Radio Rentals Under Fire For Taking Welfare Payments And Charging Exorbitant Fees

Radio Rentals Under Fire For Taking Welfare Payments And Charging Exorbitant Fees

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A recent report indicates that nearly half of the revenue of leasing company Radio Rentals comes directly from the federal Department of Human Services. Thanks to the handy Centrepay system (which allows recipients of Centrelink benefits to have their money directly credited to the company), Radio Rentals received more than ninety millions dollars in payments from the government.

A dodgy deal?

A dodgy deal?

While the system was initially founded with the idea of helping low-income and welfare dependent people, a new report by Credit Suisse has found that discretionary spending on non-essential items has gone through the roof. According to the agency, in the 2011-12 year, more than 11% of all Centrepay money was apportioned for the re-payment of leases associated with household items and white goods. The end result is an unfair system which sees the most at-risk within society levied with hefty premiums and large repayment debts.

Even more concerning was Credit Suisse’s assessment that more than forty five million dollars was surrendered to Radio Rentals for the rental of entertainment devices such as TVs and computers. The revealing statistics have drawn criticism from welfare groups and social advocates who claim that the system was unfairly benefiting companies such as Radio Rentals..

Consumer Action Law Centre CEO Gerard Brody told the ABC that the situation was unbelievable. “We have had long-held concerns about Radio Rentals and the consumer lease industry’s use of the Centrepay system,” Mr. Brody said. “But to see in this report that such a high proportion of their revenue being paid from people who are Centrelink recipients, they are people on welfare payments and this business is sustaining itself on that, is astounding.”

Similarly, not-for-profit lenders such as Good Shepherd say there are indeed other options available to consumers. Representative Adam Mooney explained the process involved with leasing from Radio Rentals.

“If you want a fridge that costs $650, for Radio Rentals their average contract will see you pay three times that, around $1,800,” Mr. Mooney told the ABC. “For us, you take out a no interest loan from one of our 600 locations and you pay $650 over 18 months, rather than $1,800 over two, three years. So there are alternatives out there.”

Labor human services spokesperson, Senator Doug Cameron, said the government must urgently explain the situation and re-assess its validity.

“I’m prepared to work in a bipartisan way with the government to make sure the most vulnerable people aren’t ripped off,” Senator Cameron explained. “Labor will not accept that the rights and the interests of companies who are charging exorbitant interest rates … come before the vulnerable in our society.”

But despite these warnings, Mr. Cameron also believes fairness is key. “To exclude welfare recipients to having access to some of the necessities of society would be unfair,” he told the media. “It’s tough enough for welfare recipients, we should be supporting them to engage in society and not exclude them from what are pretty basic things these days.”

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