Connecticut consumers who signed Acima Digital rental-purchase agreements will receive $2,441,257 in lease forgiveness under a $183.5 million multistate settlement that Attorney General William Tong announced Nov. 12. The state will also receive $246,090.70.
The settlement with Acima Digital, LLC and its parent, Acima Holdings, LLC, has three parts, according to the attorney general's release: $43 million in consumer restitution, $130 million in lease balance reductions and a $10.5 million payment to the states. Acima partners with retailers to offer financing to consumers through rental-purchase agreements.
Eligible consumers do not need to act. Those owed restitution will be contacted by the settlement administrator, Rust Consulting. Those eligible for lease forgiveness will be contacted by Acima. The release does not say how many Connecticut consumers qualify or how eligibility is determined. Acima's own announcement describes the $130 million in lease forgiveness as covering charged-off accounts of certain customers who kept leased merchandise after default. Consumers with questions can call the attorney general's office at 860-808-5318 or write to attorney.general@ct.gov.
What the states alleged
A coalition of 43 states, including Connecticut, alleged that Acima marketed its agreements as 90-day pay-off programs without disclosing that consumers were automatically defaulted into the maximum 12-month term. Under that term, the release says, consumers could pay about twice the cash price advertised by Acima's retail partner.
The states also alleged that Acima used terms such as "credit" that often led consumers to believe they were getting traditional financing, and that its electronic signing process obscured the terms of the transaction. They alleged that Acima obstructed consumers who tried to end an agreement without penalty by returning the merchandise. The release also cites deceptive marking up of cash prices and practices in Acima's debt collection and credit reporting.
"Acima lured and locked consumers into overpriced rent-to-own deals by obscuring key information, including the length of these agreements, the total cost, and options for termination," Tong said in the release.
Changes Acima agreed to
Under the settlement, Acima agreed to:
Train its retail partners.
Make certain advertising claims only when other material information is clearly and conspicuously disclosed.
Stop obscuring material terms during electronic signing.
Stop marking up the cash price above that of its retail partners.
Stop obstructing consumers who return merchandise to terminate an agreement.
Refrain from reporting rental-purchase agreements to the three largest credit reporting agencies for five years.
Properly handle late deliveries and merchandise damaged at delivery, and meet legal obligations to make repairs during the lease.
Maine, Massachusetts, New Hampshire, Rhode Island and Vermont are among the other states the release lists as joining the settlement. The attorney general's release does not include a response from Acima. In its own announcement, the company said the settlement "does not include findings or admissions of wrongdoing."
