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Sunday, March 01, 2009


Jeff Sovern

Normal retailers are somewhat different from RTO dealers in that normal retailers have an incentive to keep their cash price low to attract cash business, or business from consumers who might pay the cash price and borrow elsewhere. RTO dealers who don't sell at the cash price don't face that incentive. In general though, I think you can make a pretty good argument against price caps, including for RTO dealers. But I don't see an argument for having an illusory cap: either we should have price limits or we shouldn't, but I think the illusion of price caps without the reality is indefensible.

Jim Hawkins

This is an interesting analysis of the law, and for me, it reveals how adept RTO firms and other companies operating in the fringe economy are at skirting true consumer protection regulations. Creating price caps does seem particularly difficult to do since the cost of goods differs from one normal retail store to another. But, if the legislature thinks the statute can do it for prices set by RTO dealers, why not normal retailers? You'd have the same problem implementing the APR disclosure you suggest. What do you use as the base price?

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