Rent-a-Way Case Study

Rent-A-Way is an American public furniture and electronics rent to own company based in Plano, Texas. The rent-to-own business was started. Rent-A-Way provides new and used brand-named electronics and household furnishings including washers and dryers, refrigerators, televisions, and furniture from brands such as Ashley Furniture, Sony, Toshiba, Whirlpool Corporation, Dell and HP. As part of their rent-to-own business model, Rent-A-Way generally makes its items available with no down payments or long term obligations. Customers can return an item at any time, for any reason, without penalty and also have the option to re-rent the same item and pick up the payments where they left off. Delivery, pick-up, service and repair are also included in the stated rental price. Customers can also upgrade items while they are renting--the payments will change accordingly. The total paid for an item is usually between four to six times the retail values of said item. Rent-A-Way came into scrutiny when a former employee stated that she was forced to cook the books. The CEO made the findings public and called the authorities. Rent-A-Way becomes criticized for its action and the stock free fell and the profits shrank. It eventually was sold even though they had tried to do the right thing and expose themselves the consumers weren’t forgiving and the company was sold to its competitor.

1. What do you think of the ethics of Rent-Way’s basic business model of rent-to-own that focuses in low-income people?

I personally do not have problem with it. I have worked in the real estate market and we focused on the cheapest apartments for the best price. We essentially targeted lower priced buildings to lower income individuals

2. What might leadership at Rent-Way have done to prevent the accounting irregularities that brought the company into disfavor?

By setting up a system of checks and balances that would have allowed them to catch these errors in the first place. If the...