Credit: Dreamstime
A franchise firm specialising in renting appliances to low-income people in Australia has been ordered to pay $257,500 following an Australian Securities and Investments Commission (ASIC) investigation.
Local Appliance Rentals (LAR), which counts computers and laptops among its inventory, failed to fully vet its customers’ financial situations before lending items to them, ASIC found.
In addition, LAR was said to have inadvertently charged customers excess payments and late fees that went beyond the consumers' lease agreement.
LAR was served three infringement notices with fines amounting to $157,500 last August, and was also ordered to pay $100,000 to the children’s charity The Smith Family.
ASIC said the amount was repaid in September.
According to the Enforceable Undertaking, ASIC received "numerous reports of misconduct" relating to LAR's lending practises in 2014, the majority of which came from Broome and Alice Springs.
Following an investigation, government body found that LAR failed to obtain adequate documents to verify consumers' financial circumstances in relation to both their income and personal expenditures in the period between April 2011 and August 2018.
During the seven-year period, LAR was found to have unintentionally received payments from customers that exceeded their goods leases and also charged late fees that exceeded their contracts.
Owing to these issues, ASIC also added a third charge of failing to adequately monitor its 97 franchise operations, a number that requires "a high level of proactive and effective" supervision.
Headquartered in Manly, Queensland, LAR leases household goods to low-income and Centrelink-receipt consumers, including laptops, PC sets, printers and tablets.
Its franchise operates largely across regional Australia and remote areas such as the Tiwi Islands, Katherine, Broome and Thursday Island which have a high Indigenous population and limited options for purchasing household goods, according to ASIC.
The decision follows a recent ruling against Radio Rentals, which was ordered to pay $2 million over its lending practises. Again, the rental firm, which is owned by Thorn Australia, was rapped for failing to vet its consumers' capacity to pay.
LAR has been contacted for comment.
