Radio Rentals Exposed For Exploiting Customers, $20M Hit For Thorn
Retail giant Radio Rentals who was recently caught out fleecing customers, have been forced to refund almost $20M.
The Thorne Group Limited Company who own Radio Rentals, has agreed to refund or write off $6.1 million in default fees and pay back $13.8 million in excess lease payments, they have also been fined $2M.
According to investigators the rorting inside the Radio Rental operation was extensive with more than 270,000 questionable leases entered between January 2012 and May 2015.
The agreement follows a lengthy investigation by the Australian Securities and Investment Commission (ASIC) into the business’s lending practices, focusing on whether people signing the leases had the capacity to pay.
The conclusion was that they didn’t, and that Radio Rentals deliberately exploited their vulnerability.
Acting ASIC chairman Peter Kell said the customers tended to be vulnerable people in tight financial circumstances.
“Lease providers must ensure that they comply with their responsible lending obligations and should be engaging with their customers fairly,” Mr Kell said.
“You may be better off buying the good cheaply than continuing to pay your regular rental payments. You could end up paying much, much more than the product is worth.”
Single mum Abbi took out a lease with Radio Rentals for a lounge, a bedroom suite and an X-Box last year.
She said she was now struggling to pay $108 a fortnight in repayments.
Abbi said she ordered the goods online and was only asked for her Centrelink details and her home-rental agreement. The goods were delivered the next day.
“It was only when everything was delivered I realised how much I was going to have to pay,” she said.
Under the lease, she’s due to pay about $10,000 for $3,000 worth of goods. She has now engaged lawyers to help her break the contract.
Company to use ‘plain English’ in contracts
Radio Rentals has agreed to simplify its lease contracts, using “plain English” and work with ASIC to improve communications with customers whose leases are ending or have ended.
The agreement with ASIC will not affect a class action taken against the company by thousands of customers over the Radio Rental’s “Rent, Try $1 Buy” offer.
In a statement, Thorn said it had made significant changes to the way it conducted its consumer-leasing operations, placing the company at the forefront of the direction required of the industry.
“The changes we have made to the consumer-leasing division put it on a sound footing to meet the needs of its customers and satisfy its responsible lending obligations,” acting CEO Peter Forsberg, said.
“Consumer leasing is an important part of the financial system, as research shows that 3 million Australians are excluded from the financial mainstream.”
Thorn’s own independent market research showed nearly 75 per cent of customers said Radio Rentals was the only way for them to access essential household goods and that 92 per cent rated Radio Rentals as affordable.
Civil action has been lodged in the Federal Court including details of the agreement reached.
The court will need to sign off on the agreed $2 million penalty.