Research for Consumers Council of Canada finds rent-to-own transactions are an expensive way for consumers to acquire merchandise, with periodic payments typically totalling 2 to 3.5 times the price of the same goods at conventional retailers.
Rent-to-own transactions are an expensive way for consumers to acquire merchandise, with periodic payments typically totalling 2 to 3.5 times the price of the same goods at conventional retailers, a research study released by the Consumers Council of Canada finds.
Consumers pay 40 to 100 per cent more through periodic payments at a rent-to-own store than if they were able to purchase the item from that store at the outset. In addition, rent-to-own "buy it today" prices are typically higher than other retailers, from 20 per cent higher for refrigerators to 150 per cent higher for laptop computers, the study found. The study was based on store audits conducted between late November and mid-December 2015 at 63 rent-to-own stores across Canada.
The audits identified a number of practices that risk violation of existing consumer protection laws and others that are allowed, but place high risk on consumers. While provincial consumer protection law (outside Quebec) relies on sections of the Criminal Code of Canada to protect against unreasonably high lending rates, it is unclear these limits protect rent-to-own consumers.
Researchers and auditors entered stores posing as potential customers and recorded the prices, purchase options, service components and sales claims made. Each audit included more than 30 different questions. Rental and purchase prices were compared against prices for identical merchandise at other retailers.
Other findings arising from the research:
Canadian consumers have few of the protections provided to similar consumers in other countries. Forty-seven U.S. states have laws to specifically address rent-to-own transactions. U.K. regulators are conducting thorough reviews of firms’ practices and fining those that violate existing laws. Australian regulators are reviewing legislation and also fining violators. In Canada, many of the best existing consumer protections are measures by vendors that mirror U.S. requirements.
It is difficult for in-store consumers to view contract terms and conditions until they are presented for endorsement. As a result, many of the legislated protections – which require disclosure in the agreement – are less effective than they could be.
Canada’s largest firm claims in-store and on its website to provide “free delivery” when delivery is a component of a separately charged and disclosed fee. Similarly, certain benefits promoted as features available through the purchase of optional services are actually available to all consumers.
There are many common industry practices which disadvantage consumers. Firms are not required to disclose a “buy it today” price. There is no requirement that weekly and monthly rental prices be equivalent, and vendors have considerable flexibility on lease durations and whether to allow consumers to maintain purchase rights after a late payment.
"The rent-to-own industry is designed to serve consumers without savings and access to conventional credit. They are already disadvantaged compared to most consumers," said Consumers Council of Canada President Don Mercer. "The higher costs of using these merchants can make it more difficult for these consumers to pay down debt, improve their credit rating or accumulate savings. It’s far from clear that consumers are adequately protected through current civil and criminal law and its enforcement."
Consumers should review any agreement,ask questions and seek qualified independent advice if necessary, so they completely understand contracts they are offered, and the implications for their financial well-being, before agreeing to them. Consumers should also report any questionable practices they may experience to their province’s consumer protection office. For a list of those offices go to: http://www.consumerhandbook.ca/en/contacts/provincial-territorial-offices
The Council’s report includes a number of recommendations to improve consumer protection in the industry.
The Consumers Council of Canada has received funding from Innovation, Science and Economic Development’s (ISED) Contributions Program for Non-profit Consumer and Voluntary Organizations. The views expressed in the Council’s report are not necessarily those of ISED or the Government of Canada.
A board of directors and executive officers have been chosen to lead the Consumers Council of Canada in 2016-17. Don Mercer has returned to the board after a two-year hiatus from the role and has been named President. Three new board members were named.
A board of directors and executive officers have been chosen to lead the Consumers Council of Canada in 2016-17. Don Mercer has returned to the board after a two-year hiatus from the role and has been named President. He replaces Aubrey LeBlanc, who remains as a member of the Council's board of directors.
Three new directors were named at the Council's annual general meeting to the board of directors:
Julie Cassie, a consultant and a researcher-professor of family studies at Université de Moncton with a doctorate in francophone minority education from Université de Moncton.
Sally Southey, president of Southey Consultants and formerly Director General Strategic Communications and Parliamentary Affairs, Canadian Radio-television and Telecommunications Commission; Vice President, External Relations and Communications, Natural Sciences and Engineering Research Council (NSERC); Minister-Counsellor Public Affairs, Canadian Embassy, Washington, D.C.; Director of Communications for different sectors for Industry Canada, Senior Policy Analyst, Communications, Privy Council Office; and Chief Media Relations, Canadian Human Rights Commission.
Christine Simpson, a consultant with extensive knowledge of consumer product safety issues developed over many years of public service as a Consumer Product Safety Officer at Health Canada
The Council's board of directors and general membership extended thanks and appreciation to former Council secretary Agni Shah and members Les Jacobs and Elizabeth Nielsen for their service to the Council on its board of directors.
Dennis Hogarth was reappointed as Vice President, Howard Deane as Treasurer and Simon Wong was newly named as the Council's secretary.
The rest of the members of the board, who are continuing their service for 2016-17, are:
Consumer group Option consommateurs is releasing a video series on YouTube called "A Moment of Privacy".
“The Connected Car", features Philippa Lawson, a privacy lawyer. This video is based on a research published by the BC Freedom of Information and Privacy Association (FIPA).
"Fitness Trackers" features Andrew Hilts, from Open Effect.
"Young Canadians and Privacy" features Matthew Johnson, from MediaSmarts
This four-video series seeks to popularize results from some of the privacy research projects made possible by the Contributions Program from the Office of the Privacy Commissioner of Canada. The video gives the opportunity to researchers that published a study on privacy in the last few years, to explain, in simple terms, some of the results of their study.
Still to come, OC will offer a video on:
The protection of Canadian data in the cloud (with Heidi Bohaker, associate professor at the University of Toronto)
The Consumers Council of Canada expresses its condolences upon death of its former board member, Cindy Nicholas, on May 19, 2016.
Ms. Nicholas, who served on the Council’s board in 2009-2010, was perhaps best known to Canadians for her swimming accomplishments, including becoming the first woman to swim the English Channel both ways, non-stop.
During her life she served as a Member of Provincial Parliament in Ontario, was a practicing lawyer, and a member of Canada's Sports Hall of Fame. And she was an advocate for the rights of Canada’s consumers.
“Cindy Nicholas brought calm integrity to the Council’s board of directors,” said Consumers Council of Canada President Aubrey LeBlanc. “She expressed a concern for the welfare of families and the rights of ordinary people to be justly treated in daily life.
“The Consumers Council of Canada greatly respected and appreciated her involvement in its governance and on behalf of Canadian consumers.”
New research on ways that Canadians try to resolve their consumer problems. It examines patterns in the decision to access the formal legal system to resolve one or more consumer problems, based on ethnicity, level of education and income.
As a part of the Canadian Forum on Civil Justice’s Cost of Justice project, Dr. Les Jacobs, a director of the Consumers Council of Canada, and his research associates David Kryszajtys and Matthew McManus examined the ways that Canadians try to resolve their consumer problems. In particular, their research examined patterns in the decision to access the formal legal system to resolve one or more consumer problems, based on ethnicity, level of education and income. The data used for this study comes from the CFCJ’s nationwide Everyday Legal Problems and The Cost of Justice in Canada survey.
The Consumers Council of Canada actively seeks to expand the network and mobilization of knowledge created by public policy oriented consumer interest researchers. Researchers who want to expand awareness of their work and the PPOCIR discipline can become engaged with the Council in a variety of ways. Learn more by clicking here.
In addition, the Council is a participating organization in the Canadian Partnership for Public Policy-Oriented Consumer Interest Research. The PPOCIR initiative is supported by the Social Sciences and Humanities Research Council through a Partnership Development Grant. Learn more by clicking here.