Vermont Acima Digital Settlement: $43M Restitution, $130M Lease Reduction

• Acima Digital, LLC and its parent, Acima Holdings, LLC, reached a multistate settlement with 43 states, including Vermont.
• The settlement resolves allegations of deceptive advertising for rent-to-own financing agreements.
• Acima will pay $43 million in consumer restitution, $10.5 million to states, and provide $130 million in lease balance reductions.
• Allegations included misleading "90-day payoff" programs, obscuring 12-month terms, and obstructing termination rights.
• The company must implement significant injunctive relief, including improved disclosures and a five-year ban on credit reporting for these agreements.

Under this extended term, customers could end up paying approximately twice the original cash price advertised by Acima’s retail partners, a critical piece of information often obscured.

Vermont's Attorney General, Charity Clark, recently announced a significant multistate resolution involving Acima Digital, LLC and its parent entity, Acima Holdings, LLC. This national rent-to-own finance company faced allegations of engaging in deceptive advertising practices concerning its rental-purchase agreements. The comprehensive Acima Holdings LLC multistate settlement addresses these claims, imposing substantial financial penalties and requiring significant operational changes.

Under the terms of the agreement, Acima is mandated to provide $43 million in restitution directly to consumers nationwide. Additionally, $10.5 million will be disbursed among the participating states, and a remarkable $130 million in lease balance reductions will benefit affected customers. Specifically, the state of Vermont is slated to receive $54,806 in civil penalties, alongside $50,452 designated for consumer restitution and lease forgiveness, underscoring the local impact of this Vermont Acima Digital settlement. This collective action was spearheaded by a coalition comprising attorneys general from 43 states, highlighting a broad governmental concern over Acima's business conduct.

The core of the allegations centered on Acima's marketing of its rental-purchase agreements as "90-day pay off programs." However, the 43 states Acima settlement revealed that the company failed to adequately disclose that consumers were automatically enrolled into a maximum 12-month term. Under this extended term, customers could end up paying approximately twice the original cash price advertised by Acima’s retail partners, a critical piece of information often obscured. Furthermore, Acima was accused of misleading consumers into believing they were entering into traditional financing arrangements, rather than rental-purchase agreements.

Another significant concern addressed by the Vermont Attorney General Acima action was the company's alleged obstruction of consumers' rights to terminate their agreements without penalty. This obstruction occurred when customers attempted to return merchandise to Acima, a fundamental right within rental-purchase agreements consumer protection frameworks. To rectify these practices, the settlement imposes a series of injunctive terms. These include requiring robust training for Acima's retail partners, prohibiting certain advertising claims unless all material information is clearly presented, and ensuring that crucial terms and conditions are not obscured during the electronic signature process.

Beyond advertising and disclosure, the settlement also mandates changes to Acima's operational conduct. The company must refrain from marking up the cash price of items beyond what its retail partners advertise. Crucially, it must cease obstructing consumers' ability to terminate their rental-purchase agreements by returning merchandise. In a significant move to protect consumers' financial standing, Acima is prohibited from reporting these agreements to the three major credit reporting agencies for a period of five years. This provision aims to prevent potential negative impacts on consumers' credit scores from rent-to-own finance arrangements.

The agreement further stipulates that Acima must properly manage late deliveries, address merchandise damaged at the time of delivery, and fulfill its legal obligations regarding repairs to leased items throughout the duration of the lease. This comprehensive set of requirements reflects a concerted effort by the 43 states Acima settlement coalition to enforce rental-purchase agreements consumer protection and ensure transparency and fairness in the rent-to-own finance industry. Consumers who are eligible for restitution or lease forgiveness under this settlement do not need to take any proactive steps, as they will be contacted directly by either the settlement administrator or Acima.

Compliance officers and legal counsel for rent-to-own finance companies or their retail partners should review this multistate settlement to understand the specific deceptive advertising and operational practices that led to significant penalties and injunctive relief. This case highlights critical areas of risk, including misleading '90-day payoff' programs, inadequate disclosure of terms, obstruction of termination rights, and credit reporting practices, providing a blueprint for internal compliance audits and risk mitigation strategies to avoid similar enforcement actions.

Source: Original reporting via Vermont Attorney General's Office.