Easyhome seeks to settle class-action suit
Michael J. Knell -- Furniture Today, March 13, 2005
Toronto — Easyhome, Canada's largest rent-to-own furniture merchant, is moving to settle a class-action lawsuit in which some 70,000 customers allege they were charged excessive interest rates.
Without admitting wrongdoing and subject to court approval, Easyhome proposes to pay claimants C$7.38 million in coupons, which can be used for new merchandise or be applied against existing rental agreements. The company also would pay plaintiffs' legal fees, which have yet to be set by the court.
Initially filed in April 2004 by a customer in Windsor, Ontario, the suit alleged Easyhome had charged effective annual interest rates in excess of 60%, violating Canada's criminal code. Damages of about C$200 million were sought for all persons in Canada, except Quebec, who had signed agreements with Easyhome, First Choice Rent-to-Own or Rentown on or after April 26, 1998, and acquired ownership of items 90 days or more after signing agreements.
Easyhome also said it would revise rental agreements so that the difference between payout amounts and the cash price of merchandise cannot be construed as an interest charge. The company contends it doesn't charge interest since it doesn't advance credit. The rental agreement changes would not affect its business model, Easyhome said.
The coupons, with an average value of C$55 each, would have to be used by the end of 2005. Easyhome said that, since it doesn't know how many coupons will be redeemed, it can't say what impact the settlement might have on 2005 earnings.
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