Consumer Leases and Indigenous Consumers

25 Pages Posted: 21 Dec 2017 Last revised: 12 Dec 2018

See all articles by Paul Ali

Paul Ali

University of Melbourne - Law School; Centre for International Finance and Regulation (CIFR)

Steve Kourabas

Monash University - Faculty of Law

Cosima Hay McRae

University of Melbourne - Law School

Ian Ramsay

Melbourne Law School - University of Melbourne

Date Written: December 18, 2017

Abstract

Consumer leases offer low-income consumers the option to hire household items that they do not have the money to purchase upfront. They are marketed by consumer lease providers as a cheap way to purchase important household items. However, recent studies illustrate that the price ultimately paid to hire goods under a consumer lease contract will generally exceed the retail value of the goods hired and that it is the most expensive form of finance available. Despite this, consumers are often persuaded to enter into consumer lease contracts as a result of predatory practices engaged in by providers. These predatory practices are most effective with low-income consumers who may be experiencing financial difficulties and who live in remote areas that make it difficult to shop for alternative goods or seek financial and legal advice.

The problems associated with consumer leases are particularly prevalent in remote and rural Indigenous communities where issues such as geographical isolation, financial hardship, and cultural practices make them vulnerable targets for providers. This article explores in detail the ongoing problems faced by Indigenous consumers when entering consumer leases. After setting out some of the key aspects of consumer leases and the general problems associated with their use, the article explores the operation of consumer leases in Indigenous communities and enforcement actions relating to Indigenous consumers that have been undertaken by the Australian Securities and Investments Commission. The article also reports the results of interviews conducted by the authors that indicate that, despite regulatory reforms and enforcement actions, Indigenous communities continue to be vulnerable consumers. This vulnerability has led many Indigenous consumers to pay exorbitant amounts for household items that could be purchased more cheaply or through less costly credit products. As a result, Indigenous consumers entering into consumer leases often find they are unable to afford to pay for other essential items, which in turn forces them into even greater financial distress. The article concludes with observations regarding the potential negative effects of consumer leases in Indigenous communities and reforms that may address these problems.

Keywords: Consumer leases; Indigenous consumers; Consumer law; Financial hardship

Suggested Citation

Ali, Paul and Kourabas, Steve and McRae, Cosima Hay and Ramsay, Ian, Consumer Leases and Indigenous Consumers (December 18, 2017). Australian Indigenous Law Review, Vol. 20, No. 1, pp. 154-177, 2017; Monash University Faculty of Law Legal Studies Research Paper No. 3089495; U of Melbourne Legal Studies Research Paper No. 803. Available at SSRN: https://ssrn.com/abstract=3089495

Paul Ali

University of Melbourne - Law School ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61 3 8344 1088 (Phone)
+61 3 8344 5285 (Fax)

HOME PAGE: http://www.law.unimelb.edu.au

Centre for International Finance and Regulation (CIFR) ( email )

Level 7, UNSW CBD Campus
1 O'Connell Street
Sydney, NSW 2000
Australia

Steve Kourabas

Monash University - Faculty of Law ( email )

Wellington Road
Clayton, Victoria 3800
Australia

Cosima Hay McRae

University of Melbourne - Law School ( email )

185 Pelham Street
Carlton, Victoria 3053
Australia

HOME PAGE: http://www.unimelb.edu.au

Ian Ramsay (Contact Author)

Melbourne Law School - University of Melbourne ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61 3 8344 5332 (Phone)

HOME PAGE: http://law.unimelb.edu.au/about/staff/ian-ramsay

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