Make It Mine made to face up to irresponsible lending allegations

Appliance rental company Make It Mine will face court and more than $1.7 million in potential penalties over allegations it breached consumer credit laws, including responsible lending obligations to its customers.

The Australian Securities and Investments Commission has launched legal action in the Federal Court of Australia against the rental company, alleging Make It Mine failed to collect financial information from its customers and failed to assess whether its contracts were suitable.

ASIC also alleges the company, which rents its electronics and white goods to customers through instalment plan contracts, failed to comply with the credit licensing laws.

Levina Chim, business and commercial law associate at TressCox, told SmartCompany Make It Mine appears to have breached its responsible lending obligations by targeting financially vulnerable customers who were receiving certain Centrelink benefits; not making minimum enquiries about customer’s incomes and living expenses; not providing sufficient information to enable customers to make an informed decision about entering into contracts; and by failing to examine whether the contracts and credit products were appropriate and suitable for customers.

Chim says the main aim of the responsible lending obligations is to prevent lenders from providing unsuitable loans and to ensure that consumers have all the necessary information to make an informed decision about whether to enter into what are often costly contracts.

The maximum penalty for a company for breaching responsible lending laws is $1.7 million for each contravention.

ASIC said in a statement Make It Mine had voluntarily started its own court proceedings, admitting it failed to include in its contracts details regarding the interest rate being charged and the cash price (or market value) of the goods being purchased via the hire-purchase arrangement, as distinct from the total contract price of the goods.

Make It Mine spokesperson Andre Lang told SmartCompany Make it Mine has been dealing with ASIC on the issue for over a year, as a part of the company’s continued compliance with the regulator.

“Since the end of 2012, we have made massive changes,” says Lang. “This is all about previous conduct, not current conduct.”

Lang says customer satisfaction is a priority for Make It Mine, which it can demonstrate through its repeat customers.

“There’s not much more to say right now, because it is in front of the courts,” says Lang.

Chim says cooperating with ASIC at the early stages of an investigation often leads to lesser penalties or infringements and she recommends this course of action if a small business finds itself in a similar position.

“ASIC has, in the past, favoured a cooperative approach to dealings with ASIC, which may benefit a person of interest in many ways,” says Chim.

“ASIC love engaging in conversation and we always recommend it.”

The proceedings are listed for a directions hearing in the Federal Court in Melbourne on December 8.

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