Aaron’s, the national rent-to-own company, knowingly sold consumer accounts that weren’t delinquent or valid to a debt collector, a lawsuit filed this week against the metro Atlanta-based retailer argues.
North Carolina-based Turtle Creek Assets, the debt collector, filed a suit in Cobb County State Court that claims “a serial betrayal of trust by Aaron’s that injured not just the plaintiff (TCA) but has had a collateral effect on thousands of consumers.”
It alleges that Aaron’s, a company with a nearly $4 billion market value, knew the accounts had problems. TCA said those included instances where consumers were victims of identity theft or had already settled their accounts or returned the household furniture, appliances and electronics they had rented. Other accounts were tied up in legal proceedings — such as bankruptcy filings by customers or Aaron’s stores filing criminal charges against them — that limit or prevent TCA from trying to collect on the debts, the suit said.
TCA said Aaron’s had agreed to provide only accounts that were valid and had no legal issues, in return for millions of dollars from the debt collector. Instead, it “caused TCA to make collection efforts on consumers who should have never been subjected to such activities in the first place.”
A spokesman for Aaron’s declined comment Wednesday on the lawsuit.
In November, Aaron’s disclosed it was being investigated by the Federal Trade Commission for possible violations tied to the sale of its consumer debt.
The company reported that, while it believes it was in compliance with the law, it worked out a proposed prohibition on such sales in the future. It said it was waiting for the FTC to finalize the agreement.
A spokesman for the FTC wrote in an email to The Atlanta Journal-Constitution that the commission’s investigations are not public, and it cannot disclose more than what a company has reported.
Consumers who lease furniture, electronics and appliances from Aaron’s 1,500 corporate and franchisee owned stores around the nation are expected to make regular lease payments. But some accounts fall in arrears.
Between 2010 and 2017, Aaron’s sold rights to more than $500 million of that debt to TCA, according to TCA’s owner Gordon Engle. He told the AJC he paid less than two cents on the dollar, knowing some would be uncollectible.
For years, Engle resold the accounts to debt collection lawyers around the nation. In recent years, though, Aaron’s banned him from doing that, so he began trying to collect on the consumer debts through his own firm.
Engle said many consumers contacted by his company said they hadn’t been to Aaron’s and were victims of identity theft. Some had police reports to corroborate their claims and said they had previously informed Aaron’s about the issues, according to Engle.
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