ASIC wins Rent4Keeps ‘sham’ gift fight

Rent4Keeps was repeatedly warned over its attempts to represent credit contracts as ‘leases’ which saw goods gifted at the end of their term.

ASIC deputy chair Sarah Court during the ASIC annual forum at the Sofitel in Melbourne. Picture: Aaron Francis

Rent4Keeps, an appliance lender targeting low income Australians, has been smacked down in the Federal Court after charging hundreds of customers illegal rates of interest for appliances and attempting to “gift” the goods at the end of their “lease” terms to get around national credit laws.

The Federal Court found on Wednesday Rent4Keeps, which now trades as R4K, overcharged hundreds of vulnerable customers for essential household goods, breaching laws limiting interest on debts.

The court found the Sydney-based lender and its largest franchisee Darranda, based in suburban Melbourne, charged customers significantly more than was lawfully allowed for consumer goods.

This comes after the Australian Securities & Investments Commission launched action against Rent4Keeps in April 2022.

ASIC had alleged the lender issued 516 “lease” agreements between April and June 2019 to customers, attempting to style the contracts as a lease for goods the customers were not entitled to keep. However, customers did in fact keep their goods.

Contracts given to customers suggested goods would be gifted to customers when the “lease” ended.

The Federal Court found Rent4Keep’s deals were not leases, but instead “sham” credit contracts, with the sky high interest charged to customers breaching the Credit Act.

The court found some customers paid more than four times the cost for everyday electronics and whitegoods.

ASIC noted in its filings the lender, run by Kevin Payne and his wife Vikki Payne, was repeatedly warned over several years about its contracts, but continued to issue “leases” to customers.

The court noted Rent4Keeps was warned it would lose its licence in 2016 “yet continued to fail to have in place a system for monitoring compliance with its licence conditions”.

ASIC deputy chair Sarah Court said the corporate regulator had taken the case against Rent4Keeps over concerns with the company’s conduct.

“Many Rent4Keeps’ customers are vulnerable people with a poor credit rating, the majority of whom paid using Centrepay and were unable to access credit elsewhere in the market,” she said.

“By contravening the Credit Act rate cap obligation, hundreds of customers of the Rent4Keeps franchise were charged well above the amount that could lawfully be charged, and more than four times the retail cost of the goods, and did not receive other important consumer protections.”

Ms Court said the findings against Rent4Keeps “should send a strong deterrent message about business models in the credit industry which exploit the circumstances of financially vulnerable consumers”.

The court found Rent4Keeps and Darranda failed to act “efficiently, honestly and fairly”.

A financial penalty will be decided at a later date.