Harvey Norman Accused Of Selling “Outrageously Expensive”Finance Contracts
Harvey Norman has been accused of locking consumers into “outrageously expensive” consumer leases, it’s also been revealed, that that their sales staff are earning “high commissions” from the lease contracts.
The Consumer Action Law Centre (CALC) has said that a consumer who buys a $2847 TV is ending up paying over $5400 at the end of the contract and they don’t even own the TV when all payments have been made.
CALC told the ABC that consumers who buy from Harvey Norman and take out a consumer lease will end up paying up to 4 times the original purchase price of the goods.
They cited Katie Tyquin and her partner as a couple who thought they had signed an interest-free contract to pay off their new television from Harvey Norman over five years.
“The front page had our monthly repayments which were indicated to us, which I think was $180, the total purchase price, which was $2,847,” she told the ABC.
“That was the front page and I just remember him lifting it up and saying ‘sign here’.
“When we got home we looked at the contract and realised we were paying $5,400 for a TV worth $2,800.”
Ms Tyquin said she contacted the lease company Flexirent the next day, telling them she wanted to pay the purchase price of the television immediately and end the contract.
The finance company refused and as a result he has taken the issue to the ombudsman.
“They came back to me and said the only way I could purchase the TV then and there was to pay the full amount, $5,400, and then an additional fee of $142 because that’s what they thought my TV would be worth in five years’ time at the end of my contract.”
Ms Tyquin’s has also lodged a complaint with the Credit and Investments Ombudsman.
The ABC sad that will CALC has received 45 complaints in the past six months and has written to the Australian Securities and Investments Commission to complain about three cases including Ms Tyquin’s.
The Credit and Investments Ombudsman Raj Venga told the ABC his office received 373 complaints about consumer leases in the past year.
In many of those cases, customers complained they did not realise they were signing up to a rental agreement.
“The most common thing we see is that people think they’re actually entering a contract for a loan as opposed to a lease and that has totally different implications for them as consumers,” Mr Venga told the ABC.
“For example under the National Credit Act they don’t have some of the protections you would have for a loan or credit contract.
“A lot of disclosure is absent in leases, there are no price controls so they can charge pretty much what they want.”
Earlier this year, a government-appointed panel released its review of small amount credit contracts.
Calls for price cap and banning of unsolicited leases.
Among the recommendations is to introduce a cap on the total amount of the payments to be made under a consumer lease of household goods.
It also recommended banning the unsolicited selling of consumer leases of household goods.
“The recommendations are good, we don’t feel they go quite far enough, but at the moment there’s no cap on the cost, there is no limit to what can be charged under a consumer lease and obviously that’s a major problem,” Mr Gillam said.
Lease company Flexirent said Ms Tyquin’s contract was clearly labelled as a rental agreement.
The company said it had a range of checks included with its contract application and approval process to ensure customers understand their agreement.
“In particular given the specific confirmations made by Ms Tyquin at multiple stages throughout the contract application, approval and signing process, that she had read and understood the nature of the consumer lease contract she was entering into,” the company said in a statement to the ABC.
“Further, Ms Tyquin also voluntarily went back into the Harvey Norman store 48 hours after completing her pre-approval process to acquire the television.”