The FTC calls Progressive Leasing’s program misleading, settles lawsuit with the company.
Federal Trade Commission (FTC) has announced Progressive Leasing, a company that offers rent-to-own programs at major retailers, has agreed to pay $175 million to settle allegations it misled consumers. Progressive Leasing’s program is offered at more than 30,000 stores across the nation.
The agency filed a complaint indicating the company, which services Best Buy, Aaron’s, and Lowe’s, among other well-known retailers, “led consumers to believe they would not be charged a premium for financing purchases with the program. In reality, many consumers ended up paying more than double the ticket price for furniture, appliances, jewelry and other purchases. Despite tens of thousands of customer complaints, Progressive Leasing continued to employ the same practices to lure consumers.” Because consumers were made to pay much higher prices for the items they purchased, the FTC said, “The money from this week’s settlement will go toward customer refund.”
FTC Commissioner Rebecca Kelly Slaughter stated in a dissenting opinion related to the matter, “The conduct here is so egregious and its cumulative impact on families so corrosive that I do not believe the complaint and order are sufficient. $175 million falls far short of the injury Progressive inflicted upon consumers.”
The Federal Trade Commission also said the specifics of Progressive Leasing program’s pitch were deceiving. For example, if a potential customer were to ask if there was an interest rate tied to the lease, sales associates were to reply, “There actually isn’t an interest rate, because it’s not a loan.” They were not to go into the specifics of the extra fees charged ‘behind the scenes.’
Progressive’s program is often reserved for customers who do not qualify to receive lines of credit. It is pitched as an alternative to purchasing and paying full price for an item upfront. However, the way the option operates, consumers end up dishing out far more for the product over time. An individual initially pays $79 to allow the company to withdraw funds from a bank account anytime they receive a paycheck over the course of the year. By the year’s end, most end up paying more than double the price they would have if they had just purchased the item outright.
In a statement, Aaron’s chief executive John Robinson said the chain “fundamentally disagrees” with the Federal Trade Commission’s allegations but has chosen to settle to avoid the costs associated with continued litigation. “This settlement allows Progressive to stay focused on continuing to offer competitive, flexible and affordable purchase options to credit-challenged consumers,” he said.
“It’s great for our brand. It’s great for our customers,” chief executive Corie Barry of Best Buy said in a 2019 earnings call. Best Buy spokesperson Matt Furman insisted, “The program provides a valuable service to shoppers who couldn’t otherwise afford items like laptops, mobile phones and appliances.”
Sales associates tasked with pitching the service are less convinced. “It can help some people but it’s very misleading for others,” Joshua Howard, a former Best Buy employee at a Best Buy said. “Very few people actually benefit from this.”