Yahoo Finance Centrelink recipient charged $2,500 for $365 fridge
Two Aussie businesses are being dragged to court by the financial regulator for allegedly charging Aussies on Centrelink or low incomes more for household products.
The Australian Securities and Investments Commission (ASIC) is suing Rent4Keeps and Layaway Depot for alleged breaches of various consumer protections under the Credit Act.
ASIC has alleged that both businesses operate business models designed to avoid consumer protections for financially vulnerable consumers.
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The effect of this is that Rent4Keeps and Layaway Depot customers, who are often on low incomes or Centrelink benefits, are paying significantly more for electronics and whitegoods than they lawfully should, ASIC alleged.
For example, it is alleged that one consumer used Centrelink payments to pay almost $2,500 for a fridge which retailed at $365, another paid $1,200 for a mobile phone which retailed for just $249.
“ASIC has been reviewing the conduct of companies offering financial products to vulnerable consumers to ensure consumer protections are in place,” ASIC deputy chair Sarah Court said.
“In both these cases, consumers have paid well above the market price for consumer goods that are part of everyday life, such as mobile phones and whitegoods.”
In both proceedings, ASIC has alleged the arrangements were credit contracts regulated by the Credit Act and that both Rent4Keeps and Layaway Depot failed to comply with the consumer-protection obligations in the Credit Act.
In particular, the amounts charged by both Rent4Keeps and Layaway Depot exceeded the 48 per cent annual cost rate cap that applies to credit contracts under the Credit Act.
“These appear to be arrangements deliberately structured to get around the law by avoiding consumer protections, such as the 48 per cent cap, to charge consumers significant amounts,” Court said.
ASIC is alleging that, in a three-month period, Rent4Keeps entered into 533 agreements it called ‘leases’.
ASIC alleged the agreements were credit contracts put together to avoid the consumer protections, including a rate cap, that should apply.
By avoiding the rate cap, customers were allegedly charged more than three times the amount that could lawfully be charged, and some customers were charged more than six times the retail value of the goods.
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