Online retailer Snaffle is being sued by the Australian Securities and Investments Commission (Asic) for allegedly inflating the cost of household goods and electronics and imposing illegal interest fees.
Snaffle, operated by Walker Stores, raised the prices of washing machines, mobile phones and fridges, while also applying unlawful interest charges under its credit contracts, according to Asic.
It claims the company’s pricing structure circumvented the annual cost rate credit contract, a cap on costs to protect consumers, resulting in customers having to pay hundreds of dollars more in interest payments.
Documents filed by Asic outlined instances in which Snaffle charged costs and interest charges ranging from 60 per cent to 103 per cent – far higher than the annual cost rate, capped at 48 per cent.
The annual cost rate is based on a formula that takes into account the fees, interest, charges and the timing of repayments.
Asic outlined three examples in its court documents against Snaffle, where two alternative approaches to calculating the annual cost rate had been used, which was then applied to already inflated prices.
Snaffle also failed to disclose the true costs of credit provided and cash prices, as required by the National Credit Code (NCC).
“Asic alleges Snaffle charged customers a substantial markup on products, as well as a delivery fee they did not incur, operating costs, a profit margin and additional adjustments – all before significant interest was applied, resulting in an unlawful credit contract,” said Asic deputy chair Sarah Court.
