Affecting over 200,000 consumers around the country.
Sydney-based law firm, Maurice Blackburn has launched a class action in the Federal Court of Australia seeking compensation for over 200,000 consumers who entered into ‘Rent Try $1 Buy’ leases with Radio Rentals between 28 March 2011 and 29 March 2017.
The case, commenced by Wagga Wagga mother-of-five Casey Simpson, alleges that Radio Rentals engaged in “misleading or deceptive conduct and/or unconscionable conduct, including unfair contract terms”.
Simpson is claiming compensation for herself and others on the basis that Radio Rentals customers paid excessive amounts on their Rent Try $1 Buy leases and that contrary to Radio Rentals’ advertising, customers were not entitled to buy the rented goods for $1.
Maurice Blackburn says, “The class action alleges that one of the more insidious aspects of the business is that Radio Rentals continued to draw money on an ongoing basis from its clients’ Centrepay accounts, well beyond the retail value of the goods. Here we have a national company that deals with vulnerable people promising them one thing but signing them up to another, at a much higher price than is reasonable.
“Rent, Try, $1 Buy is misleading when you delve into what’s involved. What we have found is that people are paying up to seven times the true retail costs for goods in the belief that the goods will always be theirs, yet the contracts do not give them that right.”
“If the class action is successful at trial or a settlement with Radio Rentals is reached, we anticipate that eligible group members will be paid compensation. This class action, like many class actions, may take a few years before it is resolved because of the number of people involved and the legal complexities.”
Consumer leases under scrutiny
On Monday, advocacy groups including Choice, Consumer Action Law Centre, Financial Counselling Australia, Financial Rights Legal Centre, Consumer Credit Legal Service (WA) and Good Shepherd Microfinance, called for the federal government to immediately introduce legislation to protect borrowers of loans and leases.
The government completed a review of small amount credit contracts (consumer leases and payday loans) in November of 2016. The report made 24 recommendations in an effort to protect consumers but none of the recommendations has been legislated in the 120 days since, prompting consumer groups to band together at a demonstration in Canberra under the Consumer Federation of Australia.
The reforms include limiting lease repayments, prohibiting monthly fees for early repayments and banning unsolicited payday loan offers to current or previous customers.
Consumer Federation of Australian chairman, Gerard Brody said, “It is essential that payday lenders and consumer lease companies like Radio Rentals have to limit…these toxic products to 10% of people’s income. This will see fewer people stuck with dodgy deals, like paying over $3,000 for a clothes dryer worth $345.”
Good Shepherd Microfinance CEO, Adam Mooney said small amount credit contracts target the financially vulnerable.
“Payday loans and consumer leases are often used by people who feel they have no alternative when times get tough. We would like to see the federal government increase its investment in safe, smart options such as financial counselling, the No Interest Loan Scheme (NILS) and legal assistance,” he said.
Redfern Legal Centre credit and debit solicitor, Laura Bianchi told Choice, “The terms and conditions of consumer lease contracts go to great lengths to bury crucial information. Many consumers are under the mistaken belief that once they pay off the value of the good being leased, they will become the owner. Instead they end up paying much more than the item was ever worth.”
The 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.