Renting College Textbooks Can Be An Even Bigger Ripoff Than Buying Them

George Washington University graduate Alison Oksner learned her lesson. After she failed to return a rented textbook on time to Amazon, Oksner said she was fined $87.61.

That was more than she earned in a week as a resident dormitory adviser. All told, she spent $118.24 in rental and late fees — more than if she had bought the book new.

In theory, that might have been fair: When Oksner rented the book, she agreed to pay an additional fee if she returned it late. But in practice, consumer advocates argue, what happened to her — and to thousands of other students on college campuses across the country — could be against the law.

Even in the digital age, textbook rentals — which can run much less than the price of new or used books — are a big business. About 30 percent of college students are projected to rent at least one textbook this year, according to McKinsey & Co.

About 10 percent of the students who rent a textbook will fail to return it on time, according to spokespeople for Barnes & Noble College and the college textbook program at Shakespeare & Co. Bookseller. That’s where the big retailers get them: Most of these companies — including Amazon, Barnes & Noble College and Follett Higher Education Group — don’t charge late fees on a per-day or per-week basis. Instead, they levy a flat percentage no matter how late the materials are returned.

That kind of late fee may violate a basic premise of contract law, which holds that when someone breaches a contract — say, by returning a book late — they can’t be forced to pay penalties higher than the actual damage they caused. That suggests retailers can’t seek compensation that exceeds the value of what they actually lost from the late return of their books.

“They’re exploiting late fees as a profit center,” said Arthur Levy , a San Francisco consumer class action attorney. “A flat late fee is not based on any reasonable calculation of the rental company’s loss from having a book returned late. They are simply preying on students, who as a group can ill afford to pay excessive fees.”

Amazon said the company strives to provide students with affordable textbook options and offers them a 15-day extension on their rental deadlines — for an additional fee.

Read ’Em And Weep

Catholic University of America graduate Matthew Suhosky said he was stunned when he received a $315 bill from a collection agency last fall after he failed to return a rented Italian-language textbook on time to Cengage, an online provider of education materials. It took him about 25 hours of bartending at an on-campus restaurant to repay that charge.

Suhosky had already forked out $136 to rent the book and while he was entitled to keep it after paying those late fees, that was little consolation. “It was incredibly expensive and not worth it at all,” he said.

A book that expensive is an outlier, according to Todd Markson, chief strategy officer for Cengage. On average, he said the company’s textbooks cost $35 to rent and $160 to buy.

Markson also noted that while the company rents and sells books to students who prefer a hard copy, Cengage’s focus is now on its digital library , which students can access in its entirety for less than what Suhosky spent to rent one book.

In fact, one-third of college students no longer buy or rent hard-copy books, according to James Koch, an economics professor and president emeritus at Old Dominion University, who has advised the U.S. Department of Education on textbook pricing. But for the two-thirds who still do, textbook retailers set prices and fees that often have little to do with actual production costs, Koch said, adding, “This is classic profit-maximizing behavior.”

That’s the problem, according to Florencia Marotta-Wurgler , a contracts professor at New York University School of Law and co-author of Does Anyone Read the Fine Print? Consumer Attention to Standard Form Contracts.

Late fees that are “over-compensatory” can be seen as penalties, Marotta-Wurgler explained. And penalties, otherwise known as punitive damages, are generally rejected by courts in breach-of-contract cases, she said.

Under most state laws, Levy said, an across-the-board penalty for the late return of rented materials would be valid only if the rental company could demonstrate both that its damages from a late return could not be reasonably calculated and that the late fee was a reasonable estimate of the loss, Levy said. In the case of rented books, he argued, “neither seems to be true.”

Fees Upon Fees Upon Fees

The threat of late fees is not the same across the rental book industry. Companies have different policies on how much to charge for the delayed return of textbooks, and those differences come with financial consequences for students.

At LaGuardia Community College in New York, students can rent textbooks from the school’s bookstore, which is operated by Barnes & Noble College. That’s a valuable service given that more than 67 percent of LaGuardia undergraduates come from families with an annual income of less than $25,000.

But if students don’t bring those texts back by the due date, Barnes & Noble College will charge them 75 percent of what a new book would have cost, plus a processing fee equal to 7.5 percent of that new book price, according to the company website. That amounts to 82.5 percent of the new book price, plus the rental fee the student already paid.

The tardy student might have paid less, however, by renting the same book from a competitor, such as the retail book chain Barnes & Noble. (Barnes & Noble Education, which operates nearly 800 campus stores nationwide under the Barnes & Noble College name, is a separate corporate entity from Barnes & Noble.)

A student who returns a book more than 15 days late to Barnes & Noble will be charged a fee that equals 100 percent of what a new book would have cost, minus the rental fee and the 15-day extension fee, according to the company website.

That’s a better deal, but some lawyers contend it still may not be legal.

“This is the kind of stuff Blockbuster did before it became history,” said Brian Bromberg , a consumer protection attorney in New York. The now-defunct video rental company faced dozens of lawsuits for charging customers late fees that bore no relationship to the actual damages that it incurred from the tardy return of movies.

In Barnes & Noble College’s defense, Lisa Malat, chief marketing officer and vice president of operations, said the company takes pains to make sure students do bring the books back on time.

“Through our extensive outreach, which includes multiple emails directly to students, we remind students of rental due dates and encourage them to return their books before they leave campus for the semester,” Malat said.

Additionally, students can be reimbursed for any late fee paid if they eventually bring those books back, she said, adding that the managers at the individual college stores have the discretion to waive the processing fee as well.

Barnes & Noble College did not respond to questions about whether it notifies students that it will reimburse late fees regardless of when they return the book.

‘The Book Is The Object’

Like Barnes & Noble College, Follett will also accept a late book back and reimburse students for charges incurred in the interim. Those charges, according to the company website, are 75 percent of the cost of a new book, plus an administrative fee equal to 7.5 percent of that new book price. The fees are in addition to the rental cost.

“The fee is not the object here. The book is the object,” said Thomas Kline, a spokesman for Follett, which serves more than 5 million students nationwide through its virtual and college-based bookstores. “The deadline is more important to us from a purely operational standpoint.”

But if getting the books back is the goal, Follett did not explain why it doesn’t directly notify students that they can bring rented books back after the due date for a full reimbursement of the late charges.

When Hunter College graduate Don Kelly tried to return the used book he’d rented from Follett after the deadline, he said he was rebuffed.

According to Kelly, the Follett-employed store manager refused to accept the book on the premise that she could not find evidence of the rental transaction in the computer, even though Kelly said he had with him the original receipt from the transaction. That receipt indicated when and where he’d rented the book, how much he’d paid for it and when it was due. A few weeks later, he said, he received a bill in the mail from a debt collector that claimed he was responsible for Follett’s charges plus the debt collector’s own fees.

Kelly returned to the store. This time, the manager accepted the book but also charged him the late fee. Kelly said he ended up paying the full purchase price for a book that the store got back.

Mistakes can happen, Follett spokesman Kline said, urging students to contact the company’s customer service department if they have concerns about their rentals.

To Sue Or Not To Sue

Twenty million students were expected to attend college in the U.S. this academic year. If 30 percent rent at least one textbook and 10 percent of them fail to return it on time, that means some 600,000 students could be hit by late fees.

If they wanted to challenge the enforceability of those fees in court, many of them would have to go it alone. Of course, suing a large company in hopes of recovering, say, $87.61 is not likely to be a good financial gamble.

The legal system has an answer to this problem: class action lawsuits, in which consumers with small individual claims can band together in court.

To prevent such suits, the rental contracts from Amazon, Barnes & Noble and Follett have clauses mandating that customer disputes be handled through arbitration. Chegg , another well-known online retailer of education materials, has an arbitration clause that bars such suits unless students specifically opt out of the clause within a specified time frame. (Cengage and Barnes & Noble College do not have mandatory arbitration clauses or class action preclusions.)

Consumer protection advocates have long pushed to eliminate mandatory arbitration clauses, and the Consumer Financial Protection Bureau struck a blow against them for a brief period in 2017. But the then Republican-controlled Congress killed the agency’s effort with President Donald Trump’s support.

And without the threat of a class action lawsuit challenging their fees, book rental companies have no incentive to reconsider their ways.

“Given a chance, a court might decide that these practices are illegal,” said Bromberg, the consumer protection lawyer, “but without a class action mechanism, no one is going to test the issue.”