Aarons 2013 Annual Report Download - page 23

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decisions or interpretations will not have a material adverse effect on our operations or earnings.
A summary of certain of the state and federal laws under which we operate follows. This summary does not purport to be a
complete summary of the laws referred to below or of all the laws regulating our operations.
Currently, 47 states and the District of Columbia specifically regulate rent-to-own transactions, including states in which we
currently operate Aaron's Sales & Lease Ownership and HomeSmart stores. Most state lease purchase laws require rent-to-own
companies to disclose to their customers the total number of payments, total amount and timing of all payments to acquire
ownership of any item, any other charges that may be imposed, and miscellaneous other items. The more restrictive state lease
purchase laws limit the total amount that a customer may be charged for an item, or regulate the "cost-of-rental" amount that
rent-to-own companies may charge on rent-to-own transactions, generally defining "cost-of-rental" as lease fees paid in excess
of the “retail” price of the goods. Our long-established policy in all states is to disclose the terms of our lease purchase
transactions as a matter of good business ethics and customer service. We believe we are in material compliance with the
various state lease purchase laws in those states where we use a lease purchase form of agreement. At the present time, no
federal law specifically regulates the rent-to-own industry. Federal legislation to regulate the industry has been proposed from
time to time.
There has been increased legislative attention in the United States, at both the federal and state levels, on consumer debt
transactions in general, which may result in an increase in legislative regulatory efforts directed at the rent-to-own industry. We
cannot predict whether any such legislation will be enacted and what the impact of such legislation would be on us. Although
we are unable to predict the results of any regulatory initiatives, we do not believe that existing and currently proposed
regulations will have a material adverse impact on our sales and lease ownership or other operations.
In a limited number of states, we utilize a consumer lease form as an alternative to a typical lease purchase agreement. The
consumer lease differs from our state lease agreement in that it has an initial lease term in excess of four months. Generally,
state laws that govern the rent-to-own industry only apply to lease agreements with an initial term of four months or less. The
consumer lease is governed by federal and state laws and regulations other than the state lease purchase laws. The federal
regulations applicable to the consumer lease require certain disclosures similar to the rent-to-own regulations, but are generally
less restrictive as to pricing and other charges. We believe we are in material compliance with all laws applicable to our
consumer lease program. Whether utilizing a state-specific rental purchase agreement or federal consumer lease form of
agreement, it is our policy to provide full disclosure to our customers of all fees they will be charged in their transactions.
Our sales and lease ownership franchise program is subject to Federal Trade Commission, or FTC, regulation and various state
laws regulating the offer and sale of franchises. Several state laws also regulate substantive aspects of the franchisor-franchisee
relationship. The FTC requires us to furnish to prospective franchisees a franchise disclosure document containing prescribed
information. A number of states in which we might consider franchising also regulate the sale of franchises and require
registration of the franchise offering circular with state authorities. We believe we are in material compliance with all
applicable franchise laws in those states in which we do business and with similar laws in Canada.
Supply Chain Diligence and Transparency
Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, was adopted to
further the humanitarian goal of ending the violent conflict and human rights abuses in the Democratic Republic of the Congo
and adjoining countries ("DRC"). This conflict has been partially financed by the exploitation and trade of tantalum, tin,
tungsten, and gold, often referred to as conflict minerals, that originate from mines or smelters in the region. Securities and
Exchange Commission ("SEC") rules adopted pursuant to the Dodd-Frank Act require reporting companies to disclose
annually, among other things, whether any such minerals that are necessary to the functionality or production of products they
manufactured during the prior calendar year originated in the DRC and, if so, whether the related revenues were used to
support the conflict and/or abuses.
Some of the products manufactured by Woodhaven Furniture Industries, our manufacturing division, may contain tantalum, tin,
tungsten and/or gold. Consequently, in compliance with SEC rules, we have adopted a policy on conflict minerals, which can
be found on our website. We have also implemented a supply chain due diligence and risk mitigation process with reference to
the Organisation for Economic Co-operation and Development, or the OECD, guidance approved by the SEC to assess and
report annually whether our products are conflict free.
We expect our suppliers to comply with the OECD guidance and industry standards and to ensure that their supply chains
conform to our policy and the OECD guidance. We plan to mitigate identified risks by working with our suppliers and may
alter our sources of supply or modify our product design if circumstances require.