Pay Your Dues or You Could Land in Jail: How Rent-to-Own Customers Are Facing Jail-Time
Rent-to-own stores provide millions of Americans the opportunity to have possession of items they could not otherwise afford. By making steady payments, customers struggling with limited income or low credit can have their dream furniture or other merchandise within their own homes—at least that’s what they were told. Now, following a month-long investigation by the Texas Tribune and NerdWallet, Texas lawmakers are taking a hard look at rent-to-own stores and more stories continue to emerge of these businesses filing criminal charges against their customers for theft-of-service.
When most companies want to collect unpaid debts, they generally seek civil remedies to resolve the issue. In contrast, rent-to-own businesses, like Rent-A-Center, are taking advantage of a Texas law that not only allows them to avoid the hassle of taking customers to court, but also allows them to treat the police as ‘debt collectors.’
Options: Criminal versus Civil Remedies
The investigation discovered that at least six rent-to-own companies in McLennan, Texas, pressed charges against at least 400 customers within a three-and-a-half year span. Moreover, at least 84 percent of the theft-of-service prosecutions in this county between 2015-2018 were pursued by rent-to-own stores. This not only inundated prosecutors, police departments, and jails, but it also wasted taxpayer dollars, disrupted families, and caused struggling customers to suffer more. There are many options that rent-to-own stores can pursue against consumers who do not fulfill their end of the bargain; using the criminal justice system should not be one of them.
For example, many companies seek civil remedies through the court system–or out of it if they can via settlement or return of the merchandise. Other options for debt collection include imposing an interest on overdue payments, hiring a collection agency, selling a debt to a collection agency, collecting money judgments, or imposing mechanics’ liens. While this list does not include all of the available options for collecting debts, it proves that companies have an array of options available that have nothing to do with the criminal justice system. In fact, these contractual disputes are one of the many reasons that the civil system was created.
Further, although seeking these civil routes in order to collect what consumers owe may take more time and money, this is the cost of operating this type of business. Most businesses today have a form of protection against consumer fraud and theft in order to prevent loss, such as fully paid legal staff and loss prevention agents. These are more viable options for companies because most businesses are not permitted to use the legal system in order to avoid seeking civil remedies. Since no other companies are permitted to use the legal system for profit, rent-to-own stores should not have the “right” to use the legal system for profit either.
The Impact and the Consequences
Rent-to-Own agreements boil down to simple contract disputes, and contract disputes do not belong in the criminal justice system. Prisons throughout the United States are already overcrowded and often ill-equipped to handle their still burgeoning population of prisoners. According to the Bureau of Justice Statistics, the United States prison population currently stands at about 2.2 million prisoners, most of whom are in state and local jails and prisons. This population size equates to an occupancy level nationwide at 103.9 percent. Further, Texas has spearheaded criminal justice reform in recent years, resulting in the closing of eight prisons throughout the state. Between an already overcrowded prison system and the criminal justice reform efforts that Texas continues to endure, there is no good or reasonable answer for why renters who fail to make their payments should end up in criminal court or jail. Moreover, as the Texas Tribune article highlights, if a warrant has already been issued, there is no turning back even if the company decides to ‘drop the charges.’
Debtors’ prisons–the arrest and jailing of indigent people who failed to pay their legal fees–were formally abolished by the United States nearly two centuries ago. Nevertheless, the rise of modern-day debtors’ prisons continues. Although debtors’ prisons have been for those unable to pay legal fees and fines, the idea of jailing individuals for missing payments as part of a rent-to-own contract resonates with the current issue. If the United States said that imprisoning individuals for failure to pay court-imposed fines violates the Fourteenth Amendment, why should renters who failed to make payments for merchandise end up in jail with a criminal record?
Therefore, while most companies deal with debt collectors, these rent-to-own companies may be destroying people’s lives by filing criminal charges. Texas lawmakers have already taken a big step in the right direction by discussing this issue, and, hopefully, they will continue to work towards fixing this issue so that everyday consumers do not wind up in jail.
By: Shelby Sterling, Legal Policy Intern