Progressive Leasing, a company that markets rent-to-own payment plans in tens of thousands of retail stores nationwide, will pay $175 million to settle Federal Trade Commission charges it misled consumers about the true price of items purchased through its plans.

According to the FTC’s complaint, consumers who visited retailers to buy items such as furniture, jewelry, or cellphones frequently were told that Progressive’s payment plans were “same as cash” or “no interest” – leading consumers to believe they would not be charged more than an item’s sticker price.

Instead, the complaint alleges, consumers paid more than the sticker price, and frequently paid approximately twice the sticker price if they made all scheduled payments under the plans. When consumers were presented with the terms of Progressive’s offers, they were shown the “cash price” of the item, as well as the cost of their initial payment and each periodic payment.



Screenshot from Progressive purchase process (click image to enlarge)

In order to see the full cost of Progressive’s payment plan, consumers had to click on the non-descript dropdown arrow next to “Additional Lease Details.”



Screenshot from Progressive purchase process (click image to enlarge)

Progressive was aware of consumers’ confusion about the terms of their plans through tens of thousands of consumer complaints, with more than 15,000 complaints received just in one 15-month period, according to the FTC.

Under the terms of the proposed settlement, Progressive will be required to pay $175 million to the FTC to be used for providing refunds to affected consumers. Progressive will be prohibited from misrepresenting the cost, terms, or nature of its plans. The company also will be required to clearly and conspicuously disclose the total cost to own a product when marketing its plans, and must get consumers’ express, informed consent before charging or billing them.

Progressive also will be required to monitor third parties, such as retailers that offer its plans, to ensure their marketing complies with the terms of the settlement.

The Commission vote authorizing the staff to file the complaint and proposed stipulated final order was 3-2, with Commissioners Rohit Chopra and Rebecca Kelly Slaughter dissenting. Commissioner Christine S. Wilson issued a statement, and Commissioner Slaughter issued a dissenting statement. The FTC filed the complaint and proposed stipulated final order in the U.S. District Court for the Northern District of Georgia.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Stipulated final orders have the force of law when approved and signed by the District Court judge.