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Won’t Pay for the Time? Now it’s a Crime
Theft of Services Update
Kim Phelan
Contributing Editor
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| It’s nothing every rental veteran hasn’t seen at least a few times – and maybe even a few times a month if he’s like many independent operators. The customer signs the contract, pays the deposit, shows proper ID and takes out the equipment. Everything seems on the up and up. But the return date comes and goes, and there’s no sign of him. In fact, three weeks go by, nothing. When the customer finally returns the machine, he makes excuses but no payment for the excess rental usage. “I’ll pay you as soon as I get paid,” he promises. As he walks out the door, it’s the last Joe Rental ever sees of him.
So call the police, you say. Throw him in the slammer.
“Sorry, it’s a civil matter for the courts,” the officer replies.
“But he ripped me off. I lost more than two grand from not having that machine to rent to somebody else.”
“Sorry, call your lawyer.”
It’s called theft of services. Many rental dealers lose between $4,000-$20,000 annually on this type of scenario. It differs from conversion theft in which equipment is actually stolen. Theft of services means the customer used the rented equipment for longer than the agreed rental period, but did not pay for the extra use.
And though it’s theft, it’s not a criminal offense in many states. The theft of services statutes on many state law books protect the services of hotels and motels, cable television companies, utility and transportation companies, telephone companies and entertainment providers – but often not rental centers that provide equipment for public use in exchange for a rental fee.
But that’s beginning to change. Painstaking efforts of mostly smaller, independent rental stores that have banded together through state ARA chapters are producing legislative results. The process is slow and tedious, but for those who endure and who make savvy political connections, the outcome can mean long overdue alteration to existing theft of services laws to include the rental center that’s been robbed of income.
“The whole process is frustrating,” says Gordon Wardell, owner of Fast Rentals, Pinellas Park, Fla. “As business people we tend to be impatient; we want to get things done quickly. That’s the way we run our businesses. We give customers what they want and get them on their way. But the government doesn’t work that way.”
Florida’s revised theft of services statute took three legislative sessions before it was finally passed into law three years ago, according to Wardell. Today, depending on the value of services, theft of services constitutes a second-degree misdemeanor for amounts under $300; above that, the violation becomes a third-degree felony. The law’s language specifies the rental transaction and targets, among other things, the fraudulent intent of those “absconding without payment.”
The Florida statute sends a message to crooks, Wardell says.
“The state is saying, ‘We’re not going to accept this kind of behavior anymore. The law gives us another weapon, one more tool to get equipment back and to collect our money.”
Florida’s law requires rental stores to follow a key procedure to claim protection. Rental dealers must not only add the following phrase to every rental contract, they also must have the customer initial it.
The statement reads: “Failure to return rental property or equipment upon expiration of the rental period and failure to pay all amounts due (including costs for damage to the property or equipment) are prima facie evidence of intent to defraud, punishable in accordance with Section 812.155, Florida Statutes.”
That little step of drawing the customer’s attention to the dangers of deceit has proven effective as a deterrent, Wardell believes.
But for those who still practice the rental racket, police involvement is now a sure thing in Florida. A rental center must send a certified letter demanding the return of the equipment and proper payment for its usage. If the store receives no response within five days, it’s time to call the police.In the Know
A lawyer and drafter of many state bills once said, “You should never watch the process of making sausage or legislation.” Both are liable to make the ordinary layman ill. But if laws are to be changed to protect rental operators, it’s necessary not only to watch the legislative process, but also become immersed in it.
Perhaps the No. 1 recipe for success is getting to the right people at the state capitol. And the right people are the legal minds who comprise a state’s Judiciary Committee.
Connecticut rental store owners like Russell Dagenais, who owns Taylor Rental Center, Wallingford, Conn., who have struggled for six years to achieve adequate theft of services legislation, found this out the hard way. A 2003 bill that contained some criminal-prosecution teeth made it through the state’s General Law Committee but stopped dead at the Judiciary Committee level.
State Rep. Mary Mushinsky, who wrote and sponsored the bill, and who is also a rental customer at Dagenais’ store, says two primary concerns halted the bill’s progress.
First, and the greatest cause of consternation, was the absence of due process of law. The committee, sticklers for legal fair warnings, wished to see a clause allowing for a written warning to notify delinquent rental customers and that they must both return the equipment and pay all fees associated with its use and/or damage. Mushinsky cites the conceivable scenario of a customer who may have become suddenly ill or hospitalized. A piece of rented equipment in the garage would be the last thing on family members’ minds in such a situation.
“If you’re going to send the police to someone’s house, you have got to be certain they knew what they were doing, that they were intentionally committing a crime,” the legislator reflects.
The Connecticut Judiciary Committee also objected to the bill’s possible relevance and application to the televisions and appliance rent-to-own industry, which, Mushinsky says, has a notorious reputation in the state for charging astronomical prices and taking advantage of non-English-speaking immigrants who do not fully comprehend contracts they sign.
Mushinsky’s bill has had a good reworking, with the Judiciary Committee’s assistance, and could almost have become law this spring but for the expiration of the session – so many bills, so little time. As it is, however, the bill stands dressed and pressed for the next legislative session in February 2004. Mushinsky says it not only meets with the Judiciary Committee’s satisfaction but also has gained bipartisan support in the Connecticut legislature.
She feels fairly confident that her theft of services bill will be passed. She encourages rental store owners both in her state and elsewhere to continually remind their state representatives and senators to keep the issue on the front burner, because, frankly, legislators have many pots on the stove.
Meanwhile, Connecticut rental operations go on losing money to bamboozlers, more or less powerless to fight back. Dagenais and his peers of the Connecticut Association of Rental Dealers (CARD) conducted research for the state legislature for the year 2002. CARD found that independent rental centers lose an average of $8,000 a year to theft of services scams; larger companies lose as much as $20,000. The cumulative revenue loss due to theft of services for rental dealers throughout the state totals nearly $1.5 million.
Dagenais expresses skepticism about the passing of the pending legislation that would offer his company protection and prosecution for those who cheat him. The bill he thought would pass this year but failed would have taken effect this coming Oct. 1. As it is, he and his fellow CARD members must continue to wait for justice.Others Take Action
In Missouri, the current theft of services law excludes rental centers, but store operators there are hopeful that a revision of that statute that was bumped back by budget haranguing will pass come January.
“We’re not going to quit now,” remarked Stan Crumbaugh, owner of Independence Rent-All, Independence, Mo. “We’re too close.”
It’s been a long haul for South Carolina’s ARA members too, but a brawny theft of services bill is positioned for the January ’04 docket in that state’s legislature. Max Cromer, owner of Tri-City Rental-All of Taylors, Taylors, S.C., estimates the state ARA group has spent $10,000 to move the bill from starting line to finish. It’s been a worthwhile investment, considering that South Carolina rental dealers experience significant losses annually due to theft of services. Cromer’s two small stores lose about $5,000-$6, 000 a year, he says.
The South Carolina bill, fashioned after the strict Texas theft of services law, according to Cromer, will enable rental dealers to sign a warrant for customers who keep equipment overtime and won’t pay. The penalties will range from misdemeanor to felony, based on the actual amount of lost revenue.
Cromer, who’s been around the legislative block a few times on this issue, offers four tips for rental dealers wanting to change the theft of services laws in their states.1.) Start early, don’t wait, Cromer warns. If the legislative session begins in January, start your efforts in September so the bill is ready to go.2.) Be prepared to spend considerable time and money in the process. Accepting that up front will help curb the frustration of the murky journey later.3.) Hire a professional lobbyist. The political connections and inner workings of lawmaking are like a foreign language to the common population. Plus, it’s a full-time job safeguarding the legislative interests of the rental industry, and rental dealers already have their own jobs to worry about.4.) Head straight for the Judiciary Committee chairman. “He’s the one you need to sell; he calls the shots,” Cromer says. |
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