Retail Observer

RETAILOBSERVER.COM MAY 2019 50 T he Rental Industry is preparing for APRO's legislative conference in Washington. I'll attend for the second time, and for the second time the RTO group won't be pushing or fighting for any legislation "for" or "against" RTO. Yet our presence in Washington seems more important than ever, thanks to the confusion in the retail and RTO industries regarding third-party financing. I believe the distinction between contracts is simple. But it's a distinction that needs to be impressed on our legislators in DC, or RTO will most likely take a bad rap. By the time this article appears, the meetings will be over, but the need to continue to meet with legislators will be just as great next year. Before laying out my views on the distinctions between the two contracts, let's review the importance of legislators and consumers knowing the difference between the two transactions, and the impact they will have on the RTO industry. Third-party financing in retail stores has taken a big toll on the RTO industry. A consumer who's a prime candidate for RTO, or who's a current RTO customer, will shop just like everyone else. The consumer will have seen the retail ads – "No Credit Needed!" "Why Wait? Take It Home Tonight!" The ads are not untrue, but the consumer, especially the current RTO customer, can easily be misled. The ads aren't lying when they say "No Credit Needed!" But what isn't mentioned is the two ingredients of an RTO contract that can surprise consumers – and the impact that those customers can have, as constituents of our legislators. A retail store's third-party contract will not point out that the contract will remain in force if the consumer loses their job in two months and wants to return the product, and that the consumer will still be liable for the payments. Though fortunately that's not the case for our RTO members. Second, If the product is beyond the traditional 12-month warranty period and the consumer has a service issue, the consumer must pay for the service. Again, not so through our RTO members. The enticement is strong for consumers to buy at stores with TV ads touting how easy it is to get the products they've always dreamed of. But, of course, as always the devil is in the details. And how many consumers actually take the time to read the "details"? The RTO industry is under attack, and the opposition is very good at marketing. Consumers will revolt, and when they do, they'll describe their purchases in terms that will persuade the legislators that they need to put controls in place to protect the consumer from being taken advantage of. And guess who'll take the brunt of the legislation? You guessed right – RTO. This is why we feel it's very important to keep going to DC to explain what's actually happening in the RTO/retail sales cycle. Without educating our legislators, who can blame them for listening to their constituents' stories and trying to help? We want them to help. But we want their help to be focused in the right direction. I will continue to be in DC explaining the scenario to whoever will listen. I believe there were over 100 meetings with legislators during this round. It's good to keep in mind that when the RTO transaction is explained correctly, clearly, and with fairness to the consumer, it will be recognized that a certain percentage of buyers will always need and benefit from it. Third-party financing is getting bigger and bigger, so if I didn't see you in DC this year, save the date and stay tuned for next year's APRO legislative conference. BE CRYSTAL CLEAR WHEN OFFERING FINANCING AS A MARKETING TOOL RO Bruce Manning Rent-to-Own Trends Bruce Manning — Director, RentDirect

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