The money from this week’s settlement, the FTC said, would go toward customer refunds, though it did not provide details on how or when those refunds would be issued. Progressive Leasing is owned by rent-to-own furniture chain Aaron’s.
In a statement, Aaron’s chief executive John Robinson said the company disagrees with the FTC’s allegations but agreed to the settlement to avoid long-term expenses and litigation.
“This settlement allows Progressive to stay focused on continuing to offer competitive, flexible and affordable purchase options to credit-challenged consumers,” he said.
FTC Commissioner Rebecca Kelly Slaughter, however, said the settlement did not go far enough in addressing the company’s “pernicious” practices or providing relief to consumers who have paid Progressive Leasing more than $1 billion in extra fees and charges.
“The conduct here is so egregious and its cumulative impact on families so corrosive that I do not believe the complaint and order are sufficient,” she wrote in a dissenting statement. “ ... $175 million falls far short of the injury Progressive inflicted upon consumers.”
Progressive Leasing has come under fire in recent months for what critics say amounts to preying on the country’s most financial vulnerable consumers. The program is offered at more than 30,000 stores by some of the nation’s largest retailers, including Lowe’s, Big Lots and Kay Jewelers.
The FTC also took issue with the way Progressive Leasing instructs retail workers to pitch the program to consumers in widely distributed training materials. If a customer asked, for example, about the program’s interest rates, sales staff were told to simply say, “There actually isn’t an interest rate, because it’s not a loan,” without informing them of additional charges or fees, the complaint alleges.
Terms of the program vary by retailer, but the basics are the same: Applicants must pay a one-time fee, typically $79, and allow Progressive Leasing access to their checking accounts for payments — which are automatically withdrawn and timed to the frequency of their paychecks — for 12 months. By the end of the year, consumers would have paid more than double the purchase price, which means an Acer Chromebook that sells for $199 at Best Buy would end up costing $495 over 12 months with Progressive Leasing.
The program is often pitched as an alternative to other financing options. At Best Buy, for example, employees are instructed to offer Progressive Leasing to consumers who don’t qualify for the company’s store credit card.
“It’s great for our brand. It’s great for our customers,” chief executive Corie Barry said in an earnings call last year.
Best Buy spokesman Matt Furman told The Washington Post that the program provides a valuable service to shoppers who couldn’t otherwise afford items like laptops, mobile phones and appliances.
Some employees say they are increasingly polarized over the program, which they say preys on the chain’s most financially vulnerable shoppers.
“It can help some people but it’s very misleading for others,” Joshua Howard, a former employee at a Best Buy store in Memphis told The Post in February. “Very few people actually benefit from this.”