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Perez v. Rent-A-Center, Inc.

186 N.J. 188, 892 A.2d 1255 (2006)

CONSUMER FRAUD ACT; RETAIL INSTALLMENT SALES; USURY—Contracts subject to the Retail Installment Sales Act are also subject to the criminal usury statute and consequently to the Consumer Fraud Act.

A customer entered into several rent-to-own contracts. Each contract provided for weekly payments. The customer had the option to purchase the goods at any time, but a portion of the customer’s weekly payments was applied by the rental store to defray the costs of the goods. After twelve months, the customer ceased payments and the rental company filed suit in small claims court seeking monetary damages. The customer then countersued, alleging the rental contracts violated the Retail Installment Sales Act (RISA), the Consumer Fraud Act (CFA), and the interest rate cap in the criminal usury statute. The lower court dismissed the customer’s complaint, and the Appellate Division affirmed. The customer then appealed to the Supreme Court. The rental company voluntarily dismissed its money claim.

Finding that the terms of the contracts provided the customer with the option to purchase the goods at their full value, the Supreme Court held that these rent-to-own contracts were subject to RISA as “conditional sales” subject to RISA. The Court further held that the contractual right granted to the customer to purchase the goods at a later date, provided the customer made periodic payments, (the “time price differential”) was the same as if the rental company had charged interest on a loan for the purchase of the goods. Even though the Legislature, through an amendment to RISA, permitted parties in installment contracts to negotiate their own interest rate, the Court concluded that other legislation passed on the same day as the RISA amendment (the criminal usury statute) provided an interest rate ceiling. The Court reasoned that when multiple pieces of legislation relating to the same subject matter are passed on the same day, the overall purpose of the enacted laws should be read as a whole. Therefore, contracts subject to RISA are also subject to the criminal usury statute. The Court reinstated those complaints alleging a violation of the criminal usury statute. Further, the Court held that the CFA’s remedies are cumulative in nature and the CFA may be applicable even in situations where other remedial statutes may also be applicable. Only in the event of a direct conflict would the CFA not apply; provided the other remedial statute specifically addresses the alleged wrong or harm. Therefore, to the extent the customer’s claim was linked to the applicability of RISA and the criminal usury statute, the CFA claim was reinstated. For those reasons, the matter was remanded to the lower court for further proceedings.

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