The company’s owner, Thorn Australia, came under scrutiny as part of Australian Securities & Investments Commission (ASIC) investigations into the consumer leasing industry.
According to its website, Radio Rentals has 65 stores in every state and territory, except WA, as well as national online business. The company was established in Sydney in 1937, and it leases a range of household furniture, appliances, electronics and fitness equipment.
ASIC found that Radio Rentals made four breaches of the National Credit Act pertaining to all of the 278,683 leases it entered between 1 January 2012 and 1 May 2015. Those breaches pertained to verifying the consumer’s financial situation and suitability for the lease prior to it being signed.
As a result, the business was found to have accumulated $13.8 million in excess lease payments from customers. It will also be liable for a further $6.1 million in refunds and write-offs relating to default fees.
Radio Rentals has already refunded around $11.8 million of the excess lease payments.
The financial regulator and Thorn Australia have also reached an agreement on penalties worth a further $2 million for the breaches, which they will tender to the Federal Court for final determination.
“Consumer lease customers tend to be vulnerable consumers in tight financial circumstances. Lease providers must ensure that they comply with their responsible lending obligations and should be engaging with their customers fairly,” said ASIC acting chair Peter Kell.
“If customers are paying more than what is required, lease providers need to promptly fix this or face regulatory action.”