Radio Rentals is set to refund nearly $20 million to customers stuck in leases that they can't pay.
Thorn Group Limited, the company which operates Radio Rentals, has agreed to refund or write off approximately $6.1 million in default fees and to pay back an extra $13.8 million in excess lease payments.
This will pertain to an estimated 60,000 leases from January 2012 and May 2015 after ASIC expressed concern about the company's responsible lending practices.
"So rent-to-buy companies have access to Centrelink's bill-paying service, Centrepay, which means that they get first dibs on people's welfare payments to make these lease repayments," Consumer Action Law Centre's Katherine Temple said.
"Which means the leases are getting priority over basic things like food and rent for these people."
Thorn Group have said they would contest the claims made in the class action.