The Australian Competition and Consumer Commission has instituted legal proceedings in the Federal Court, Adelaide against Radio Rentals Limited* and Walker Stores Pty Ltd (which operated as "in Rent" through Radio Rentals stores) alleging that they engaged in unconscionable conduct in their dealings with an intellectually disabled man.
The ACCC alleges that:
- between November 1996 and October 2002 the man entered into:
- 15 rental agreements, two loan agreements and 17 service agreements with Radio Rentals; and
- three rental agreements with Walker Stores
- the man paid Radio Rentals and Walker Stores more than $20,000
- the rental and loan agreements were for fridges, televisions, washing machines, microwave ovens, video recorders, a clothes dryer, heater, vacuum cleaner, DVD player and a digital camera
- the service agreements were for a number of products which he had paid for in full under rental agreements with Radio Rentals
- the companies entered into the agreements with the man when they knew or ought to have known that he:
- was a person with an intellectual disability
- could not read the agreements
- could not understand all the terms and conditions of the agreements
- was unable to understand all the rights, options and benefits he had under the agreements
- was unable to make a worthwhile judgment about whether entering into the agreements was in his best interests.
- the companies knew or ought to have known from their records that:
- it was unlikely to be in his best interests to enter into the agreements
- he received a disability pension as his sole source of income
- credit applications completed by Radio Rentals' employees contained information that was incorrect, unrealistic and inadequate
- his monthly liability to the companies ranged up to 40.5 per cent of his income; and
- his monthly liabilities to the companies would result in financial hardship
- Radio Rentals raised seven of the service agreements without the prior knowledge or consent of the man after he had overpaid amounts on other service agreements
- four of those service agreements were raised after Radio Rentals had received correspondence from a solicitor, acting on behalf of the man, about his intellectual disability and his dealings with the companies
- on three occasions at about the time the man entered into a rental agreement, he returned similar goods to Radio Rentals. He had made substantial rental payments towards the returned goods and could have within a short period of time exercised an option to purchase those goods
- in November and December 2002 Radio Rentals and Walker Stores unduly harassed the man in connection with payments due under the agreements and the man subsequently entered into a settlement and confidentiality agreement with the companies.
The ACCC is seeking declarations, injunctions and findings of fact and has indicated it will then seek compensation for the man.
*EDITORS NOTE: Radio Rentals Limited operates Radio Rentals Stores in South Australia only.