Mr Rental forced to refund 1,560 customers for “unfair” rental contracts

By Claire Reilly

The Australian Securities and Investments Commission has today announced that home appliance and furnishings rental business Mr Rental has entered into an enforceable undertaking to refund more than 1,500 customers due to enforcing “unfair” contract terms.

Mr Rental Australia has 70 bricks and mortar stores spread across each Australia (in every state and territory except the Northern Territory) and offers appliance and furniture rentals for both consumer and business customers. Rentals are available on both short and long-term contracts and cover a wide range of products including portable air conditioners, computers, TVs, home theatres, gaming products, whitegoods and fitness products.

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ASIC confirmed that Mr Rental has entered into an enforceable undertaking with the regulator to provide refunds to approximately 1,560 consumers and “amend the standard form rental contract used by the 52 franchisees operating under the Mr Rental banner”. The refunds are expected to be “in excess of $300,000” according to ASIC.

The statement from ASIC outlined infringements of Australian Consumer Law and the Australian Securities and Investments Commission Act 2001. According to the statement, Mr Rental’s “standard form rental agreement” included a term which allowed franchisees to charge additional fees if consumers terminated their rental agreements early. ASIC deemed this “calculation period adjustment” condition as “unfair”.

As a result of the undertaking, Mr Rental has agreed to write to affected consumers and provide them with a refund, and advise existing customers that they will not be charged for early contract termination. In addition, the company has agreed not to enter into further rental agreements that charge the calculation period adjustment fee.

“ASIC had additional concerns that the rental agreement was regulated by the National Consumer Credit Protection Act 2009 (National Credit Act),” the statement concluded. “ASIC understands that Mr Rental or its franchisees intend to apply for an Australian credit licence.”

The enforceable undertaking is effective as of 8 January 2013.

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