Renter beware.

Just $14.99 a week for a color television sounds pretty good to a $6-an-hour factory worker or a mother on welfare. For people without the cash or the squeaky-clean credit history to buy it at Sears, "renting to own" offers an alluring alternative: easy payments, no credit check, and no hassles. But your mother should have told you this: When you hear phrases like "no credit check and no hassles," keep your hand on your wallet. Someone's trying to pick your pocket.

The rent-to-own equation is simple. When a rent-to-own store brings in a new piece of merchandise, it multiplies the wholesale price by a set percentage - usually 350 percent to 450 percent - to come up with the total sales price. Then the store divides that total by a number of weeks or months - typically 78 weeks or 18 months - to determine what the installment payments will be. Throw in fees for insurance, late charges, and other submerged costs, and eventually customers pay three, four, or five times what they'd spend on the same item at a retail store. That's why a 20-inch TV that costs $329.99 at Sears will cost as much as $1,200, at Rent-A-Center, the nation's largest chain of rent-to-own outlets.

With these exorbitant prices come a set of rules that grossly favor the retailer over the customer. Iris Green, a public housing resident in Paterson, N.J., paid nearly $4,000 to Continental Rentals toward a stereo, washer, freezer, and other items that had a cash value of less than $2,800. The she got sick and the paychecks from her job as a nursing home aide stopped coming. Continental came and took everything. Sandra James signed a $2,485 rent-to-own contract for bedroom furniture from a Rent-A-Center in Chicago. She fell behind in her payments and the store swore out a theft change against her. She says the manager told her the warrant would be dropped if she paid $177.50. She paid but then was hauled off her job by police officers accompanied by the manager. She spent the night in jail.

Rent-to-own got its start back in the sixties, when state and federal government were passing laws to control ghetto merchants who used retail installment contracts to fleece the poor. The industry's trade group, the Association of Progressive Rental Organizations (APRO), says the rent-to-own industry was born during this time "as a result of the tightening of consumer credit and burgeoning federal consumer protection legislation."

Rent-to-own stores have managed to avoid tough consumer laws by tinkering with the traditional retail credit contract. Mainly, it's a matter of changing the terminology. An interest charge becomes a "rental fee." A late charge becomes a "reinstatement fee." Merchandise that is repossessed is "returned by the customer." Buying an item is "exercising a purchase option."

For customers, the only advantage to this system is that if they can't afford to keep paying, the item can be brought back to the store with no further obligation for the rest of the payments. That's a nice option for anyone whose income is unreliable. But it's not much of a consolation for somebody like Iris Green, who's already invested thousands of dollars in the merchandise. It's been enough in most states, however, to get rent-to-own exempted from retail-credit laws which generally limit store owners to interest rates of 20 to 30 percent a year. By avoiding such regulation, rent-to-own dealers can charge the equivalent of interest rates of 100, 200, even 300 percent a year.

In the past three decades, rent-to-own has grown from a handful of inner-city operators one step ahead of the law to a powerful nationwide industry with 7,500 stores and revenues over $3.5 billion annually. It's dominated by a few conglomerate-owned, upscale-looking chains that have changed the look, if not the reality, of selling the poor.

In spite of the industry's new image, it continues to spend a lot of money defending itself against lawsuits from attorneys for the poor.) At a legal issues seminar for rent-to-own dealers last year, the first question from the audience was: "What can we do to abolish Legal Aid?") The litigation has occasionally taught the industry something about the consequences of heavy-handed collection tactics. But the lawsuits have had less success in changing the pricing equation that makes every customer a victim. The industry has beaten back almost all challenges with a two-pronged strategy. First, overwhelm understaffed Legal Aid offices with private bar talent (or buy off destitute customers with modest confidential settlements). Then, work to change the laws.

In most states, industry lobbyists have prevailed by combining free-market rhetoric and hard-ball politicking. Back in 1983, Jeanne Fenner, a North Carolina state legislator, introduced a bill that would have limited finance charges on rent-to-own contracts. Pro-business lawmakers gutted the bill and then the industry took revenge on Fenner. During her next two campaigns, rent-to-own dealers from as far away as Texas poured more than $20,00 into her opponents' campaigns. Fenner, who spent a fraction of that, lost both times. Since then, rent-to-own opponents in North Carolina have gotten nowhere.

In many others states, the industry has headed off such nasty fights by using an effective strategy of preemptive regulation. It works like this: Dealers approach a legislator with a reputation as a consumer advocate and say, "We want to be regulated so we can protect our customers from the handful of bad apples out there. We've written a law that will do the trick."

The industry's model statute sounds good. And no doubt it does help run off some of the most outrageous scam artists because it includes some protections for consumes, like requiring that stores be honest about their prices and state whether an item is new or used. But the law also exempts rent-to-own deals from state retail credit laws and the interest limits that go along with them. "Disclose and Anything Goes," Legal Aid attorneys call this strategy. Since 1984, at least 35 states have passed such rent-to-own friendly statutes.

The industry - which by the late 1980s was spending half a million dollars a year on legislative efforts - has even persuaded the Council of State Governments to endorse its model bill. And it seemed ready to palm off the same statute on Congress until Texas Rep. Henry Gonzalez was joined on his House Banking, Finance, and Urban Affairs committee by a number of newly-elected urban liberals.

What explains this history of legislative successes? Good public relations is much of it. The industry has convinced more than a few powerful people of what might generously be called half-truths:

In written testimony submitted to Gonzalez's committee this spring, the executive director of the industry's trade association declared that "Eighty percent of the industry is made up of |mom and pop' operators with fewer than five stores each." Later, during his oral testimony, he changed that figure to "over two-thirds."

Even that's wrong. Rent-A-Center, the Wichita-based chain owned by Thorn EMI, a global conglomerate whose other assets include country-music star Garth Brooks, controls, 1,200 of the industry's 7,500 or so stores. That's nearly 20 percent of the market all by itself. In fact, in written answers to questions from the House committee, the trade association's own figures indicate that 40 percent of rent-to-own stores are owned or franchised by chains with 25 or more outlets. David Ramp, a Minneapolis Legal Aid attorney who has been fighting the industry for years, says his research shows that 60 percent of the market is controlled by fewer than 20 large corporations. And the industry trend is toward more and more consolidation.

Anecdotal evidence aside, it's clear that the vast bulk of rent-to-own's customer base comes from the poor or near-poor. For example, Rent-A-Center's own market research has shown that nearly 60 percent of its customers earn less than $20,00 a year, while just 4 percent earn $45,000 or more. Only about 7 percent are college graduates.

This is the industry's big lie. "We're in the retail merchandising business when you get right down to it," Larry Sutton, an owner in a Florida rent-to-own chain, told fellow dealers at a 1991 seminar. "We don't want to say that in court. [But] let's face it: We're in the retail business. We sell." Indeed, in a national survey, 70 percent of Rent-A-Center customers said they intended to own the merchandise. Just 11 percent said they only wanted a short-term lease. In fact, 48 percent believed they already owned the goods even before the "lease" was completed.

To test what they do tell customers, I visited 15 rent-to-own stores in Georgia, New Jersey, Pennsylvania, and Virginia. I asked questions just like any customer off the street. Among them: What percentage of customers end up owing? Not one of them gave the 25 percent figure that's cited in official settings. Seven estimated 80 percent or more. Six others gave estimates ranging from 45 percent to 70 percent. At another store, a salesman said simply: "Almost all of them."

In congressional testimony this spring, the industry's trade group said that 12 percent of rent-to-own merchandise is stolen. However, the industry association's chief attorney wrote in an 1989 trade journal article that rent-to-own stores' losses from stolen merchandise consistently averages about 2 percent of revenues - considerably less than what credit-card companies are forced to write off in unpaid debts.

As for free repairs and replacement, a lot of the stuff - such as furniture - requires little maintenance, and much of it is covered by manufacturer's warranties. A Rent-A-Center study found that less than five percent of their merchandise needed repairs.

But the spectre of damaged goods is actually a cash cow for the industry. Most stores require customers to pay "damage and theft waiver fees" - essentially credit insurance that covers the store if something happens to the merchandise. In return for the fee, you won't owe anything to the store if the merchandise is damaged or stolen during the contract period. The downside, of course, is that you're also out all the payments you've already made and can't keep what you've been paying for.

Typically, a rent-to-own store will charge you $1 a week in "waiver" fees for insurance - so that a $330 TV from Rent-A-Center (for which you're paying $1,200) costs another $74 to insure. For roughly that sum you could buy enough renter's insurance to cover $10,000 or even $20,000 worth of personal belongings. Rent-A-Center, meanwhile, makes a bundle on the extra fee: Ramp's research has shown that Rent-A-Center has to write off only about a nickel in claims for each dollar it takes in "waiver fees." (Another big money maker is fees to forgive late payments. Rent-A-Center customers in Minnesota paid $1.3 million in "reinstatement" charges over one four-year period).

Even where lawmakers haven't been snookered into buying this industry propaganda, rent-to-own dealers have found ways to get around the law. When Pennsylvania passed a statute in 1989 that defined rent-to-own as a retail sale and sets an annual interests limit of 18 percent the state's rent-to-own dealers claimed the law would put them out of business. It didn't. Instead, most ignored it or found ways to skirt it. Some, for example, now offer straight rentals ("rent-to-rent") with the promise of a "rebate" that the customer can use to purchase the item at the end of the contract. An undercover investigation by the Pennsylvania attorney general's office found rent-to-own stores were still charging annual interest rates from 82 to 265 percent.

This end run shows the problem with trying to regulate away price-gouging: As long as there's a customer demand and a market that is locked out of mainstream credit, some businesses will find a way to take advantage. "If you want nice things - where are you gonna go if you can't get credit?" asks Tonya Cross, a rent-to-own customer in Roanoke, Va. "If you want it, you're gonna have to get it from somewhere."

Which is where customer advocates come in. Many customers are illiterate or financially unsophisticated and have little idea that they are paying double or triple retail, or more. Few know that - as the industry has sworn in court and in Congress - you have only a one-in-four chance of ultimately keeping the stuff when you rent-to-town. A consumer protection campaign pushing these themes would be a good start.

Other customers, like Cross, know that they're paying more, but go the rent-to-own route because they believe they have no other choices. That's why government and consumer activists should provide them with some alternatives by putting more resources into credit unions and other non-profit institutions that offer savings accounts and small loans to poor and working people.

In the meantime, there are some cheaper (though not inexpensive) alternatives: Buying things on time from retail stores or with credit cards is almost always cheaper than renting to own. Paying 20 percent interest a year or more to a retail store isn't cheap, but it's less than rent-to-own and the chances you'll actually keep the goods are better. Taking the plunge with Sears simply has to be better than paying $1,200 for a $300 TV.