Rent-to-Own Racism

Fighting Rent-to-Own Racism This Christmas

For low-income shoppers, the holiday season can be particularly precarious.

By Aaron Ross Coleman is a NY Times writer who covers race and economics.

I am not done with my Christmas shopping. I realize this is not great. Partly, I blame procrastination. I also don’t like crowds.

But I also hate the way searching for the perfectly priced present reminds me that for many Americans, especially African-American shoppers, prices are never going to be perfect.

In cities like Boston, New York and Chicago, high-quality retailers often avoid majority-black neighborhoods. In segregated cities like Detroit, some residents say that trying to find something as basic as a Gap can feel impossible. Without mainstream stores, many customers in urban black neighborhoods are left to shop at low-quality and exploitative outlets that fleece their patrons during the holidays.

I saw this for myself when I walked into a holiday sale at Rent-A-Center in Flatbush, Brooklyn. Oversize flat-screen TVs lined the walls and overstuffed couches filled the floors. The large “No Credit Needed” sign on the window made me feel as if I might actually be able to afford something.

While walking me through the season specials, a sales representative pointed out an advertisement selling Beats by Dre headphones for $20 a week. It sounded reasonable enough until I read the fine print that explained after a 61-week payment plan the headphones would cost $1,219.39.

You can buy the headphones outright for $349.95 or less. So that’s not just an exorbitant markup. In some states it could be illegal.

In a current California class-action lawsuit against Rent-A-Center, lawyers argue that the company’s customers, a disproportionate number of whom are people of color, are charged prices that violate the state’s rent-to-own pricing laws. The legal documents say that a Rent-A-Center in Northern California ultimately charged, after installments, $1,379.54 for an Xbox that normally retails at $299.99, and $2,834.19 for a television that sells for $717.60.

I have not been tempted to finance an Xbox this way, even though I grew up in black neighborhoods south and east of Atlanta — areas with no shortage of rent-to-own stores. I was lucky, though, to hear this simple advice from my dad from an early age: Spend cash, not credit.

This is what he taught on our Saturday-morning shopping trips. Whether we were on the way to buy a new refrigerator or look at a used car, the lesson was the same: “If you don’t have enough to buy it cash, don’t buy it,” he’d tell us.

Mom’s lessons were equally sober. She had a few credit cards but hated them all. Whenever she finally paid one off, she’d call us into her room. There, she asked us to help her demolish the card. We twisted it. We bent it. We folded it until the blue and red plastic turned white along the creases. Then, finally, we’d snip it to pieces. It was a ceremony of sorts. The itinerary concluded in a lecture about the evils of interest and how we were now free from the shackles of another company. By the time I reached the age of 18, my approach to finance was “Just say no.”

“No, I do not want to sign up for a store credit card.”

“No, I do not want to finance a computer over several payments.”

No. No. No.

I had internalized the distrust my parents taught me, but it wasn’t until I went to college that I began to better understand where they were coming from.

My junior year, I read Manning Marable’s “How Capitalism Underdeveloped Black America.” In it, the author outlined the various debt schemes retailers use to target black neighborhoods. “White businessmen now recognize that the urban poor and lower-income consumers can be made to pay much higher prices than affluent white suburbanites for commodities, so long as adequate lines of credit are made available to them.”

Although he wrote the book in 1983, it explained the ideology of the predatory world that surrounded me more than 30 years later. This was the used-car dealer who tried to get me to finance a 10-year-old Honda Civic for $18,000. This was the subprime lending that wiped out half of black Americans’ wealth in the Great Recession. These were the majority-black neighborhoods full of Rent-A-Centers and payday lenders.

It doesn’t have to be this way. Black neighborhoods can support legitimate stores.

During the mid-2000s, economists calculated a $42 billion retail supply gap in urban neighborhoods where many African-Americans reside. Today, retail-redlining studies of areas like Harlem and Chicago’s West Side reveal that high-quality bookstores, pharmacies, restaurants and other businesses still often steer clear of minority communities despite strong consumer demand.

In the void, many urban black neighborhoods are left with few alternatives. Online shopping is a good option for some people. But a lack of reliable internet access and the necessity of having a credit or debit card prevent many low-income people from participating in this digital economy. Not everyone lives in a neighborhood where packages and presents can sit safely on a stoop while they are at work.

In fact, in recent years businesses that clearly seem predatory and low-quality have expanded in many black neighborhoods.

My dad’s advice was simple — spend cash, not credit. But that advice is not easy to follow when the gift-giving season is here and every store in your neighborhood is promising a way to be Santa for just $20 a week.