Thorn settles Radio Rentals class action

With $25m payment.

Thorn Group has agreed to pay $25 million to settle the class action against its ‘Rent Try $1 Buy’ leases with Radio Rentals customers.

Thorn advised that the settlement did not involve any admission of liability and remains subject to court approval. Thorn’s insurer will also make a separate contribution towards the settlement.

In March 2017, Sydney-based law firm, Maurice Blackburn launched the class action in the Federal Court of Australia seeking compensation for over 200,000 consumers.

The case, commenced by Wagga Wagga mother-of-five Casey Simpson, alleged that Radio Rentals engaged in misleading or deceptive conduct and/or unconscionable conduct, including unfair contract terms, on the basis that customers paid excessive amounts on their leases. Contrary to Radio Rentals’ advertising, customers were not entitled to buy rented goods for $1.

Then in January 2018, Thorn paid $6.1 million in remediation and $2 million civil penalty to the Australian Securities and Investments Commission (ASIC) for consumers who entered into relevant leases from 1 January 2012 to 1 May 2015.

Last month, Thorn commenced a store rationalisation process for the Radio Rentals store network following an ongoing review of performance and lease maturity dates. A decision was made to close eight stores with demand for consumer leasing moving online.

For the financial year ending 31 March, 2019, Radio Rentals recorded an operating loss of $2.2 million. Further, $10 million of software and fixed assets were written off.

The class action matter involves Radio Rentals stores owned and operated by the Thorn Group in states other than South Australia. The South Australian Radio Rentals brand is not associated in any way. In South Australia, Thorn Group stores trade as Rentlo Reinvented.

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