Rent-to-own furniture stores, once branded as "predatory lenders" by the Department of Defense, are now pledging to hire veterans returning from duty.
On Tuesday, executives from Aaron's and Rent-A-Center, the two largest rent-to-own companies, visited the White House, according to a news release from the Association of Progressive Rental Organizations, a rent-to-own industry group. There, they met with U.S. Navy Capt. Brad Cooper, executive director of Joining Forces, a veteran support program spearheaded by first lady Michelle Obama and Jill Biden that aims to find jobs for Americans returning from war.
"In addition to the patriotic consideration, hiring returning soldiers makes business sense for us," wrote Xavier Dominicis, spokesman for Rent-A-Center, in an email to The Huffington Post. "They're a diverse and qualified pool of candidates benefiting from favorable attributes, a strong work ethic and a willingness to learn."
Soldiers are also attractive customers for Rent-A-Center, which has courted business from military members.
Consumer advocates, however, have long called the industry's solicitation of military members predatory, alleging that rent-to-own stores unfairly target service members for what amount to high-interest, high-fee loan transactions.
Rent-to-own stores let shoppers buy furniture and electronics over time, without requiring credit checks, down payments or even bank accounts. Shoppers can purchase items by paying "rent" on them for a set period of time; they can also decide to stop paying and return the items without penalty. The catch is that shoppers who do want to buy the items often end up paying double or triple the retail value of their purchase, at effective interest rates of more than 100 percent.
In 2003, the National Consumer Law Center, a nonprofit that advocates for low-income consumers, published a report accusing rent-to-own stores of targeting service members and their families living on military bases, who are often financially inexperienced and can have trouble obtaining other forms of credit. In 2006, the Defense Department published its own report decrying rent-to-own programs as predatory -- along with payday lending, military installment lending and tax refund loans.
Ultimately, the Defense Department did not include rent-to-own stores in its 2007 ruling regulating the terms of credit products extended to service members. And because a rent-to-own agreement is not technically defined as a credit loan under the Truth in Lending Act, a 1968 consumer protection law, legislators have a difficult time setting rules for the rent-to-own industry in the same way they have for other lenders.
In recent years, the industry has worked hard to build a positive relationship with the military. Beginning in 2009, according to Dominicis, Rent-A-Center has increased its support of military programs, furnishing barracks at Fort Knox and other Army garrisons as well as donating money to many military-related nonprofits such as Helping Our Heroes and Thanks USA. Though neither Rent-A-Center nor Aaron's has an official veterans hiring program, executives from both companies are now voicing the desire to establish them.
While the uptick in support for the military did come after the Defense Department report, the two aren't causally related, according to Dominicis. "Our CEO's brother was a Gulf War veteran who suffered from post-traumatic stress disorder," he said. "It's his service to our country, and that of others like him, that spurred our CEO's resolve to support our nation's servicemen and women."
"If our support of our soldiers becomes the proverbial 'damned if you do, damned if you don't,' we'll take the former over the latter," Dominicis added.
Meanwhile, consumer advocates locked in a legislative battle with rent-to-own aren't optimistic about their chances of winning against the well-funded and well-connected industry. After visiting the White House on Tuesday, rent-to-own executives spent the next two days meeting with members of Congress and lobbying for the proposed Consumer Rental Purchase Agreement Act. The bill, which currently has 104 co-sponsors in the House, would explicitly define rent-to-own transactions as leases and not credit loans, protecting the industry from future regulation at the state level.