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Category: Consumer Protection / Business, Economics and Finance / Consumer Finance

Radio Rentals facing class action over 'Rent, Try, $1 Buy' scheme

03:15 UTC+8 March 29, 2017 | Amy Bainbridge

Lead plaintiff Casey Simpson says she feels "ripped off". (Supplied: Maurice Blackburn)

Retail giant Radio Rentals is facing a class action on behalf of thousands of customers who have allegedly been ripped off while leasing household goods.

Key points:

  • The company's "Rent, Try $1 Buy" offer can see some customers paying more than four times the retail value for a product
  • The class action could involve up to 200,000 people
  • The company could be forced to refund a total of $50 million

Law firm Maurice Blackburn says if successful, the case could affect up to 200,000 people and refund a total of $50 million.

The court case is based on the company's "Rent, Try $1 Buy" offer — where consumers sign an agreement to rent items like fridges, televisions and smart phones.

But the customers can sometimes end up paying more than four times the retail value and not own the product when the lease ends.

Maurice Blackburn alleges Radio Rentals targeted vulnerable people and treated customers unfairly and unconscionably, and should pay them compensation.

Ben Slade from Maurice Blackburn said the case would be filed as an open-class action, on behalf of lead plaintiff Casey Simpson.

Mr Slade said Ms Simpson, from Wagga Wagga, had four separate contracts for household goods, but alleges when those contracts ended Radio Rentals kept charging her for the leased products.

"She was attracted by Radio Rentals advertising of 'Rent, Try, $1 Buy, and looked at the payment regime and thought she could afford to do the things that Radio Rentals said she could do.

"She obtained for example a second-hand mattress and bed for $430, and yet she finds after a number of years she's paid over $3,400 for it."

Mr Slade said Ms Simpson kept having money automatically deducted from her account long after contract had ended.

"It seems to be part of the business model that the payments just keep being made until the consumer realises that the money's continuing to go out," he said.

'I was paying way too much'

Ms Simpson has told the ABC she took out separate leases for a dining setting, television and coffee table as well as the bed.

She said she sought help from a local legal centre to understand why payments were being deducted when she thought her contracts had ended.

"It seemed like I was paying way too much for the goods that I had," she said.

In all she says she paid about $5,000 more than what the goods were worth.

"If they're doing this to me, I imagine they're doing it to hundreds and thousands of other people out there, same as my position, low income and everything.

"I was definitely getting ripped off."

Mr Slade added: "We will run Casey Simpson's trial and that will identify those issues that we say are common to everyone and the court will be asked to determine whether we're right.

"If the court decides that we're right and Casey Simpson should be compensated, we will try to adopt a regime that will be beneficial for all people who paid too much."

Radio Rentals is owned by Thorn Group, which is listed on the Australian Stock Exchange.

Earlier this month, Thorn Group announced it was expecting to be hit with civil penalties in relation to an Australian Securities and Investments Commission (ASIC) investigation.

It told the stock exchange that it may have to pay compensation of $4 million to customers who did not meet minimum income thresholds for their contracts following ASIC's investigation.

The Federal Government has been urged to move swiftly and toughen laws covering the payday lending industry and consumer leases.

Karen Cox from the Financial Rights Legal Centre said the practice needed to be called out and stopped.

"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," Ms Cox said.

Thorn Group has been contacted for comment.

AustraliaPlus


 

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