ASIC acts on rent to buy advertisements

ASIC has been monitoring the rental of household goods industry over the past few years as it been identified as a high-risk product for consumers who are often not aware of the type of contract they are entering into.

Dale Cleves Music Pty Ltd, trading as Winston Music, has stopped advertising its musical instrument rental agreements as ‘rent to buy’ following ASIC concerns it was misleading.

ASIC was concerned that: the terms of the rental contract did not give consumers the right or obligation to purchase the instrument. Instead they provided that the consumer may make an offer to purchase the instrument which Winston Music may or may not accept, and they incorrectly advertised these arrangements as ‘rent to buy’.

Unless a consumer has a right or obligation to purchase the goods under a goods rental contract, it is misleading to advertise the arrangement as being ‘rent to buy’.

Winston Music responded to ASIC’s concerns and stopped using the phrase ‘rent to buy’ and ‘choose to purchase’ in its advertising.

Deputy Chairman Peter Kell said, ‘Consumers make day-to-day decisions based on advertisements they see, read and hear. They have a right to expect advertising that is not misleading in any way.

‘ASIC is closely monitoring this space, and we will continue to monitor it to ensure consumers are not misled when they are making a financial commitment’, Mr Kell said.

Winston Music has published a corrective notice regarding the advertising on their website, and has also sent a copy of the corrective notice to current customers.