by Donald Eng
Connecticut is part of a $183.5 million settlement with rent-to-own finance company Acima Digital, LLC, and its parent company, Acima Holdings, LLC, according to Attorney General William Tong.
Tong on Thursday said the agreement settles allegations that the company misled consumers about its agreements. The states also alleged that Acima deceptively marked up prices.
“Acima lured and locked consumers into overpriced rent-to-own deals by obscuring key information, including the length of these agreements, the total cost, and options for termination. They took advantage of families struggling to afford basic needs, and we are making them pay. Our settlement sends millions of dollars back to consumers and forces strict reforms to ensure fair and honest practices going forward,” Tong said.
Who gets the money
According to Tong’s office, the settlement includes $43 million in consumer restitution and $130 million in lease balance reductions. Acima will also pay the states $10.5 million. Connecticut consumers will receive just over $2.44 million in lease forgiveness. The state will also get just under $250,000.
Eligible consumers do not need to take any action to receive restitution or lease forgiveness, Tong said. The settlement administrator, Rust Consulting, will contact consumers eligible to receive restitution. Acima will contact consumers who are eligible to receive lease forgiveness.
Acima partners with retailers to offer financing to consumers via rental-purchase agreements. The settlement resolves allegations that Acima’s advertising misled consumers about the nature and cost of its rental-purchase agreements. The states also alleged that Acima deceptively marked up the cash price of rented merchandise. Other alleged deceptive practices involved servicing the agreements, collecting debt, and reporting to credit agencies.
The company’s media representative did not immediately respond to a request for comment Thursday afternoon.
How Acima’s rent-to-own deals worked
The 43-state coalition alleged that Acima marketed its rental-purchase agreements as 90-day payoff programs. It did not disclose that consumers were automatically defaulted into the maximum 12-month term, according to the states. Under that term, consumers could pay about double the cash price advertised by Acima’s retail partner. Acima also advertised its rental-purchase product using terms like “credit,” the group argued. According to the states, that wording often misled consumers into believing they were obtaining traditional financing.
Acima’s process for electronically executing rental-purchase agreements also obscured the terms of the transaction, further compounding consumer confusion. Additionally, Acima obstructed consumers’ ability to terminate their rental-purchase agreements without penalty by returning their merchandise to Acima.
What Acima agreed to
Under the settlement, Tong said Acima has agreed to injunctive terms to address these practices, including to:
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