Previously we have covered benefits of offering RTO to your customers, how to best market RTO, and consumer protection laws. Now let’s consider some factors that go into choosing an RTO provider for your business.
Over the last 20 years, RTO for the shed industry has grown exponentially. Many small RTO providers have come seemingly out of nowhere, to meet the demand created by manufacturers and retailers.
Many of these RTO providers started small and grew rapidly, creating a concern for the industry. Being busy and growing by leaps and bounds, these firms had no time to pay attention to legal issues. They abided by no common practices and operated without boundaries. Each company crafted its own set of guidelines and rules based strictly on the bottom line.
This could have been a great opportunity, but of course it did not work out quite that way.
As you might guess, the government had an opinion on the matter. Two basic jurisdictions cover RTO—there is the IRS and then there are state statutes. As happens in any young, fast-growing industry, not only were there problems and roadblocks to overcome, but there was also a steep learning curve in the area of the law.
Many of these companies eventually ran into difficulties with their tax accountants because they didn’t have a complete understanding of RTO or how to properly record RTO transactions. They were mostly unaware of the multitude of state RTO statutes and other consumer protection statutes applying to the transaction.
This is where the vision for NBSRA was born — a vision for creating a common language for the shed RTO industry and for defining the laws that regulate what can and cannot be done. Since its inception, NBSRA has become the official voice of the shed RTO industry. It is a go-to resource for shed RTO companies committed to adopting best business practices and staying in compliance with all industry laws.
You as the manufacturer or retailer may carry more liability and exposure than you think doing RTO business. Are you in compliance? Check this list of potential issues:
1. Advertising policies
a. There are some very clear guidelines regarding advertising your RTO options, and you should know what they are.
b. In most cases, the manufacturer/retailer handles the RTO advertising at its locations. The RTO provider might provide banners, but ultimately you are the one responsible to make sure your advertising complies with the advertising and price tag requirements in various state RTO statutes.
a. The language and terms in the RTO contracts are a legal matter. The language and terms of RTO contracts should be written or at least approved by a competent RTO attorney.
b. Most of the problems arising from RTO transactions that get the attention of consumer advocates and plaintiffs’ attorneys have to do with what is communicated to the consumer when making the deal.
c. A common mistake is using
“finance” terminology instead of RTO terms in closing the deal. When the transaction is complete, does the client fully understand all aspects of the contract?
3. Return policies
Most states have laws regarding reinstatement if a product is picked up involuntarily, including who is liable for contents. There are restrictions on pickup fees in many states.
Is your RTO provider up to speed in all areas, including all the legalities of RTO? Find out by going over these questions together with your RTO provider:
1. Are you an NBSRA member?
2. Are your contracts in compliance with all applicable RTO and other consumer protection laws?
3. Are your policies and procedures in compliance with those laws?
4. Are you in agreement with what happens to buildings that are returned?
5. Do you have a process for handling consumer complaints?
6. Do you have written agreements with the RTO provider covering when payments are due, indemnity provisions, and other liability issues?
7. Is the RTO provider able to help train and educate your sales team so they do not misrepresent RTO?
8. Does the RTO provider understand bankruptcy as it relates to RTO? Are they in compliance with bankruptcy laws?
9. Does the RTO provider have liability insurance in place that covers their operations?
As you can see, choosing the right RTO provider is important. It pays to do business with a company that provides top quality, up-to-date service.