Changes mulled in Texas law allowing charges against rent-to-own customers

A rent-to-own company threatened to file criminal charges against Austin resident Melinda Sandlin after she stopped making payments. Sandlin looks through her rental purchase agreement and other related documents at her Austin home on Aug. 30, 2017. (Photo by Charlie Pearce for The Texas Tribune)
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AUSTIN, Texas (Texas Tribune) Texas lawmakers from both sides of the aisle said Friday they are mulling legislative reforms to criminal laws that allow rent-to-own companies to pursue criminal theft charges against customers who default on payments for sofas, TVs and other merchandise.

The reaction came after The Texas Tribune and NerdWallet published the results of a months-long investigation into an obscure provision of the penal code written 40 years ago by rental industry lobbyists. There are similar laws in other U.S. states, leading to the filing of charges against thousands of rent-to-own customers nationwide, the joint investigation found.

State Sen. Konni Burton, a Colleyville Republican who has championed criminal justice reforms at the Texas Capitol, said she wants to explore reforms ahead of the next regular session of the Legislature in a little over a year.

"While I believe that we, as individuals, are responsible for the contracts in which we enter, I do not believe that one industry, or set of industries, should have special laws allowing the escalation of a dispute to our criminal system," Burton told The Texas Tribune. "We have a civil system for these kind of disputes. I look forward to exploring this issue in advance of next session."

Likewise, state Sen. Kirk Watson, D-Austin, said he found it "enormously unfair" that a contract dispute could end up with one of the parties getting arrested.

"I don't know why the police are ever involved in something like this," Watson said. "It smacks of debtors' prisons. You find yourself involved in a misunderstanding, or even a legitimate dispute and one side can have you hauled to jail. We need to look at that. That doesn't sound fair."

The Tribune's investigation found a cluster of cases in McLennan County, where rent-to-own disputes made up 98 percent of the more than 400 theft of service complaints filed with two local police departments in the last three and a half years. State Sen. Brian Birdwell, a Republican who represents the Waco area, said in a statement that "the issue merits a rigorous review by the legislature, and it's something about which my staff and I will seek [additional] granularity."

Describing why the issue deserves further scrutiny, Birdwell compared the Tribune's findings to the concept of debtors' prisons, which are prohibited by the Texas Constitution.

State Rep. Kyle Kacal, R-College Station, whose district encompasses part of Waco, said in a statement: "I think we can certainly look into this matter before next session and see if there are ways to improve the statute for our constituents."

Jason Milam, president of the McLennan County Defense Lawyers Association, said the district attorney's office has exhibited an eagerness to take on rent-to-own cases.

The district attorney's office did not respond to requests for comment from the Texas Tribune.

"Ultimately it comes down to prosecutorial discretion," Milam said. "In general they have an attitude of, if the law says it's illegal, we're just gonna file it." Milam said the most common reaction from the rent-to-own defendants he's represented is shock.

"Without exception, no one that I've talked had any idea at the time they rented the items that they could ever be criminally prosecuted. They're absolutely shocked." Though Milam said he would favor sweeping reforms, at a minimum he believes the Legislature should require rent-to-own companies to warn customers in no uncertain terms that they could go to jail if they default on their contracts.

Democratic state Reps. Joseph "Joe" Moody and Chris Turner both suggested Friday they'd study the issue and consider authoring bills once the Legislature reconvenes in 2019. Moody, from El Paso, told the Tribune the statute is "constructed in a way to create a default conviction.

"If there are problems for those businesses as creditors in reclaiming their property through the civil justice system, that's where the reforms need to happen," he said. "This criminal justice provision probably just needs to be eliminated."

Moody said he hopes the lower chamber's criminal jurisprudence committee, which he chairs, would study the issue and "make full recommendations back to the House about it."

"I anticipate the recommendation will be, 'This [statute] is unnecessary,'" he added.