Lease-to-Own Business Files Complaint Against CFPB’s Investigation

On July 22, a lease-to-own company (plaintiff) filed a complaint against the CFPB in the U.S. District Court for the Eastern District of Texas to seek declaratory judgment and injunctive relief to halt the CFPB’s ongoing investigation and pending litigation related to the company’s business. 

The plaintiff has offered short-term renewable lease solutions to consumers via Rental Purchase Agreements (RPA) for over a decade that allow consumers to take possession of household merchandise and other goods, such as furniture, appliances, and computers, that they would otherwise be unlikely to afford. Lease-to-own transactions have been regulated at the state level for decades and were recognized as distinct from credit transactions, given that the RPAs do not involve a loan of money or a requirement to repay. The RPAs clearly stated that the underlying transaction was “not a loan or a credit transaction.”

The CFPB, after almost four years of investigation incurring “substantial legal fees,” appeared to have taken the position that these transactions were credit transactions subject to consumer financial regulatory laws, including the CFPA, TILA, and the EFTA, to regulate lease-to-own transactions under federal law. The plaintiffs have countered that this equated to “regulatory overreach” for three reasons: