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It's a cruel irony that being poor can be more expensive than being rich. One case in point is the "rent-to-own" business, which invites people without credit cards or savings to buy household appliances on monthly payment plans for hundreds of dollars more than the item's value. As Jonathan Epstein and Rod Watson explain in their comprehensive account of this predatory industry, people living paycheck to paycheck eventually wind up spending as much as $1,700 on a $430 refrigerator, or $2,000 on a washer-dryer that sells for $660 at Best Buy.

Most states have legislation regulating the rent-to-own business. But according to critics interviewed by Epstein and Watson, the laws are often "weak" and "written by the industry." In New York state, rent-to-own stores take advantage of a legal loophole that allows them to determine the cash value of an item, rather than using the prevailing price at traditional retailers. The industry is also lobbying for federal regulations that would overturn some of the stricter state laws. (It probably doesn't hurt that Richard Armey sits on the board of Rent-A-Center, a national chain).

The typical response of the rent-to-own industry is that customers at regular retail stores who buy goods on credit plans pay about the same amount, once you add the interest and finance fees. Epstein and Watson did the math and disagreed--the refrigerator was still around $900 cheaper on a credit plan.

Jonathan D. Epstein and Rod Watson The Buffalo News, June 19, 2006 Rent-to-own buys misery for the poor"

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