Mr Rental Australia Pty Ltd has entered into an enforceable undertaking (EU) with ASIC, to provide refunds to over 1,500 consumers (in an amount in excess of $300,000) and to amend standard form rental contracts used by its 52 franchisees.
ASIC investigated Mr Rental’s standard form rental agreement and formed the view that a term allowing Mr Rental to charge a ‘calculation period fee’ is an unfair contract term under the Australian Securities and Investments Commission Act 2001 (ASIC Act) and the Australian Consumer Law. This is an additional fee charged to consumers who terminated their rental agreements early.
ASIC believes that the term is an unfair term within section 12BG of the ASIC Act because it allows Mr Rental to charge the additional fee without disclosing what the fee will be or provide information for its calculation.
ASIC also believes that the Rental Agreement is a consumer lease for a fixed term regulated by the National Consumer Protection Act. Hence Mr Rental franchisees are required to hold Australian credit licences for such agreements.
Results and/or Outcome
The undertaking to ASIC means Mr Rental will:
- refund those customers who paid a calculation period fee;
- advise existing customers that it will not charge that fee if they terminate their agreements early
- not enter into any further rental agreements which allow it to charge the fee upon early termination.
ASIC understands that Mr Rental or its franchisees intend to apply for an Australian credit licence.