The Federal Court today imposed a penalty of $4 million against Rent4Keeps and $3.4 million against Rent4Keeps' largest franchisee, Darranda Pty Ltd, for overcharging consumers on essential household goods, and for failing to comply with their obligations as credit licensees.
Deputy Chair Sarah Court said, 'The penalty reflects the seriousness of this conduct as it involved vulnerable people, many with a poor credit rating who were purchasing essential items such as fridges, washing machines and mobile phones at unlawfully inflated prices.'
'These customers were denied the protections afforded by the Credit Act and typically, they paid almost four times the retail cost price of these essential items.'
In September 2024, following a nine-day trial, Justice Hespe found that Darranda entered into 516 agreements it called 'leases' that were actually credit contracts, meaning that Darranda contravened the 48 per cent annual rate cap and failed to disclose to its customers key details of the contract, including the interest rate, and the cash price of the goods to be purchased.
Additionally, the Court found that Darranda failed to act efficiently, honestly and fairly when engaging in credit activities.
Rent4Keeps was found to have been knowingly involved in Darranda's breaches of the rate cap and the general obligations contraventions.
In her reasons, Justice Hespe said that, 'Darranda was dealing with a financially vulnerable customer base. The statutory safeguards, including the key requirements, are there to protect the interests of those consumers in particular. The standards set by the legislation were breached. It is not appropriate for a commercial operator servicing a vulnerable class of consumers to breach statutory safeguards without consequence.'
Her Honour also noted that, 'The message must be conveyed that operators conducting a business for profit in a highly regulated industry with a financially vulnerable client base must do so to a standard that is efficient, honest and fair. The message is also directed to the individuals who controlled Darranda and Rent4Keeps (Aust) and who continue to control entities operating in the highly regulated consumer credit environment.'
