Leases on basic household items – at up to three times retail price – prey on financially vulnerable people. A new bill aims to improve the situation, but it doesn’t stop the practice. By Denham Sadler.

Consumer leases prey on the vulnerable

Claire Tacon helps people who are being overcharged via consumer leases.
Claire Tacon helps people who are being overcharged via consumer leases.
Credit: Supplied

Paul Howard and Matt Stephens were just escaping homelessness when they signed a contract to rent some basic household items. The arrangement, which included a fridge, a television and a couch, would have cost them $20,000 over four years, well above double the total retail price of the goods.

The couple were “in dire straits” and had been squatting at various locations while looking for somewhere to live. When they were eventually offered accommodation, they lacked some of the essentials to make a home. Both Howard and Stephens are on the disability support pension and didn’t have enough money to buy these goods or access other forms of credit. In desperation, they visited a local store that leased basic consumer goods, on weekly or fortnightly payments.

Howard and Stephens signed up to five consumer leases between them. Just before they did so, they were told that because of their low income, many of the items would be second-hand.

The pair were convinced to set up automatic deductions from their welfare payments to cover the leases through the federal government’s Centrepay platform. This meant the weekly repayments for the household goods were automatically deducted from their Centrelink disability pension before they had access to it.

“They sucked us into a deal – we were going through problems galore,” Howard tells The Saturday Paper. “We weren’t in a good state.”

Consumer lease providers are still available through Centrepay despite long-running concerns over their exorbitant costs and exploitative practices targeting those on welfare. Services Australia maintains a register of companies available on the platform, which is voluntary and is meant to assist people in budgeting their welfare payments. 

Treasury has estimated that more than half of the consumer lease market is conducted through Centrepay, while IBISWorld has estimated that the size of the home appliance rental market in Australia is $653 million.

These companies are charging people on welfare as much as three times the retail prices, and are being given direct and priority access to their Centrelink payments.

It wasn’t until two years into paying off the consumer lease that Howard and Stephens realised something wasn’t right. They called the Consumer Action Law Centre’s National Debt Helpline. Claire Tacon, who works for Consumer Action’s team in charge of the helpline, was on the other end of the phone, and soon discovered that the consumer lease company hadn’t taken into account Howard’s and Stephens’ substantial medical expenses, or that many of the goods provided were substandard.

The pair were eventually refunded about $8000. “We were victorious,” Stephens says.

Tacon says their story is typical of the calls she receives from people on consumer leases. “Anyone who takes on one of these leases, they’re already in hardship, otherwise they wouldn’t take on a contract like that,” Tacon tells The Saturday Paper. “It’s obscene how much these companies are preying on them, and taking from their already small incomes.”

Consumer Action Law Centre policy officer Tom Abourizk has a number of clients locked into consumer leases through the Centrepay platform, including one paying $15,000 over three years for a laptop that retails for $3000. “A lot of people are pushed to the brink by these products,” Abourizk tells The Saturday Paper.


Consumer leases are currently regulated differently to credit contracts. While a 2016 Treasury report recommended a raft of changes to the oversight of consumer leases in order to protect consumers, no action was taken by the then Coalition government. The new Labor government has now introduced a bill implementing these reforms and which was given the green light by a senate committee last week.

Community and legal groups have welcomed this bill as a step in the right direction, and which will go a long way to preventing the most egregious of consumer lease examples. But they say it doesn’t go far enough and that consumer lease providers should be banned from Centrepay entirely, otherwise welfare recipients will still be exploited.

While the Economics Committee in 2019 called for consumer lease providers to be banned from Centrepay, the latest report does not mention Centrepay once.

Submissions to this inquiry paint a picture of the predatory practices employed by consumer lease companies and the impact it is having on people on welfare. The stories include a 51-year-old woman with an intellectual disability relying on the support pension as her sole source of income. She entered into three consumer leases, and ended up spending 15 per cent of her income on the contract payments, leading to a $40 shortfall in her budget of essentials each month.

Similarly, there’s the story of an Aboriginal elder who entered into consumer leases for a phone, a washing machine and a speaker, leading to him paying $200 a fortnight over two years, equating to 20 per cent of his income and placing him in severe financial hardship. He ended up paying more than $10,000 for the items, and due to a “very poor lending assessment” that “substantially underestimated his living expenses”, found he was unable to afford the automatic deductions from Centrelink. According to the Financial Rights Legal Centre, he was “very upset” upon learning he had paid this much for the items, and that he had thrown away the phone after it stopped working.

Economic Justice Australia chief executive Leanne Ho says Centrepay is a good tool for budgeting things such as rent and utilities, but it is “open for exploitation”. “It can be specifically targeted at people on social security for commercial interests, and there’s scope for it to be abused,” Ho tells The Saturday Paper. “We’re seeing all of these cases where people don’t really know what they’re signing up for, and then they’re stuck with these contracts.”

This is something Abourizk also often sees in his work. “I’m assisting one client right now who was provided terms on their phone in a document that’s so small I can hardly read it on my computer screen,” he says. “She thought it was for two years but it was actually for three – she didn’t understand how much she’d be paying for the goods.”

A number of consumer lease providers are listed on Centrepay across Australia, including Direct Appliance Rentals, which markets itself as “Centrelink-friendly”. The company offers a Haier fridge on a $20-a-week contract running for 36 months, for a total of more than $3100. The same fridge is available from Appliances Online for $879.

Rent4Keeps, another consumer lease provider available on Centrepay, offers a Fisher & Paykel washing machine on $18.70 weekly payments over three years. This totals just under $3000, while the machine retails at less than $1000.

In April, the Australian Securities and Investments Commission (ASIC) sued Rent4Keeps, accusing it of operating in a way “designed to avoid consumer protections for financially vulnerable consumers”. ASIC said people on Centrelink are often paying significantly more than they lawfully should for common whitegoods. Rent4Keeps is still listed on the Centrepay platform.

Under current regulations, consumer lease providers must undertake an affordability assessment of a potential client before signing them up to ensure they won’t be placed into financial hardship by the repayments. But there is “chronic underestimating” in these assessments, Abourizk says. One of his clients signed up for two consumer leases across three months. The affordability assessment for the first lease estimated he would spend $50 a fortnight on food, and the second assessment reduced this amount to just $30 a fortnight, equating to just over $2 a day.


The bill currently before parliament outlines a series of reforms to strengthen the regulations around consumer leases, including the introduction of a maximum amount that can be paid by the lessee on the consumer lease, calculated as the sum of the base price of the item. This cap would allow for a 4 per cent monthly fee for a maximum of 48 months, in addition to the base price, delivery fees and installation fees. The bill would also add consumer leases for household goods to the Credit Act, and a protected earnings amount, likely to prevent providers from taking more than 10 per cent of a person’s net income on leases. The reforms would force providers to disclose the base price of the goods and prevent them from unsolicited communications.

This bill was approved by a senate committee in a report last week, and appears likely to sail through parliament with bipartisan support. The committee report said the reforms strike the “right balance between enhancing consumer protection, while ensuring these financial products and services can continue to fulfil an important role in the economy”.

In a submission to the inquiry regarding the bill, the Consumer Household Equipment Rental Providers Association, the peak body for the consumer lease industry, railed against many of the proposed reforms and called for the bill to be rejected in its current form. The group said the proposed 10 per cent cap to protect earnings would lead to sweeping financial exclusion and that it would be “devastating to the entire industry”.

There are many other options available to people experiencing financial hardship attempting to find household essentials, including no-interest loans. But the stigma associated with these often leads to people signing up to the expensive consumer loans. “When people are financially vulnerable there’s a lot of shame and embarrassment about seeking help,” Tacon says.

“To go into a store like that and be offered a contract – they’re pleased about it. To be treated like an everyday consumer, and they don’t look into the extra costs and work out what they’re actually paying for.”

Tacon is now hopeful the Labor government will move to stamp out consumer lease products from Centrepay entirely, after introducing a private member’s bill to this effect while in opposition. “It’s just wrong they get their money first and people don’t have enough to feed themselves or look after their health,” she says.

This article was first published in the print edition of The Saturday Paper on October 29, 2022 as "Whitegoods and evil".

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