Atlanta-based Aaron’s agrees to one of largest ever FTC settlements

The Federal Trade Commission signed off on a $175 million settlement with Atlanta-based Aaron’s, accused of misleading consumers who purchased items through one of the rent-to-own company’s units, the government said Monday.

The settlement is one of the 10 largest consumer protection judgments in FTC history, according to a commission spokesman.

Consumers “frequently paid approximately twice the sticker price if they made all scheduled payments under the plans,” the FTC had alleged.

The settlement money will be used by the FTC to provide refunds to affected consumers of Aaron’s Progressive Leasing unit. Progressive will be required to make sure the total cost to own a product is clearly disclosed in marketing and to get consumers’ informed consent about terms before charging them, according to the FTC.

Progressive offers lease-to-purchase options through about 25,000 retail locations operated by other companies. The retailers, who offer items such as furniture, jewelry and cellphones, frequently described Progressive’s payment plans as “same as cash” or “no interest” – leading consumers to believe they would not be charged more than an item’s sticker price, according to an FTC release about the complaint.

The commission’s staff argued Progressive knew consumers were confused about the pricing because of tens of thousands of consumer complaints.

Aaron’s issued a statement saying, “Although we disagree with the FTC, we have agreed to settle this matter to avoid the expense, management distraction and uncertainty caused by protracted litigation. Progressive has enhanced disclosures of lease terms, improved its field training and testing, and continues to innovate in these areas on behalf of consumers and retailers.”

The cost to Aaron’s could have been substantially higher. FTC commissioner Rebecca Kelly Slaughter, one of two who voted against the settlement, wrote that the deception began as early as 2016 and continued through at least August of 2019. The commission, she wrote, should have sought a higher settlement since Progressive charged consumers far more than $1 billion over the cash price of the goods purchased. Slaughter also pushed for action against the chief executive of the Progressive unit.

Ryan Woodley, Progressive’s CEO, earned $3.6 million in compensation last year, including an annual cash incentive, according to a recent Aaron’s filing with the U.S. Securities and Exchange Commission.

About 20,000 Progressive customers live in Georgia alone, according to the FTC. Progressive operates in at least 45 other states as well.

Aaron’s also has about 1,500 company-operated or franchise stores nationally. The company said it primarily focuses on “credit-challenged” segments of the population, making it easier for its customers to get items they might not otherwise be able to acquire.

Earlier this year, Aaron's agreed to an unrelated FTC settlement of allegations that it and rival rent-to-own operators had executed agreements in violation of federal antitrust law. The government contended that the companies agreed to swap customer rent-to-own contracts and sometimes to avoid competing within a territory.