The legislation introduces new requirements for merchants, mandating that they disclose the cash price of the merchandise, the amount of periodic payments, and the total number of payments required to acquire ownership under the rental-purchase agreement. This aims to protect consumers by eliminating hidden fees and making the financial obligations clear. The act is set to take effect on September 1, 2017, and will only apply to agreements entered into on or after that date, thus ensuring that existing agreements are treated under the law at the time they were signed.
Summary
Senate Bill 938 aims to regulate rental-purchase agreements in Texas, specifically targeting the transparency and disclosure obligations of merchants who engage in such transactions. The bill defines a rental-purchase agreement as a contract allowing consumers to use personal property for an initial period, generally four months or less, with an option to purchase the property. It amends the Business & Commerce Code to enforce certain disclosures related to pricing and payment terms prior to the execution of these agreements, ensuring consumers are well-informed before making financial commitments.
Sentiment
The sentiment around SB938 is generally positive among consumer advocates who view the bill as a necessary step to enhance consumer protection in rental transactions. However, there is some concern among merchants about the potential burden these additional disclosure requirements may impose on business operations, particularly for smaller companies that may struggle with compliance costs. The manufacturer and service sectors may also express reservations regarding the possible reduction in rental activity as consumers become more cautious with their purchasing decisions.
Contention
Key points of contention involve the balance between consumer protection and the operational freedom of businesses. Some merchants argue that the additional disclosures may dissuade consumers from engaging in rental agreements due to the increased scrutiny and disclosure requirements. They fear this could lead to a decrease in rental-purchase transactions, impacting their revenue. Proponents of the bill counter that the enhanced transparency will ultimately promote fairer practices within the industry, fostering trust between consumers and merchants.
Relating to amendments to the Uniform Commercial Code, including amendments concerning certain intangible assets and the perfection of security interests in those assets.
Relating to amendments to the Uniform Commercial Code, including amendments concerning certain intangible assets and the perfection of security interests in those assets.
Relating to prohibiting a person or entity from surveilling, reporting, or tracking the purchase of firearms, ammunition, and accessories through the use of certain merchant category codes; imposing a civil penalty.