When we last left off, Aaron’s had just offered a loan to a person who had explicitly detailed his problems with debt, lack of money, and lack of interest in paying for things. All through Grant’s phone call, phone operators were friendly and accommodating of the cheerful deadbeat offering to sign an Aaron’s contract.
“But they were friendly! How bad could they be, Savings? Why the campaign of negativity?”
Because, reader, it is never, ever, ever, ever, ever, ever, ever, ever a good idea to shop at Aaron’s. If I couldn’t communicate that with my previous lengthy polemic, here’s a Buzzfeed-style listicle (I forgive you if you skimmed my intro, fellow millennials).
1. Aaron’s spied on consumers, as in “nudie pics and personal info” spying.
Not an exaggeration. Leasers/buyers of computers from Aaron’s all over the US were targeted in a completely monstrous espionage campaign that would make the NSA blush. More than just location and financial information were captured — one can see a reason Aaron’s would have a vested interest in gathering that, although that certainly doesn’t justify it. Instead of describing it, here’s the Federal Government’s take on what happened:
“Since at least 2009 through January 2012, some Aaron’s franchisees licensed a software product known as PC Rental Agent from DesignerWare, LLC (“DesignerWare”) and installed it on computers rented to consumers […]”
“[…] Using Detective Mode, Aaron’s franchisees could — and did — surreptitiously monitor the activities of computer users, including by logging keystrokes, capturing screenshots, and using the computer’s webcam. Through Detective Mode, Aaron’s franchisees could — and did — secretly gather consumers’ personal information using fake software registration windows.”
So there’s that.
2. The founder of Aaron’s owned a bank that was fingered by the Fed in the sub-prime crisis.
Charlie Loudermilk, who began Aaron’s with just some party chairs in the company origin story he repeats ad nauseum, also owned Atlanta’s Buckhead Community Bank, which was abruptly closed in 2009 — that is to say, in the aftermath of the global financial meltdown caused by crummy loans.
In 2012, the FDIC officially filed suit against Loudermilk himself, alleging that while he was chairman, during the period from the early 2000s until the subprime crisis, the bank made millions of dollars in highly risky loans. The FDIC sought $21.8 million, alleging that Buckhead “recklessly” gave out a fortune in unwise loans that flew in the face of banking ethics, and its own internal rules and regulations, in order to give loans to people who weren’t credit-worthy at all, and loans of too much money to people who were a little credit worthy.
The bank’s lawyer said, “The complaint and the allegations are without merit and we will demonstrate that in court.” From court documents in the ongoing legal proceedings, it looks like this will drag on for years. Loudermilk is in his eighties.
3. Aaron’s targets the poor.
As I’ve mentioned before, the RTO industry has a lobby, and front-and-center on its website are statistics they’ve gathered on who uses rent-to-own/lease-to-own retail. Some have accused their industry of unfairly targeting African-Americans, or the elderly, which there’s no evidence for, but their own numbers do show that their customers are pretty much all poor.
As far as combined household income, 13 percent are from households making under $15 thousand, 28 percent make from $15-24 thousand, 34 percent make $24-36 thousand, 24 percent make 36-50 thousand, and 3 percent have combined earnings of 50 thousand or more a year. Other statistics point to them mostly being homeowners with kids, so even with their tiny incomes, they have mortgages to pay.
How do you reach the poor? Figure out what they probably watch, and market there. For Aaron’s, that’s sports. It’s controversial to say this, but Nascar is a sport much beloved by the non-rich. It’s hard to demonstrate, but The Daily Beast ran a list of the top Nascar loving cities. The majority are states with below-average income. Only one, Virginia, is in the top ten among statewide income levels.
Obviously people of all incomes enjoy Nascar, but with stadium capacities over 100 thousand, it’s a good place to spread a brand message to a vast number of people, many of whom aren’t doing well financially. Aaron’s has an elaborate deal with Nascar superstar Michael Waltrip, in which his car is named the “Aaron’s Dream Machine,” and carries the number 55, after 1955, the year Aaron’s was founded.
As for the efficacy of marketing to Nascar fans, CNBC’s 2005 story on the subject carried the headline “Nothing Does It Like Nascar,” and wrote that “NASCAR offers Corporate America something no other sport provides. […] a level of consumer loyalty that’s unmatched.”
4. Aaron’s has a legion of unsatisfied customers.
“We keep learning what people need and want and keep supplying it. We couldn’t have 1,500 stores unless we were doing a great job of satisfying customers.” -Charlie Loudermilk, Founder of Aaron’s
Last time I wrote about Aaron’s, I grabbed quotes from their page at Consumer Affairs, where, admittedly, anyone can say anything about a business, which makes it into a huge unfiltered bulletin board of indignation. For something a little more credible, I tried reading their Yelp reviews instead. It’s harder, because each location has a separate rating, so I just had to keep trying other locations in other cities. Over and over, I tried different cities in different parts of the country and I found exclusively negative reviews.
I finally found one good one in the metro Atlanta area. Not to poison the well of credibility, but that one is only a few miles from Aaron’s corporate headquarters. I’m not saying there aren’t other positive reviews. They have thousands of locations. But I am saying I tried my hardest and I couldn’t find any more. As a fun game, try it yourself. Let me know what you find.
For reference, by the way, here are the reviews of the first random Arby’s I found.
5. The Aaron’s business model is spreading
Screencapped from Sears “Why Not Lease it” site
Aaron’s is suffering from some kind of mysterious existential turmoil, and it looks like some lucky buyer is about to take ownership. God knows why. Aaron’s is reporting profits. For a clue from history, Ron Allen, the CEO of Aaron’s once got fired from Delta when the company was reporting record profits, and it turned out it was because Allen was demanding an unreasonable raise. In return for his resignation he he was awarded an astonishing golden parachute (I have to say “rumor has it” here, because the blog I’m linking to refers to an outdated news link) worth perhaps eight million dollars. So Now Aaron’s, an apparently healthy company is “ready to sell at the right price.”
But, horror of horrors! Kmart has adopted the Aaron’s business model. I can imagine why. Layaway is a great way to get someone to commit to buying something they don’t currently have enough money for. I endorse layaway for anyone in the position of needing things they can’t afford. Despite the stigma, it’s mostly harmless to the consumer. With a lease-to-own model, Kmart has, according to Bloomberg, turned a “$300 TV Into [a] $415 Buy.” What’s good for Kmart is of course good for sister company Sears, which has also adopted the policy.
Kohls, Home Depot, and Walmart can’t be far behind. God help us all.