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Wednesday 28 August 2013

13-235MR ASIC takes action against rental companys franchisees

ASIC’s crackdown on credit providers’ responsible lending obligations continues with the regulator taking action against Zaam Rentals’ franchisees.

Earlier this year ASIC banned two directors of the appliance rental company Zaam Rentals and cancelled the company’s credit licence for failing to comply with responsible lending obligations. The company deliberately targeted vulnerable people in remote Aboriginal communities in Mildura, Victoria and surrounding areas in NSW (refer: 13-021MR).

Following this action ASIC undertook a surveillance of all Zaam franchisees and found they operated in a similar manner to Zaam Rentals. That is, they targeted Indigenous consumers and did not make reasonable inquiries about customers’ financial situations or provide important credit guides and other information.

The franchisees were operating out of Berri in South Australia (V Mall Rentals Pty Ltd), Broken Hill in NSW (Regional Rentals Pty Ltd), Geelong in Victoria (Aradhya Pty Ltd) and Kelso in NSW (BDS Rentals Pty Ltd).

The directors, Mr Vikas Mall, Mr Ishan Gupta, Mr Ajay Sharma and Mr Ramandeep Singh, have been excluded from the industry by entering into written undertakings with ASIC stating they will not engage in credit activities for three and a half years.

‘Responsible lending laws aren’t to be taken lightly and breaching these laws can have severe consequences for a business, including franchisees,’ ASIC Deputy Chairman Peter Kell said.

‘Franchisees who are involved in a business model that does not comply with the law will be held accountable.

‘It is not good enough for a franchisee to claim they were only doing what the franchisor told them to do. Individuals are accountable for their own actions, whether they operate as a sole trader or under a franchise group.’


The franchisees will write to nearly 200 consumers telling them their agreements have been terminated, they do not owe any further money, and they now own the rented goods.

ASIC’s crackdown on responsible lending laws has seen the prosecution of firms that failed to observe their obligations, including:

Last updated: 28/08/2013 12:00