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ASIC issues Urban Rampage with interim stop order over concerns of financial harm to First Nations consumers

Giovanni Torre -

The Australian Securities & Investments Commission has made an interim stop order preventing Coral Coast Distributors (Cairns) Pty Ltd (CCD) from having customers at its Urban Rampage retail stores enter agreements to pay for goods on credit through Centrepay deductions.

ASIC is concerned that consumers in CCD's target market are low income recipients of Centrelink benefits, residing in remote Indigenous communities, without access to other forms of credit, and that these consumers are vulnerable, at risk of financial hardship and many may currently be experiencing financial distress.

ASIC estimates that well over 10,000 customers are impacted. Data shows the Urban Rampage store in Alice Springs alone signed up over 5,000 customers in the twelve months from 1 December 2022 – 1 December 2023.

There are ten Urban Rampage stores nationwide. Nine of the ten stores are involved in the alleged misconduct. These stores are located in Broome, Derby, Halls Creek, and Kununurra in Western Australia, Gove/Nhulunbuy, Tennant Creek, Katherine and Alice Springs in the Northern Territory and Mt Isa in Queensland.

Consumers' repayments to CCD for goods purchased on credit are deducted from their Centrelink income before they receive their support payment, carrying the risk that they will then be unable to meet essential living expenses. ASIC said on Thursday that it is concerned this deferred deduction arrangement is "inherently unsuitable" for the consumers in CCD's target market and "does not meet their likely needs, objectives and financial situation".

ASIC noted it has received complaints through consumer networks and engagements with ASIC's Indigenous Outreach Program, including of CCD customers experiencing financial hardship and presenting for emergency relief after entering Centrepay deduction arrangements.

ASIC Deputy Chair Sarah Court said Urban Rampage describes its target market as "consumers who predominantly reside in remote Aboriginal communities, are low income recipients of Centrelink payments, do not have immediate funds to purchase household goods and do not otherwise have access to credit".

"ASIC is concerned that CCD's Target Market Determination did not adequately detail eligibility criteria, including how the financial capacity of consumers is to be determined. More broadly, ASIC is concerned that this deficiency reflects CCD's inability to ensure that this kind of credit facility is suited to the needs of consumers in its target market," she said.

"ASIC continues to work closely with financial counsellors in regional and remote communities where CCD operates to understand the impact of these arrangements and the circumstances of consumers experiencing financial hardship. We are concerned such arrangements are causing vulnerable consumers serious financial harm, and ASIC is committed to taking action in these circumstances."

The interim stop order, issued Thursday, is valid for 21 days unless revoked earlier. The order does not prevent CCD from offering alternate payment options for goods such as cash or EFTPOS. CCD will have an opportunity to make submissions before a decision is made about a final stop order.

CCD operates 10 Urban Rampage stores in regional and remote locations across Western Australia, the Northern Territory and Queensland, selling household items.

ASIC said the nature of CCD's business and its reliance on deferred deduction arrangements means the company "must comply with the design and distribution obligations" administered by the Commission.

The obligations require firms to design financial products, including credit facilities, that meet the needs of consumers, and to distribute those products in a targeted manner.

ASIC said CCD is required to publish a Target Market Determination for the credit facility it offers to customers, which involves repayment for goods purchased at its stores by deductions from customers' Centrepay accounts.


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