ASIC has commenced proceedings in the Federal Court of Australia in Brisbane against Rent 2 Own Cars Australia Pty Ltd (R2O Cars), Timothy Roberts (Mr Roberts) and Paul Green (Mr Green), directors of R2O Cars, for breaching key requirements under the National Credit Code.
The alleged breaches caused customers of R2O Cars to be charged amounts in excess of the maximums allowed under the credit legislation.
R2O Cars operates a business providing credit to consumers for the purchase of used cars, through a hire-to-purchase type contract. Under the contract, consumers make weekly repayments to buy the car. These contracts were entered into by a number of franchisees located in Queensland, New South Wales, Victoria, South Australia and Western Australia. Each franchisee or an employee of the franchisee was authorised by R2O Cars to enter into credit contracts with consumers on its behalf.
ASIC alleges that R2O Cars instructed its franchisees to use “calculators” that miscalculated the weekly repayment amount. This resulted in many instances where R2O Cars charged the consumer amounts in excess of the annual cost rate of 48%, which is the maximum allowed under the credit legislation. R2O Cars also failed to disclose in its contracts, the actual annual percentage rate it charged and had charged consumers in excess of the rate disclosed. The method of calculation of the interest charges payable was also not disclosed.
ASIC is seeking financial penalties against R2O Cars and declarations of contravention and orders to stop R2O Cars, Mr Roberts and Mr Green from engaging in credit activity for a period the Court sees fit.
The maximum penalty for a company breaching a key requirement law is $500,000 for each contravention.
The matter is listed for hearing in the Federal Court in Brisbane on 12 September 2018.
