Rent-To-Own: Exploiting Baltimore’s Poor

April 2012 / Abell Reports / Community Development

Consumers who buy from rent-to-own stores pay up to 3.5 times more than at traditional retail stores. This report highlights how the city’s low-income population is victimized by the industry.

The Maryland Consumer Rights Coalition (MCRC) researched Maryland’s $67 million Rent-to-Own (RTO) industry, investigating the structure of the industry, mapping the location of stores throughout the state,
and comparing the cost of purchasing merchandise at RTO stores to the cost at traditional retail stores. The MCRC conducted qualitative and quantitative analyses of the RTO industry in Maryland. Research included a literature review, stakeholder interviews with RTO customers and former sales associates, an analysis of complaints to the attorney general’s office, and a legal analysis comparing Maryland law to that of other states.

To investigate the prices offered by RTO stores in Maryland, the MCRC surveyed 15 Rent-to-Own stores in Baltimore City, Baltimore County, and Prince George’s County between June 2011 and August 2011. The survey compared the cost of 42-inch televisions and 18-cubic-foot refrigerators at RTO stores to the prices at four local chain retail stores (Lowe’s, Target, Home Depot, and Best Buy) as well as to other nontraditional
retailers including Craigslist, appliance outlets, and second-hand stores. Annual percentage rates on RTO contracts were also calculated.

If an identical model could not be identified in each RTO store, then prices for the closest available substitute were cited and then compared to the cost for the same model (or a very similar one) at local retail stores and second-hand stores, and on Craigslist.