Consumer Action lodges complaint to Commonwealth Ombudsman about the Department of Human Services’ poor administration of Centrepay
Consumer Action Law Centre (Consumer Action) has made a formal complaint to the Commonwealth Ombudsman about the Department of Human Services (DHS). This complaint comes after the department failed on multiple occasions to apply its own policy to address exploitative consumer lease providers using the Centrepay bill-payment system.
Since November 2017, Consumer Action has made multiple complaints to DHS about systemic misconduct of consumer lease companies exploiting people through the DHS Centrepay system. Centrepay is a priority payment system administered by DHS through which they facilitate deductions from a person’s welfare payments to approved businesses.
Giving consumer lease companies priority access to people’s Centrelink payments often means that high-cost consumer lease providers are paid before the Centrelink recipient can allocate their benefits to other essential expenses such as housing, utilities or food.
In 12 complaints made to DHS, it is alleged that consumer lease providers are systematically breaching the Centrepay rules by:
- providing high-cost but low value goods;
- providing products that expose people to an unacceptable risk of financial stress or exploitation;
- failing to operate in a lawful manner;
- failing to comply with Centrepay Policy and Terms and Framework and adversely affecting the reputation of DHS; and
- failing to act acting ethically, lawfully and fairly in its dealings with customers.
Consumer lease providers have a proven history of non-compliance with the law and charging high prices for low value goods.
A 2015 ASIC report found that Centrelink recipients were charged consistently inflated amounts for products. In one case, a person paid over $3,000 for a clothes dryer with an RRP of $345. In 2018, the Federal Court of Australia ordered a $2 million penalty against Thorn Australia’s Radio Rentals for contravening its responsible lending obligations.
“The practices of consumer lease providers like Radio Rentals are directly contrary to many of the eligibility requirements set out by DHS for Centrepay,” says Consumer Action CEO, Gerard Brody.
Consumer Action regularly speaks to clients with multiple expensive consumer leases whose Centrelink payments are being prioritised to pay off these exploitative loans before they can buy groceries or pay their energy bills.
“It is clear that consumer lease providers are exploiting Centrepay. It is critical that the Department of Human Services does not allow these companies the privilege of continuing to use the Centrepay service,” says Mr Brody
“We are yet to see DHS take effective action to address our complaints. We urge DHS to take these complaints seriously and take swift action to remove consumer lease providers from Centrepay.”
MEDIA CONTACT: 0413 299 567, media@consumeraction.org.au.
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