Queensland-based Local Appliance Rentals (LAR) has been fined at least $257,500 by ASIC for not meeting responsible lending obligations from 2011 to August this year.
Following an investigation, ASIC said the company failed to make reasonable inquiries or take steps to verify consumers financial situations. LAR was also found to have inadvertently received excess payments in relation to customer leases and charged late fees in excess of the amounts set out in the lease agreements.
ASIC has ordered to remediate its affected consumers, appoint an independent compliance consultant and pay a Community Benefit Payment of $100,000 to charity The Smith Family.
The remaining $157,500 relate to three infringement notices over concerns relating to responsible lending failures, which LAR paid on 27 September.
“ASIC entered into the [enforceable undertaking] and issued the infringement notices as it was concerned that low-income consumers often have little flexibility in their spending and may have to go without essential items or default on other financial commitments, including rent and utility bills, due to responsible lending failures by firms,” ASIC said in a statement.
“LAR will provide remediation to affected consumers, including those who made excess payments or were charged excessive late fees.”
Local Appliance Rentals operates its consumer leasing operations nationally through a franchise model, including regional and remote areas with high Indigenous populations and limited options for purchasing household goods.
ASIC said some of the franchises were located in the Tiwi Islands, Katherine, Broome and Thursday Island.
The company mainly leases household goods to low-income consumers, including those who receive payments from Centrelink.
Fellow appliance rental provider Radio Rentals has also been fined for the same reason following ASIC investigations, agreeing to refund up customers $13.8 million in excess lease payments in January and paying out $2 million in fines in May.
Last year, regional NSW-based The Rental Guys was ordered to pay $100,000 for similar infractions, while Rent to Own saw its credit licence revoked in 2016 for charging customers an annual interest rate more than the allowable maximum of 48 percent.