of subdivision five of this section. The consumer's right to
25 reinstate an agreement does not expire because of such a repossession.
26 If the consumer is entitled to reinstatement after repossession, then,
27 within fifteen days of the repossession, the merchant shall provide
28 written notice to the consumer of the consumer's right to reinstate the
29 agreement pursuant to paragraph (c) of subdivision five of this section.
30 On reinstatement, the merchant shall provide the consumer with the same
31 merchandise or substitute merchandise of comparable quality and condi-
32 tion. If substitute merchandise is provided, the merchant shall provide
33 the consumer with the disclosures required in subdivision seven of this
34 section.
35 7. [A rental-purchase agreement must disclose in a conspicuous and
36 informative fashion:
37 (a) a description of the merchandise provided;
38 (b) whether the merchandise is new or used, provided however, that it
39 shall not be a violation of this section to indicate that the merchan-
40 dise is used if it is actually new;
41 (c) the amount and timing of rental-purchase payments;
42 (d) the total number of payments and the total amount that must be
43 paid to acquire ownership of the merchandise, which amount shall be
44 explicitly labelled "total cost";
45 (e) the amount and purpose of any payment, charge, or fee, in addition
46 to the regular periodic payments;
47 (f) whether the consumer is liable for loss or damage to the merchan-
48 dise and, if so, the maximum amount for which the consumer may be
49 liable, which in the case of loss shall in no event be greater than the
50 price the consumer would have paid to exercise an early purchase option
51 pursuant to this article. In the case of damage to the merchandise,
52 other than normal wear and tear the consumer shall be liable for the
53 lesser of the price the consumer would have paid to exercise an early
54 purchase option pursuant to this article or the cost of the repair as
55 determined by the merchant;
S. 557--C 4
1 (g) that the consumer does not acquire ownership rights unless the
2 consumer has complied with the ownership terms of the agreement;
3 (h) the cash price of the merchandise; and
4 (i) a statement of the conditions under which a consumer may exercise
5 an early purchase option and under which the merchant or consumer may
6 otherwise terminate the lease] (a) Every rental-purchase agreement shall
7 be contained in a single document which shall set forth all of the
8 agreements of the merchant and the consumer with respect to the rights
9 and obligations of each party. Every rental-purchase agreement shall
10 clearly and conspicuously disclose all of the following:
11 (1) the names of the merchant and the consumer, the merchant's busi-
12 ness address and telephone number, the consumer's address, the date on
13 which the agreement is executed, and a description of the merchandise
14 sufficient to identify it;
15 (2) whether the merchandise subject to the rental-purchase agreement
16 is new or used, provided, however that it shall not be a violation of
17 this section to indicate that the merchandise is used if it is actually
18 new;
19 (3) the minimum period for which the consumer is obligated under the
20 rental-purchase agreement; the duration of the rental-purchase agreement
21 if all regularly scheduled periodic payments are made, designated as the
22 "rental period"; and the amount of each periodic payment;
23 (4) the total of payments and the total number of periodic payments
24 necessary to acquire ownership of the merchandise if the renter makes
25 all regularly scheduled periodic payments;
26 (5) the cash price of the merchandise subject to the rental purchase
27 agreement;
28 (6) the cost of rental;
29 (7) the amount and purpose of any other payment or fee in addition to
30 those specified pursuant to subparagraphs three and four of this para-
31 graph, including any late payment fee;
32 (8) a statement that the total number and dollar amount of payments
33 necessary to acquire ownership of the rental merchandise disclosed under
34 subparagraph four of this paragraph does not include other fees, such as
35 late payment fees, and that the consumer should read the rental-purchase
36 agreement for an explanation of any applicable additional fees;
37 (9) whether the consumer is liable for loss or damage to the merchan-
38 dise and, if so, the maximum amount for which the consumer may be
39 liable, which in the case of loss shall in no event be greater than the
40 price the consumer would have paid to exercise an early purchase option
41 pursuant to this article. In the case of damage to the merchandise,
42 other than normal wear and tear the consumer shall be liable for the
43 lesser of the price the consumer would have paid to exercise an early
44 purchase option pursuant to this article or the cost of the repair as
45 determined by the merchant;
46 (10) that the consumer does not acquire ownership rights unless the
47 consumer has complied with the ownership terms of the agreement;
48 (11) the following notice:
49 NOTICE
50 You are renting this merchandise. You will not own it until you make
51 all of the regularly scheduled payments or you use the early purchase
52 option.
53 You do not have the right to keep the merchandise if you do not make
54 required payments or do not use the early purchase option. If you miss a
S. 557--C 5
1 payment, the merchant can repossess the merchandise, but, you may have
2 the right to the return of the same or similar merchandise.
3 See the contract for an explanation of your rights.
4 (12) a statement of the consumer's right to acquire ownership as
5 provided in section five hundred four of this article, including
6 substantially the following statement: "The attached chart shows the
7 amount required to exercise your early purchase option after each
8 renewal payment, assuming you make each periodic payment on time." The
9 rental-purchase agreement shall be accompanied by a chart showing the
10 amount required to exercise the consumer's early purchase option after
11 each periodic payment if payments are made as scheduled;
12 (13) a description of the consumer's reinstatement rights as provided
13 in subdivision five of this section;
14 (14) a description of the consumer's right to lower periodic payment
15 amounts as provided in section five hundred four-a of this article.
16 (15) if warranty coverage is transferable to a consumer who acquires
17 ownership of the merchandise, a statement that the unexpired portion of
18 all warranties provided by the manufacturer, distributor, or seller of
19 the merchandise that is the subject of the rental-purchase agreement
20 will be transferred by the merchant to the consumer at the time the
21 consumer acquires ownership of the merchandise from the merchant; and
22 (16) a description of the merchant's obligation to maintain the rental
23 merchandise and to repair or replace rental merchandise that is not
24 operating properly, as provided in section five hundred four-b of this
25 article.
26 (b) (1) The disclosures required by subparagraphs three, four, five,
27 and six of paragraph (a) of this subdivision shall be printed in at
28 least ten-point boldfaced type or capital letters if typed and shall be
29 grouped together in a box formed by a heavy line in the following form:
30 ________________________________________________________________________
31 TOTAL OFCOST OF RENTALCASH PRICE
32 PAYMENTS
33 $$$
34 You must payAmount overMerchandise available
35 this amount tocashat this
36 own theprice you willprice for cash from
37 merchandise ifpay ifthe merchant. See
38 you make allyou make allabout your
39 the regularregularearly purchase
40 payments.payments.option rights.
41 You can buy
42 the merchandise
43 for less
44 under the
45 early
46 purchase
47 option.
48 ________________________________________________________________________
49 AMOUNT OFNUMBERRENTAL
50 EACH PAYMENTOFPERIOD
51 PAYMENTS
S. 557--C 6
1 $
2 per
3 _______________
4 (insert period)
5 ________________________________________________________________________
6 (2) The box described in subparagraph one of this paragraph shall
7 appear immediately above the space reserved for the consumer's signa-
8 ture.
9 (c) The disclosures required by subparagraphs three, four, five, and
10 six of paragraph (a) of this subdivision shall be grouped together in a
11 box formed by a heavy line in the form prescribed in paragraph (b) of
12 this subdivision and shall be clearly and conspicuously placed on a tag
13 or sticker affixed to the merchandise available for rental-purchase. If
14 the merchandise available for rental-purchase is not displayed at the
15 merchant's place of business but appears in a photograph or catalog
16 shown to consumers, a tag or sticker shall be affixed to the photograph
17 of the merchandise or catalog shown to consumers or shall be given to
18 consumers. The disclosure required by subparagraph two of paragraph (a)
19 of this subdivision also shall be clearly and conspicuously placed on
20 the tag or sticker. The provisions of this paragraph shall not apply to
21 photographic depictions of merchandise that comply with the provisions
22 of section five hundred five of this article.
23 (d) All disclosures required by this subdivision shall be printed or
24 typed in a color or shade that clearly contrasts with the background.
25 8. (a) (1) Subject to federal law and regulation, no rental-purchase
26 agreement shall contain a mandatory arbitration clause. Nothing
27 contained herein shall be construed to prohibit a merchant from incorpo-
28 rating a provision within such contract that such merchant agrees that
29 the decision of the arbitrator or panel of arbitrators shall be final in
30 its application to such merchant and not subject to court review.
31 (2) The provisions of a mandatory arbitration clause shall be null and
32 void but shall not constitute a violation of this article. The inclu-
33 sion of such clause in a rental-purchase agreement shall not serve to
34 impair the enforceability of any other provision of such contract.
35 (b) For the purposes of this subdivision the following terms shall
36 have the following meaning:
37 (1) "mandatory arbitration clause" shall mean a term or provision
38 contained in a rental-purchase agreement which requires the consumer to
39 submit any controversy thereafter arising under such agreement to arbi-
40 tration prior to the commencement of any legal action to enforce the
41 provisions of such agreement and which also further provides language to
42 the effect that the decision of the arbitrator or panel of arbitrators
43 in its application to the consumer shall be final and not subject to
44 court review.
45 (2) The term "arbitration" shall mean the use of a decision making
46 forum conducted by an arbitrator or panel of arbitrators within the
47 meaning and subject to the provisions of article seventy-five of the
48 civil practice law and rules.
49 § 4. Section 502 of the personal property law, as added by chapter 792
50 of the laws of 1986, is amended to read as follows:
51 § 502. Availability. Every rental purchase agreement shall indicate
52 that a consumer at his or her [written] request shall be permitted to
53 review a completed rental-purchase agreement for up to [twenty-four]
54 forty-eight hours prior to signing. A copy of the fully completed
55 rental-purchase agreement and all other documents which the merchant
S. 557--C 7
1 requests the consumer to sign shall be given to the consumer at the time
2 they are signed. The rental-purchase agreement shall not be enforceable
3 against the consumer until the consumer has received a signed copy. In
4 addition to any other right of cancellation, a consumer has the right to
5 cancel a rental-purchase agreement, without penalty or obligation if the
6 consumer has not taken possession of the property.
7 § 5. Section 503 of the personal property law is REPEALED and a new
8 section 503 is added to read as follows:
9 § 503. Total cost. 1. A merchant shall maintain records that estab-
10 lish the merchant's cost for each item of merchandise that is the
11 subject of the rental-purchase agreement. A copy of each rental-pur-
12 chase agreement and of the records required by this subdivision shall be
13 maintained for at least two years following the termination of the
14 agreement.
15 2. The maximum cash price for the merchant's first rental of the
16 merchandise that is the subject of the rental-purchase agreement may not
17 exceed 1.75 times the merchant's cost for appliances, 1.75 times the
18 merchant's cost for electronic sets having merchant cost less than one
19 hundred fifty dollars, 2.0 times the merchant's costs for electronic
20 sets having merchant cost greater than or equal to one hundred fifty
21 dollars, 2.15 times the merchant's cost for furniture, 2.0 times the
22 merchant's cost for automotive accessories, jewelry, and musical instru-
23 ments, and 1.75 times the merchant's cost for all other items.
24 3. The maximum total of payments may not exceed 2.25 times the maximum
25 cash price that could have been charged for the first rental of the
26 merchandise under subdivision two of this section.
27 4. The maximum total of payments for the merchant's second and subse-
28 quent rental of the merchandise that is the subject of the rental-pur-
29 chase agreement may not exceed the maximum total of payments permitted
30 under the terming matrix contained in subdivision five of this section.
31 5. (a) The terming matrix provided for in paragraph (b) of this subdi-
32 vision shall be used to lower the number of periodic payments, which
33 shall result in a lower total of payments and a lower maximum cash price
34 for the used merchandise based on its age and condition, or, in the
35 event that the merchant chooses to maintain the number of periodic
36 payments of the original term when new, the merchant shall lower the
37 total of payments and maximum cash price on a pro-rata basis. The
38 merchant shall keep in electronic or hard copy form, the matrix used,
39 together with a record of the number of periodic payments provided in
40 the first agreement for the item when it was offered as new, as well as
41 a record of the item's condition as determined by the merchant pursuant
42 to such matrix each time it is priced as used. This requirement shall
43 be satisfied by a record of the number of periodic payments and cash
44 price from each rental-purchase agreement under which merchandise was
45 rented. These records shall be maintained as long as the item is owned
46 by the merchant. No merchant shall price used goods in excess of the
47 prices dictated by the matrix.
48 (b) The attorney general shall make available in printed form to
49 merchants and publish on the website of the department of law a terming
50 matrix in chart form to be used by merchants as required pursuant to
51 paragraph (a) of this subdivision. The chart shall have as its title
52 "Terming Matrix for Used Merchandise". The matrix chart shall conform
53 to the example set forth in this paragraph and shall consist of five
54 rows and five columns and shall be printed in at least ten point type.
55 TERMING MATRIX FOR USED MERCHANDISE
S. 557--C 8
1 OriginalTerm91weeks
2 inWeeks34weeks35-38weeks39-90weeksormore
3 whenNeworless
4 EXCELLENTsubtractasubtractasubtractasubtracta
5 CONDITIONminimumof1minimumof2minimumof3minimumof
6 weekfromweeksfromweeksfrom4weeks
7 originaloriginaloriginalfromori-
8 termtermtermginalterm
9 GOODsubtractasubtractasubtractasubtracta
10 CONDITIONminimumof3minimumof5minimumof7minimumof
11 weeksfromweeksfromweeksfrom9weeks
12 originaloriginaloriginalfromori-
13 termtermtermginalterm
14 FAIRsubtractasubtractasubtractasubtracta
15 CONDITIONminimumof4minimumof7minimumof10minimumof
16 weeksfromweeksfromweeksfrom13weeks
17 originaloriginaloriginalfromori-
18 termtermtermginalterm
19 POORsubtractasubtractasubtractasubtracta
20 CONDITIONminimumof6minimumof10minimumof15minimumof
21 weeksfromweeksfromweeksfrom20weeks
22 originaloriginaloriginalfromori-
23 termorcashtermorcashtermorcashginalterm
24 salesalesaleorcash
25 sale
26 (c) Immediately below the terming matrix, the following language shall
27 be printed in ten point type.
28 New = Full Term
29 Excellent = In great shape. Refurbished to look like new.
30 Good = In good working order. Refurbished, but imperfections still
31 exist.
32 Fair = Completely operational, but refurbishment has not concealed obvi-
33 ous wear and tear.
34 Poor = Ripped, faded, cracked or broken and refurbishment did not change
35 it.
36 6. The maximum cash price for merchandise on its second or subsequent
37 rental may not exceed the maximum total of payments for that merchandise
38 as permitted under subdivision five of this section divided by 2.25.
39 7. Upon the written request of the attorney general a merchant shall
40 provide copies of the records described in this section.
41 8. If a merchant intentionally discloses a cash price or a total of
42 payments that exceeds the amount permitted by this section, the rental-
43 purchase agreement is void, the consumer shall retain the merchandise
44 without any obligation, and the merchant shall refund to the consumer
45 all amounts paid.
46 § 6. Section 504 of the personal property law is REPEALED and a new
47 section 504 is added to read as follows:
48 § 504. Early purchase option. 1. The consumer has the right to
49 acquire ownership of the merchandise at any time by tendering to the
S. 557--C 9
1 merchant all past due payments and fees and an amount equal to the cash
2 price stated in the rental-purchase agreement multiplied by a fraction
3 that has as its numerator the number of periodic payments remaining
4 under the agreement and that has as its denominator the total number of
5 periodic payments. A consumer must affirmatively elect to exercise an
6 early purchase option. In no event shall the consumer's early purchase
7 option be less than the amount of one periodic payment.
8 2. In a clear and conspicuous manner on the consumer's receipt for
9 every periodic payment, the merchant shall, in connection with a consum-
10 er's rights under this section, provide the consumer with a written
11 statement of:
12 (a) the total amount the consumer would have to pay to acquire owner-
13 ship of the rental merchandise if the consumer makes all regularly sche-
14 duled payments remaining under the rental-purchase agreement; and
15 (b) the total amount the consumer would have to pay to acquire owner-
16 ship of that merchandise pursuant to subdivision one of this section.
17 § 7. The personal property law is amended by adding a new section
18 504-a to read as follows:
19 § 504-a. Interruption or reduction of income in certain instances. 1.
20 If any consumer who has signed a rental-purchase agreement experiences
21 an interruption or reduction of twenty-five percent or more of income
22 due to involuntary job loss, involuntary reduced employment, illness,
23 pregnancy or disability after one-half or more of the total amount of
24 the rental payments necessary to acquire ownership under the agreement
25 has been paid, and such consumer provides to the merchant some evidence
26 of the amount and cause of the interruption or reduction of income, the
27 merchant shall reduce the amount of each rental payment by (a) the
28 percentage of the reduction in the consumer's income or (b) fifty
29 percent, whichever is less, for the period during which the consumer's
30 income is interrupted or reduced.
31 2. If payments are reduced, the total dollar amount of payments neces-
32 sary to acquire ownership shall not be increased, provided, however,
33 that the number of payments necessary to acquire ownership may be
34 increased accordingly and the rights and duties of the merchant and the
35 consumer shall not otherwise be affected.
36 3. When the consumer's income is restored, the merchant may increase
37 the amount of rental payments, but in no event shall rental payments
38 exceed the originally disclosed amount of rental payments.
39 § 8. The personal property law is amended by adding a new section
40 504-b to read as follows:
41 § 504-b. Maintenance of merchandise. 1. The merchant shall maintain
42 the property subject to the rental-purchase agreement in good working
43 order while the agreement is in effect without charging any fee to the
44 consumer in addition to the regularly scheduled rental payments set
45 forth in the rental-purchase agreement.
46 2. By the end of the second business day following the day on which
47 the merchant received notice from the consumer that the property is not
48 operating properly, the merchant shall repair or replace the property
49 without any fee to the consumer in addition to the regularly scheduled
50 rental payments set forth in the rental-purchase agreement.
51 3. If a repair or replacement cannot be immediately effected, the
52 merchant shall temporarily substitute property of comparable quality and
53 condition while repairs are being effected. If repairs cannot be
54 completed to the reasonable satisfaction of the consumer within thirty
55 days after the merchant receives notice from the consumer or within a
S. 557--C 10
1 longer period voluntarily agreed to by the consumer, the merchant shall
2 permanently replace the property.
3 4. All replacement property shall be the same brand, if available, and
4 comparable in quality, age, condition, and warranty coverage to the
5 replaced property. If the same brand is not available, the brand of the
6 replacement property shall be agreeable to the consumer, provided,
7 however that any request by the consumer shall not be unreasonable.
8 5. All of the consumer's and merchant's rights and obligations under
9 the rental-purchase agreement and this title that applied to the proper-
10 ty originally subject to the rental-purchase agreement shall apply to
11 any replacement property.
12 6. The consumer shall not be charged, or held liable for, any pro rata
13 portion of a periodic payment for any period of time greater than one
14 full day and each full day thereafter during which the property that is
15 the subject of the rental-purchase agreement or any property substituted
16 for it pursuant to this section is not in good working order.
17 7. This section shall not apply to repairs or damage for which the
18 consumer is liable under the rental-purchase agreement as permitted by
19 this article.
20 8. A merchant shall not deliver to a consumer any property which the
21 merchant knows or has reason to know is defective.
22 § 9. Subdivision 1 of section 505 of the personal property law, as
23 added by chapter 792 of the laws of 1986, is amended to read as follows:
24 1. An advertisement for a rental-purchase agreement that refers to or
25 states the amount of a payment or the right to acquire ownership of any
26 one particular item under the agreement shall clearly and conspicuously
27 state:
28 (a) that the transaction advertised is a rental-purchase agreement;
29 (b) the total number of payments and the total amount to be paid to
30 acquire ownership, which amount shall be explicitly labeled "total
31 cost"; [and]
32 (c) the circumstances under which the consumer can acquire ownership
33 rights; and
34 (d) whether the advertised terms are for new or used merchandise.
35 § 10. The personal property law is amended by adding a new section 508
36 to read as follows:
37 § 508. Administration by the attorney general. The attorney general
38 may make rules and regulations necessary for the administration of this
39 article; provided, however, that such rules and regulations shall not
40 attempt to regulate or characterize rental-purchase agreements as a
41 security interest, credit sale, retail installment sale, conditional
42 sale or any other form of consumer credit that imputes to a rental-pur-
43 chase agreement the creation of a debt or extension of credit, nor shall
44 such rules and regulations require the disclosure of a percentage rate
45 calculation, including a time-price differential, an annual percentage
46 rate, or an effective annual percentage rate.
47 § 11. This act shall take effect on the one hundred eightieth day
48 after it shall have become a law and shall apply to all agreements
49 entered into or offered on or after such date.
