200,000 consumers launch class action against Radio Rentals
The claim could be worth up to $50 million.
A nationwide class action lawsuit has been launched in Sydney today against the unfair and unconscionable practices of Radio Rentals. The class action could be comprised of up to 200,000 affected consumers across Australia and worth up to $50 million.
The lawsuit, being led by Maurice Blackburn Lawyers, has been announced just two days after 30 meetings were held in Canberra between consumer advocates and MPs regarding payday loan and consumer lease legislation.
Ben Slade, principal at Maurice Blackburn, says the contract terms imposed by Thorn Australia (trading as Radio Rentals) avoided credit laws that prohibited overcharging.
"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 (Centrelink payment) accounts, well beyond the retail value of the goods,” Slade said.
The company's "Rent, Try $1 Buy" offer is another seriously misleading part of the class action.
"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.”
One of the key arguments from consumer action groups that met with Parliament on Monday is that many of these companies, in particular consumer leasing companies, can be avoided. No- and low-interest loan schemes such as those provided by Good Shepherd Microfinance offer affordable credit options for those on low incomes for the purpose of buying essentials.
While not all borrowers are eligible and the turnaround time is longer, it is an option to consider for many consumers usually opting for high-cost rent-to-buy schemes, the costs of which were largely unregulated until recently.
Karen Coz from the Financial Rights Legal Centre said the unfair treatment of consumers by companies such as Radio Rentals needs to stop.
"“A healthy business model is one that delivers real benefits to people needing a service – not one that uses misleading means to get people into situations that only make their personal plights more dire."
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