A prominent online retailer, Snaffle, is set to appear in federal court after the Australian Securities and Investments Commission (ASIC) accused it of misleading over 40,000 customers regarding the pricing of electronics and household items. Snaffle operates on a model that allows customers to purchase items, such as washing machines, fridges, and mobile phones, through weekly payment plans over several years.
ASIC alleges that Snaffle has been inflating product prices and applying excessive interest rates on credit agreements. In one instance highlighted by the regulator, a customer reportedly paid over $4,000 for a mobile phone valued at less than $1,500. Similarly, another customer was allegedly overcharged by $835 for a 35L fridge.
Australian regulations place a cap on interest rates for credit contracts at 48 per cent. However, ASIC claims Snaffle circumvented these laws, with interest rates ranging from 60 to 103 per cent, causing customers to pay significantly more than necessary. Instead of calculating interest on the decreasing unpaid balance of products, which decline in value over time, Snaffle purportedly charged customers a fixed interest rate on the total purchase cost for the entire duration of the contract.
ASIC’s Deputy Chair, Sarah Court, has indicated that if the allegations are validated by the courts, the regulator will seek a substantial penalty against Snaffle. Court expressed particular concern about the implications of such practices on vulnerable consumers and reiterated the necessity for significant consequences to deter similar behaviour in the future.
Additionally, Consumer Action Law Centre’s chief executive, Stephanie Tonkin, mentioned the availability of better alternatives for consumers, emphasising that more ethical products and no-interest schemes are available for purchasing essential items like fridges and other white goods, in stark contrast to the practices reported against Snaffle.
This situation raises important discussions regarding consumer protection and the fairness of financial practices within Australia’s retail sector, especially concerning high-interest credit products that disproportionately impact those with limited financial resources.