Consumer credit provider Latitude Financial says it has paid back about three-quarters of the amount.
Customers with little stable income and limited English were given easy access from 2014 to 2016 to credit limits of several thousand dollars or higher, well in excess of what was needed for televisions and whitegoods costing less than $1000.
Financial counsellors from Lutheran Community Care discovered what was happening and told the Financial Rights Legal Centre, who alerted the Australian Securities and Investments Commission.
The Harvey Normal employee was sacked and Latitude agreed to fully repay all affected customers.
ASIC are still investigating whether to take more action.
The Financial Rights Legal Centre’s policy and advocacy officer Drew MacRae could not legally comment on the case but said exploitation of vulnerable people was common in the retail industry, where interest-free and buy now-pay later deals are common.
“They end up pushing this finance on to unsuspecting folk, who find themselves getting into a lot of debt,” he told AAP.
Unlike mortgages and other loans, credit provided by retailers is not regulated by the National Credit Code and they do not have to hold an Australian Financial Services Licence .
Complaints about unethical practices in retail, including conflicts of interest such as commissions and sales targets, were made at the Banking Royal Commission.
Royal commissioner Kenneth Hayne has recommended the current point-of-sale exemption of retail dealers from the National Credit Code be removed.
Federal legislation is due in the current fiscal year.
A Latitude Financial spokesman said the company “was deeply appalled” when it became aware of what had happened in July 2017, it had paid back most customers and was working with Lutheran Community Care to do so.
Want to comment?
Send us an email, making it clear which story you’re commenting on and including your full name (required for publication) and phone number (only for verification purposes). Please put “Reader views” in the subject.
We’ll publish the best comments in a regular “Reader Views” post. Your comments can be brief, or we can accept up to 350 words, or thereabouts.
InDaily has changed the way we receive comments. Go here for an explanation.
Local News Matters
Media diversity is under threat in Australia – nowhere more so than in South Australia. The state needs more than one voice to guide it forward and you can help with a donation of any size to InDaily. Your contribution goes directly to helping our journalists uncover the facts. Please click below to help InDaily continue to uncover the facts.