Radio Rental's parent company Thorn Australia has agreed to hand back millions in refunds for breaching responsible lending practices following an ASIC investigation.
Radio Rentals leases consumer IT products like iPads, iPhones and Acer laptops to consumers, along with appliances and furniture.
Thorn has agreed to refund customers $13.8 million for accepting excess lease payments that Radio Rentals wasn't actually owed. The company will also refund or write off $6.1 million in default fees on 60,000 leases.
In addition to the refunds, Thorn has agreed to pay a penalty of $2 million, subject to a final decision by the Federal Court.
The company admitted to contravening Australian commercial leasing law on 278,683 leases between 2012 and 2015, relating to Radio Rentals failing to verify customer's financial situation to verify whether a leasing option would be suitable before selling them the lease.
ASIC acting chair Peter Kell said customers should check their contracts to see whether they're better off buying goods cheaply before continuing to lease them.
"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. If customers are paying more than what is required, lease providers need to promptly fix this or face regulatory action," said Kell.
Thorn acting chief executive Peter Forsberg said the company had made changes to put it on sound footing with customers and satisfy its lending obligations.
“Thorn’s consumer leasing business is the largest in Australia and it is now positioned to strengthen its offering in this segment. Consumer leasing is an important part of the financial system, as research shows that three million Australians are excluded from the financial mainstream,” he said.
Radio Rentals will begin contacting customers eligible for a refund, or affected customers can address their concerns in-store.