The Australian appliance rental industry is facing a shakeup
The recent class action filed against Radio Rentals is the latest sign (of many!) that change is needed in Appliance Rental Industry. Law firm Maurice Blackburn are currently leading a $50M class action on behalf of up to 200,00 customers of the “Rent, Try, Buy” scheme that has landed the company in hot water with ASIC. In 2015, ASIC started an investigation into the industry, uncovering systemic abuse of Centrepay, a facility that enables welfare recipients to pay their utilities via their Centrelink payments.
The report found as much as 884% Interest was being charged on appliances and consumer goods through under-regulated consumer leases. Around the same time it was reported approximately $90M of Radio Rentals revenue was coming directly from Centrelink, and around half of that was for consumer entertainment items like Smart TV’s and smartphones.
This started the beginning of the end for the consumer leasing industry that had become so reliant on the business of welfare recipients with few options. Fast forward two years, with countless businesses closed or stripped of their credit licences, Radio Rentals facing a $4M fine, the ASIC led SACC review making 24 recommendations including caps on both the interest rates charged and total rents payable by customers, and we arrive at a crossroad for the industry as a whole.
The federal government will likely pass most or all of the SACC recommendations, meaning many of the hundreds of businesses that rely on these unsavoury consumer leases will be forced to change their practices or face closure.
CHERPA, a lobby group for the consumer leasing industry, expects 90% of their industry members to be seriously affected or close-down. Rather than move with the times and pioneer a consumer-friendly model, many of these businesses are in retreat, objecting to change and fighting to maintain the status quo. This strategy didn’t bode well for the taxi industry, so why would it work for them?
2ndLease is bringing digital innovation to an industry that is desperately in need of a facelift. Our agreements are entirely flexible and affordable, fitting in with today’s consumption model of access over ownership. Our partner suppliers are local businesses that provide this flexibility simply by renting put their idle inventories through the 2ndLease platform.
We aren’t plagued by the same problems that are rife in the industry, primarily because our consumer friendly terms provide the customer with the freedom to change their minds at any stage, without penalty fees or interest.
We embrace these new regulations that will force the industry to change or be left behind. While there is still a need for rent to own contracts for households on a budget, charging any more than the 48% interest (annual) cap that is coming is excessive and needs to be stopped.