LD 1156
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Page 1 of 2 An Act to Update the Maine Consumer Credit Code Regarding Rental-purchase Agree... LD 1156 Title Page
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LR 1711
Item 1

 
The cash price for used property must be reduced to reflect the
age and condition of the property and may not exceed the cash
price of the new property when new.

 
Sec. 3. 9-A MRSA §11-105, sub-§§5-A, 5-B, 6-A to 6-C, 8 and 9 are enacted to
read:

 
5-A.__"Debt" means an obligation or alleged obligation of a
consumer to surrender or return rental property or pay money
arising out of a rental-purchase agreement.

 
5-B.__"Location information" means a consumer's place of
residence and the consumer's telephone numbers at that location
and at the consumer's place of employment.

 
6-A.__"Periodic payment" means the total payment the consumer
will make for a specific rental period, including the rental
payment, any administrative fees or delivery charges, taxes and
fees or charges for optional products and services.

 
6-B.__"Rental payment" means a payment to be made by a
consumer for the right of possession and use of rental property
for a specific rental period, but does not include taxes imposed
on such payment.

 
6-C. "Rental period" means a week, month or other specific
period of time during which the consumer has a right to possess
and use the property after making the rental payment and
applicable tax payment for such period.

 
8.__"Rental-purchase cost" means the total of charges payable
by the consumer and imposed by the merchant as a condition of
entering into and acquiring ownership of property under a rental-
purchase agreement.__"Rental-purchase cost" includes rental
payments and any initial administrative fees, but does not
include taxes, delivery charges, late charges, payment pick-up
fees or any optional charges or fees that meet the requirements
of section 11-111, subsection 4.

 
9.__"Total of payments to acquire ownership" means the total
of all charges payable by the consumer to acquire ownership of
the rental property.__"Total of payments to acquire ownership"
includes the rental-purchase cost and taxes, but does not include
taxes, delivery charges, late charges, payment pick-up fees or
any optional charges or fees that meet the requirements of
section 11-111, subsection 4.

 
Sec. 4. 9-A MRSA §11-107, sub-§3, as enacted by PL 1991, c. 787, is
amended to read:

 
3. The disclosure must be made clearly and conspicuously, in
a clear and coherent manner, in writing, in type size not less
than 8-point standard type and appropriately divided and
captioned by various sections. A copy of the rental-purchase
agreement must be provided to the consumer. If more than one
consumer executes a rental-purchase agreement, the merchant shall
provide a copy of the agreement to each consumer. The disclosure
required under section 11-108 must be made on the face of the
contract above the line for the consumer's signature. If
disclosures are made on more than one page, the contract complies
with this subsection if the consumer signs each page of the
contract.

 
Sec. 5. 9-A MRSA §11-107, sub-§5 is enacted to read:

 
5.__A merchant may disclose information that is not required
by this Article if the additional information is not stated, used
or placed in a manner that contradicts, obscures or distracts
attention from the required information.

 
Sec. 6. 9-A MRSA §11-108, sub-§1, ¶¶A and B, as enacted by PL 1991, c.
787, are repealed.

 
Sec. 7. 9-A MRSA §11-108, sub-§1, ¶C, as enacted by PL 1991, c. 787, is
amended to read:

 
C. A statement that the consumer is responsible for the
fair market value, remaining rent, early purchase option
amount or cost of repair of the property, whichever is
least, if, and as of the time, it is lost, stolen, damaged
or destroyed;

 
Sec. 8. 9-A MRSA §11-108, sub-§1, ¶F, as enacted by PL 1991, c. 787, is
repealed.

 
Sec. 9. 9-A MRSA §11-108, sub-§1, ¶¶G and L, as enacted by PL 1991, c.
787, are amended to read:

 
G. A statement that the total amount of payments does not
include other charges the consumer may incur, such as late-
payment and payment pick-up fees. Late-payment and payment
pick-up fees must be separately disclosed in the agreement;

 
L. A statement that the consumer may terminate the
agreement without penalty by voluntarily surrendering or
returning the property to the merchant in good repair upon
on or before the expiration of any rental term period along
with any past due rental payments;

 
Sec. 10. 9-A MRSA §11-108, sub-§§2 and 3 are enacted to read:

 
2.__To the extent applicable, the following information must
be disclosed and grouped together in each rental-purchase
agreement:

 
A.__The amount of the payment required at or before
consummation of the agreement or delivery of the property,
whichever is later, using the term "initial periodic
payment."__The merchant shall itemize each component of the
initial periodic payment by type and amount, including any
initial administrative fee, delivery charge, rental payment,
taxes and fees or charges for optional products or services;

 
B. The amount of the regular periodic payment.__The merchant
shall itemize each component of the regular periodic payment
by type and amount, including any initial administrative
fee, delivery charge, rental payment, taxes and fees or
charges for optional products or services.__If the final
periodic payment is less than or equal to the regular
periodic payment, the components of the final periodic
payment need not be itemized;

 
C.__The rental purchase cost and a brief description of the
total of the initial administrative fee and all rental
payments necessary to acquire ownership.__If a rental-
purchase agreement involves the rental of 2 or more items,
the merchant may disclose the aggregate rental-purchase cost
for all items;

 
D.__The total of payments and a brief description of the
total amount the consumer will have paid, including the
rental-purchase cost and taxes, if the consumer acquires
ownership of the property by making all scheduled payments,
but not including late charges or payment pick-up fees the
consumer may incur or charges for optional products or
services the consumer may elect to purchase;

 
E.__A statement in substantially the following form in no
less than 8-point boldface type:__"YOU WILL BE RENTING THE
PROPERTY. YOU WILL NOT ACQUIRE EQUITY OR OWNERSHIP RIGHTS IN
THE PROPERTY UNLESS YOU MAKE ALL PAYMENTS NECESSARY TO
ACQUIRE OWNERSHIP";

 
F.__The following statement:__"Other important terms.__See
your rental-purchase agreement for additional important
information on termination, purchase option, reinstatement
rights, warranties, maintenance responsibilities, late
charges, payment pick-up fees and your liability for loss,
theft or destruction of the property"; and

 
G.__The payment schedule and a brief description of the
number, amount and due dates or periods of payments
scheduled under the agreement.__A merchant may also disclose
alternative periodic payments and payment schedules.

 
3.__A merchant is deemed to comply with the disclosure
provisions of subsection 2 with respect to other than the
sufficiency or accuracy of the disclosures provided by the
merchant if the merchant uses a model form adopted by the
Department of Professional and Financial Regulation, Office of
Consumer Credit Regulation through rulemaking.__Rules adopted
pursuant to this subsection are routine technical rules as
defined in Title 5, chapter 375, subchapter II-A.__Use of such a
model form is optional.

 
Sec. 11. 9-A MRSA §11-109, sub-§12, as enacted by PL 1991, c. 787, is
amended to read:

 
12. An offer of A provision requiring the consumer to
purchase insurance from the merchant to the consumer.

 
Sec. 12. 9-A MRSA §11-111, as enacted by PL 1991, c. 787, is amended
to read:

 
§11-111. Allowable charges

 
In addition to rental payments, a merchant may contract for
and receive the following charges or fees.

 
1. An initial administrative fee not to exceed $15 $22.50 may
be assessed only once per consumer regardless of the number of
rental-purchase agreements entered into by the consumer and but
the fee must be refunded to the consumer if the rental agreement
is not consummated. If a consumer enters into more than one
rental-purchase agreement with a merchant on the same day, only
one initial administrative fee may be assessed.

 
2. An optional delivery charge may not exceed $20 $30 for 3
or fewer items actually delivered or $40 $60 for 4 or more items
actually delivered.

 
3. An optional payment pick-up fee may not exceed $5 $7.50
and may be assessed only once per payment.

 
4. A liability damage waiver fee may be contracted for and
received pursuant to section 11-115.

 
Sec. 13. 9-A MRSA §11-113, as enacted by PL 1991, c. 787, is amended
to read:

 
§11-113. Reinstatement

 
1. A consumer who fails to make a timely rental payment but
has returned or surrendered the merchandise, made arrangements
for its return or surrendered the property upon the rental
property to the merchant within 7 days after missing a payment or
within 2 days of the merchant's request, whichever comes later,
may reinstate the agreement without losing any rights or options
that exist under the agreement by payment of:

 
A. All past due rental charges; and

 
B. Other charges expressly provided in this Article, except
any initial administrative fee.

 
2. Whenever a consumer has paid less than 1/3 of the total of
payments necessary to acquire ownership and is in default or the
property has been returned other than through order of the court,
the consumer may reinstate the agreement during a period of not
less than 45 days after the date of the default or the return of
the property.

 
3. Whenever a consumer has paid more than 1/3 but less than
2/3 of the total of payments necessary to acquire ownership and
is in default or the property has been returned other than
through order of the court, the consumer may reinstate the
agreement during a period of not less than 90 days after the date
of the default or the return of the property.

 
4. Whenever a consumer has paid more than 2/3 of the total of
payments necessary to acquire ownership and is in default or the
property has been returned other than through order of the court,
the consumer A consumer who has returned or surrendered the
rental property within the reinstatement period set forth in
subsection 1 may reinstate the agreement during a period of not
less than 180 days after the date of the default or the return of
the property missed payment.

 
5. Nothing in this section prevents a merchant from
attempting to repossess property during the reinstatement period,
but such a repossession does not affect the consumer's right to
reinstate.

 
6. Upon reinstatement, the merchant shall provide the
consumer with the same property or substitute property of
comparable quality and condition.

 
Sec. 14. 9-A MRSA §11-115, first ¶, as enacted by PL 1991, c. 787, is
amended to read:

 
In addition to the other charges permitted by this Article,
the parties may contract for a liability damage waiver. The fee
for the liability damage waiver may not exceed the greater of 5%
of any periodic rental payment due or $2 in the case of any
rental-purchase agreement with weekly or biweekly renewal dates
periods more frequent than monthly or the greater of 5% of any
periodic rental payment due or $5 $7.50 in the case of any
rental-purchase agreement with monthly renewal dates. The
selling or offering for sale of a liability damage waiver
pursuant to this Article is subject to the following prohibitions
and requirements.

 
Sec. 15. 9-A MRSA §11-115, sub-§3, as enacted by PL 1991, c. 787, is
amended to read:

 
3. The liability damage waiver agreement must include a
statement of the total charge for the liability damage waiver and
must display in 8-point boldface type the following notice or a
notice in a substantially similar form:

 
NOTICE: THIS CONTRACT OFFERS, FOR AN ADDITIONAL CHARGE, A
LIABILITY DAMAGE WAIVER TO COVER YOUR RESPONSIBILITY FOR DAMAGE
TO THE PROPERTY. BEFORE DECIDING WHETHER TO PURCHASE THE
LIABILITY DAMAGE WAIVER, YOU MAY WISH TO DETERMINE WHETHER YOUR
HOMEOWNERS OR CASUALTY INSURANCE AFFORDS YOU COVERAGE FOR DAMAGE
TO THE RENTAL PROPERTY AND THE AMOUNT OF THE DEDUCTIBLE UNDER
YOUR OWN INSURANCE COVERAGE. THE PURCHASE OF THIS LIABILITY
DAMAGE WAIVER IS NOT MANDATORY AND MAY BE DECLINED.

 
Sec. 16. 9-A MRSA §11-115, sub-§4 is enacted to read:

 
4.__A liability damage waiver may not be a factor in the
approval by the merchant of the rental-purchase transaction and
the contract may take effect only after the consumer has signed
or initialed an affirmative request to purchase the liability
damage waiver after written disclosure of the cost of the
liability damage waiver.

 
Sec. 17. 9-A MRSA §11-118, as enacted by PL 1991, c. 787, is amended
to read:

 
§11-118. Advertising and point-of-sale disclosure

 
1. An advertisement for a rental-purchase agreement that
refers to or states the dollar amount of any payment for a
specific item must state clearly and conspicuously:

 
A. That the transaction advertised is a rental-purchase
agreement;

 
B. The total amount of payments, including any initial fee,
necessary to acquire ownership rental-purchase cost; and

 
C. That the consumer does not acquire ownership rights if
until the total amount of payments necessary to acquire
ownership is not paid.

 
2. If For any item of property is displayed or offered for
rent with a point-of-sale rental-purchase, the merchant shall
display a point-of-rental placard. that refers to or states the
amount of any weekly or monthly payment, the point-of-sale The
point-of-rental placard must state, in numerals and lettering at
least as prominent as the payment price, the following:

 
A. The number of weekly or monthly rental payments necessary
to acquire ownership of the item; and

 
B. The total amount of payments necessary to acquire
ownership rental-purchase cost of the item.

 
3. An owner or the personnel of a medium in which an
advertisement appears or through which an advertisement is
disseminated is not liable under this section.

 
4.__A merchant may make the disclosures required by subsection
2 in the form of a list or catalog that is readily available to
the consumer if the property is not displayed in the merchant's
showroom or if displaying a point-of-rental placard would be
impractical due to the size of the property.

 
This section does not apply to an advertisement that does not
refer to or state the amount of any payment.

 
Sec. 18. 9-A MRSA §11-119, as enacted by PL 1991, c. 787, is
repealed and the following enacted in its place:

 
§11-119.__Collection activity

 
The following provisions govern the debt collection practices
of merchants under this Article.

 
1.__A merchant communicating with any person other than the
consumer for the purpose of acquiring location information about
the consumer may:

 
A.__Identify the merchant; state that the merchant is
confirming or correcting location information concerning the
consumer; and, only if expressly requested, identify the
merchant's employer;

 
B.__Not state that the consumer owes any debt;

 
C.__Not communicate with such a person more than once,
unless requested to do so by that person or unless the
merchant reasonably believes that the earlier response of
that person was erroneous or incomplete and that the person
now has correct or complete location information;

 
D.__Not communicate by postcard;

 
E. Not use language or a symbol on an envelope or in the
contents of a communication effected by the mails or by
telegram that indicates__that the communication relates to
the collection of a debt; and

 
F.__After the merchant knows the consumer is represented by
an attorney with regard to the subject debt and has
knowledge of, or can readily ascertain, that attorney's name
and address, not communicate with any person other than that
attorney, unless the attorney fails to respond within a
reasonable period of time to communication from the
merchant.

 
2.__Without the prior consent of the consumer given directly
to the merchant or the express permission of a court of competent
jurisdiction, a merchant may not communicate with a consumer in
connection with the collection of any debt:

 
A.__At an unusual time or place or a time or place known or
that should be known to be inconvenient to the consumer.__In
the absence of knowledge of circumstances to the contrary, a
merchant shall assume that the convenient time for
communicating with a consumer is after 8 a.m. and before 9
p.m. local time at the consumer's location;

 
B.__If the merchant knows that the consumer is represented
by an attorney with respect to that debt and has knowledge
of, or can readily ascertain, that attorney's name and
address, unless the attorney fails to respond within a
reasonable period of time to a communication from the
merchant or unless the attorney consents to direct
communication with the consumer; or

 
C.__At the consumer's place of employment if the merchant
knows or has reason to know that the consumer's employer
prohibits the consumer from receiving a communication.

 
3.__Except as provided in subsection 1, without the prior
consent of the consumer given directly to the merchant or the
express permission of a court of competent jurisdiction, or

 
except as reasonably necessary to effectuate a post-judgment
judicial remedy, a merchant may not communicate, in connection
with the collection of a debt, with a person other than the
consumer, the consumer's attorney, a consumer reporting agency if
otherwise permitted by law, the creditor, the attorney of the
creditor or the attorney of the merchant.

 
4.__A merchant may not engage in conduct the natural
consequence of which is to harass, oppress or abuse a person in
connection with the collection of a debt. Without limiting the
general application of this subsection, the following conduct is
a violation of this section:

 
A.__The use or threat of use of violence or other criminal
means to harm the physical person, reputation or property of
a person;

 
B.__The use of obscene or profane language or language the
natural consequence of which is to abuse the hearer or
reader;

 
C.__The publication of a list of consumers who allegedly
refuse to pay debts, except to a consumer reporting agency
or to persons meeting the requirements of Title 10, chapter
210;

 
D.__The advertisement for sale of a debt to coerce payment
of the debt;

 
E.__Causing a telephone to ring or engaging a person in
telephone conversation repeatedly or continuously with
intent to annoy, abuse or harass a person at the called
number;

 
F.__Except as provided in subsection 1, the placement of
telephone calls without meaningful disclosure of the
caller's identity; and

 
G. The use of "shame cards," "shame automobiles" or similar
devices, except that delivery vehicles used by the merchant
in the ordinary course of business may not be considered
"shame automobiles."

 
5.__A merchant may not use a false, deceptive or misleading
representation or means in connection with the collection of a
debt.__Without limiting the general application of this
subsection, the following conduct is a violation of this section:

 
A.__The false representation or implication that the debt
collector is vouched for, bonded by or affiliated with the

 
United States or any state, including the use of any badge,
uniform, seal, insignia or facsimile;

 
B.__The false representation of the character, amount or
legal status of a debt;

 
C.__The false representation or implication that an
individual is an attorney or that a communication is from an
attorney;

 
D.__The representation or implication that nonpayment of a
debt will result in the arrest or imprisonment of a person
or the seizure, garnishment, attachment or sale of property
or wages of a person, unless that action is lawful and the
debt collector or creditor intends to take that action;

 
E.__The threat to take an action that may not legally be
taken or that is not intended to be taken;

 
F.__The false representation or implication that a sale,
referral or other transfer of any interest in a debt will
cause the consumer to:

 
(1)__Lose a claim or defense to payment of the debt; or

 
(2)__Become subject to a practice prohibited by this
Article;

 
G.__The false representation or implication that the
consumer committed a crime or other conduct in order to
disgrace the consumer;

 
H.__Communicating or threatening to communicate to any
person credit information that is known or that should be
known to be false, including the failure to communicate that
a disputed debt is disputed;

 
I.__The use or distribution of a written communication that
simulates or is falsely represented to be a document
authorized, issued or approved by a court, official or
agency of the United States or any state, or that creates a
false impression as to its source, authorization or
approval;

 
J.__The use of a false representation or deceptive means to
collect or attempt to collect a debt or to obtain
information concerning a consumer;

 
K.__The false representation or implication that accounts
have been turned over to innocent purchasers for value;

 
L.__The false representation or implication that documents
are legal process;

 
M.__The use of a business, company or organization name
other than the true name of the merchant's business, company
or organization;

 
N.__The false representation or implication that documents
are not legal process forms or do not require action by the
consumer; or

 
O.__The false representation or implication that a merchant
operates or is employed by a consumer reporting agency, as
defined by Title 10, section 1312, subsection 4.

 
6.__A merchant may not use unfair or unconscionable means to
collect or attempt to collect a debt.__Without limiting the
general application of this subsection, the following conduct is
a violation of this section:

 
A.__The collection of an amount, including any interest,
fee, charge or expense incidental to the principal
obligation, unless the amount is expressly authorized by the
agreement creating the debt or permitted by law;

 
B.__The solicitation by a merchant of any postdated check or
other postdated payment instrument for the purpose of
threatening or instituting criminal prosecution;

 
C.__Depositing or threatening to deposit any postdated check
or other postdated payment instrument prior to the date on
the check or instrument;

 
D.__Causing charges to be made to a person for
communications by concealment of the true purpose of the
communication.__These charges include, but are not limited
to, collect telephone calls and telegram fees;

 
E.__Communicating with a consumer regarding a debt by
postcard;

 
F.__Using language or a symbol, other than the merchant's
address and business name, on an envelope when communicating
with a consumer in connection with a debt; or

 
G.__Using or employing notaries public, constables, sheriffs
or any other officer authorized to serve legal papers in the
collection of a debt.

 
Sec. 19. 9-A MRSA §11-120, sub-§3, as enacted by PL 1991, c. 787, is
amended to read:

 
3. A civil action by an aggrieved consumer in which the
consumer may recover actual damages, plus costs of the action and
reasonable attorney's fees. or In lieu of actual damages a
consumer named as a plaintiff in the complaint as originally
filed has a right to recover from a merchant violating this
Article $250, whichever is greater, plus costs of the action and
reasonable attorney's fees.

 
Sec. 20. 9-A MRSA §11-120, as enacted by PL 1991, c. 787, is amended
by adding a new paragraph at the end to read:

 
An action pursuant to this section may not be brought more
than 2 years after the violation occurs.

 
SUMMARY

 
This bill updates and clarifies the provisions of the Maine
Consumer Credit Code relating to rental-purchase agreements. It
amends consumer disclosure provisions and clarifies the term
"cash price." The bill also limits the consumer's liability for
the property to the least of the fair market value, early
purchase option price, remaining rent or repair cost and
lengthens the time consumers have in which to reinstate the
rental-purchase agreement. The bill requires merchants to
display a point-of-rental placard for any item offered for
rental-purchase.

 
The bill also tailors provisions of the Maine Fair Debt
Collection Practices Act to rental-purchase agreements.


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