Quebec probing rent-to-own industry
Lower-income consumers targeted and exploited, expert says
The province's consumer watchdog is working on beefing up legislation to protect Quebecers from companies in the rent-to-own industry, CBC Montreal Investigates has learned.
“We’re looking at different types of contracts as they’re not clear,” said Office de la protection du consommateur spokesman Jean-Jacques Préaux.
“It’s always a little bit shades of grey. It has to be white, it has to be black, not grey, so that the consumer knows what he’s really getting into.”
Potential provisions would come in the form of an update to the existing Consumer Protection Act, though there is no timeline for amendments yet.
Canadians shell out $260 million every year for rent-to-own products, often paying exorbitant prices that would not be allowed in some U.S. states.
A CBC News investigation has found the rent-to-own industry targets cash-strapped Canadians and engages in opaque sales practices, then aggressively pursues customers who miss payments.
It’s been six years since Option consommateurs, a local consumer protection group, raised red flags about some rent-to-own company practices to both Ottawa and provincial jurisdictions, but little has since been done to regulate the industry.
It's always a little bit shades of grey. It has to be white, it has to be black, not grey, so that the consumer knows what he's getting into.- Jean-Jacques Préaux, Office de la protection du consommateur
Consumers such as Paula Dnistrianskyj of Ste-Anne-des-Lacs, Que., spend hundreds of dollars on products that are typically less expensive to buy outright.
Dnistrianskyj signed up for a refrigerator with one such company, easyhome, in 2011.
“It’s a basic, very standard, typical fridge, with no ice machine, no water machine, no below-drawer freezer,” she said.
She’s signed a three-year contract, paying $21 a week. The appliance will end up costing her about $3,300.
“It’s worth $799, I’ve seen in a few different stores the same model,” she said.
It is much the same story for her flat-screen TV set, a $22 per week investment over the course of two years, for a total of $2,112.
“It’s on sale right now for $599,” she said.
Dnistrianskyj has a bad credit history, and told CBC she was fully aware of the inflated price tags on her bills, but she said other stores simply would not take her on as a customer.
“We sort of got hooked,” she said, because it was so easy. “Who cares if my credit is good or not because they give it to you anyway,” she said.
Governments warned long ago
In 2008, Option consommateurs published a report on the rent-to-own industry after interviewing 40 customers.
“Most of the people who go there, they sort of feel like they are financially excluded. It’s mostly people who have lower income, sometimes who have lower financial literacy,” said Sylvie De Bellefeuille, a lawyer at Option consommateurs.
The Option consommateurs report called on Ottawa to provide better educational tools for Canadian consumers.
It requested better funding for consumer advocacy groups in order to let them do a part of that work.
It also called on provincial governments to write legislation which would force the rent-to-own industry to be more transparent with its contracts.
Easyhome’s head office sent a statement to the CBC saying customers “always have the option to purchase their product outright within the first 90 days and save up to 55 per cent of the total lease rate.”
The company also said its pricing included benefits such as delivery, set-up and upgrades.
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