Thorn reviews claim of malpractice at US arm: Former American senator to look at Rent-A-Center chain

THORN EMI, hoping to counter charges that its chain of US 'rent- to-own' stores uses dubious sales techniques, has engaged a respected former US senator to conduct an independent review of its business practices.

Warren Rudman, a Republican senator from New Hampshire who decided not to run for re-election last year, will investigate whether the group's chain of 500 Rent-A- Centers - appliance-leasing outlets that turn over the goods to customers once they have completed a schedule of weekly payments - misleads and maltreats low-income clients.

'Thorn EMI is confident that Rent-A-Center's procedures, which are the subject of continuous improvement, are second to none in its industry and strongly guard against the types of abuse alleged,' Sir Colin Southgate, the chairman of Thorn, said.

Rent-A-Center, Thorn's most profitable division, has been under scrutiny since late September, when an investigative report in the Wall Street Journal charged that it deceived customers about the real costs of its scheme.

The report found that the rent-to- own formula resulted in some customers paying effective annual interest rates in excess of 200 per cent to acquire items such as cassette players and television sets. It also suggested that employees routinely put pressure on customers to take on more payments than they could afford, leading to high rates of default and repossession.

The newspaper quoted former staff members as saying that the division's agents broke into customers' homes and employed members of motorcycle gangs to help recover goods when payments fell behind schedule.

In another instance, a late payer was allegedly forced to do involuntary labour for the chain.

Walter Gates, Rent-A-Center's chief executive, has denied the charges, calling them profoundly wrong and grossly unfair. He said that the company, which has about 25 per cent of a market worth dollars 2.8bn a year, aims to bring new professionalism to an industry with a bad reputation. But the reports have prompted members of the US Congress to suggest new laws cracking down on rent-to-own outlets, reclassifying lease-purchases as credit sales.

Many US states limit annual interest rates to 21 per cent, and would regard Rent-A-Center's effective rates as usurious.

Rent-A-Center argues that its leases are not sales because they allow clients to cancel at any time. Indeed, three out of every four customers eventually fail to meet payments.

Sir Colin said yesterday that Thorn, which bought the chain in 1987 for some dollars 600m, was confident Rent-A-Center's management and staff operated with complete integrity and professionalism. He added that the appointment of the former senator to conduct the inquiry underscored this confidence.

Mr Rudman will report by the end of the year.

Start your day with The Independent, sign up for daily news emails
Voices
voices Simon Usborne: It's not about political correctness. It's about decency
Sport
Wojciech Szczesny watches the ball cross the line as Garath McCleary scores for Reading
football All the latest from Wembley as Gunners face Reading in semi-final
Life and Style
health
News
i100
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...