Essential goods retailer Rent4Keeps has been fined $4 million, and its largest franchisee, Darranda, has been fined $3.4 million for overcharging consumers on basic household goods by the Australian Securities and Investments Commission (Asic).

The company operated a franchise-based system through which its franchises, including Darranda, provided essential goods such as fridges and washing machines via instalments, to people on low incomes or those who received Centrelink benefits. 

The company sold a mobile phone, which retailed for a cash price of $1229, for $5980, payable over two years. 

A 10kg washing machine, which retailed for a cash price of $795, was sold at $4316, to be paid over two years.
 
A 400L fridge with a cash price of $798 was sold for $4784, and a 65-inch television, retailing at a cash price of $884, was sold for $4836 over a two-year period. 

The company also failed to comply with its obligations as a credit licensee. 

After a nine-day trial last September, a judge found that Darranda had entered into 516 agreements which were actually credit contracts, and so had charged above the 48 per cent annual rate cap. 

The company had failed to act efficiently, honestly and fairly, and to disclose key information such as interest rates and cash prices of the goods being purchased. 

“The message must be conveyed that operators conducting a business for profit in a highly regulated industry with a financially vulnerable client base must do so to a standard that is efficient, honest and fair,” said Justice Hespe.

Darranda was the ‘state master’ of 12  Rent4Keeps franchisees in Victoria, and it also operated out of South Australia. 

Rent4Keeps was found to have been knowingly involved in Darranda’s breaches, but no longer offers goods to customers.