ACCC examines issues raised by retailer Urban Rampage’s use of Centrepay in disadvantaged communities
A fast-growing retail chain in disadvantaged communities in regional Australia has come under fire for its business practices, which financial advisers say are predatory and exploitative of welfare recipients.
- Financial advisers have criticized the business practices of retailer Urban Rampage, which they say exploit welfare recipients
- ACCC, ASIC and consumer watchdogs WA and NT are jointly looking into the issues raised
- The owner of Urban Rampage has denied any wrongdoing, saying the company has ‘never failed an audit’
Self-described as a clothing and homewares retailer, Urban Rampage has established stores in towns with large Indigenous populations in the Northern Territory and Western Australia, including Kununurra, Broome, Nhulunbuy and Alice Springs.
The ABC can reveal that the Australian Competition and Consumer Commission (ACCC) and national business regulator are investigating issues raised about the retailer, following complaints about the company’s use of Centrepay .
Centrepay is a financial management tool allowing social assistance recipients to have essential expenses such as rent and energy bills deducted from their Centrelink payments before the money reaches their bank accounts.
It was designed to reduce the financial risk for the user.
But some financial advisers based across regional Australia have told the ABC that Urban Rampage uses Centrepay in a way that “achieves just the opposite” and leaves welfare recipients unable to pay for necessities.
A “specialized” business model in Centrepay
Alan Gray, financial adviser at Bush Money Mob in the Kimberley, said the firm’s business model focused on getting ‘instant access’ to customers’ Centrelink payments without sufficiently explaining how the money was taken. .
“They specialize in signing people up through Centrepay, which is direct access to their Centrelink payments even before people get the money to buy basics like food,” he said. .
“I’ve never seen Urban Rampage do any kind of budget assessment to see if the client can afford to get those payments out of their Centrelink.
“They have no interest and no idea if they leave this person short of food money.”
The retailer’s eclectic product line includes clothing, scooters, blankets, speakers and jewelry.
This venture has proven successful, with the Darwin-based company having recently opened its eighth store in Alice Springs and planning to diversify further.
Through his work, Mr. Gray has traveled to several areas of northern Australia where Urban Rampage operates.
“In my experience, very little information is provided to the customer on these Centrepay accounts,” he said.
“Stores take money from people every fortnight, and often the welfare recipient doesn’t even realize the store is still taking money from them until we get their bank statements. and explain to them.
“Taking advantage of the goodwill of remote people is not a sufficient excuse to pursue a sharp business practice.”
In anonymized Centrelink income statements seen by the ABC, some customers racked up debts totaling more than $1,000 with the retailer in one fell swoop, with one welfare recipient racking up more than $3,700 in deductions over the course of nine months.
Statements show that deductions of $200 or more are often made from customers’ Centrelink payments, which can amount to around a third of a person’s fortnightly income if they receive the JobSeeker payment.
Clients presenting for emergency financing
Across the border in Nhulunbuy, Anglicare NT financial adviser Fiona Pettiford said she was concerned about the number of Urban Rampage customers turning up for emergency relief funding after shopped at the retailer.
Ms Pettiford said customers started coming to Anglicare’s financial advice service within weeks of the retailer opening in the city.
“It was the first time we became aware of the problem,” she said.
“This emergency relief funding is for people who literally have no money left for necessities…and often it’s not just themselves they are supporting.
“What concerns me is that Urban Rampage’s business model is designed to deliberately exploit the financial vulnerability of First Nations customers for their own financial gain.”
Product quality and price questioned
Advisors have also expressed concerns about the quality and price of the retailer’s products, which they say are in some cases two to four times higher than equivalent items in nearby stores.
It has also been argued that prices are not displayed on some items and that goods are misclassified into broad groups such as “accessories” on receipts, making it impossible to identify what has been purchased or make a return.
Ms Pettiford also questioned why Services Australia – the government agency responsible for managing social benefits – allowed Urban Rampage to continue using Centrepay.
“Centrepay is being abused,” she said.
“It’s extremely rare for us to have a client come to us and actually understand what happened.”
She claimed Urban Rampage’s conduct violated Centrepay’s policy, which required companies to act in a way that did not “unduly take advantage of customers” and was not “predatory to people.” disadvantaged or vulnerable”.
A Services Australia spokesperson said concerns raised about the retailer were being investigated and “appropriate action” would be taken against any business found to be in breach of Centrepay’s policy.
“This may involve suspending a business, imposing additional conditions or removing its ability to use the Centrepay service at any time,” the spokesperson said.
Operating in a “heavily regulated” industry
In a letter sent to Urban Rampage operating company Coral Coast Distributors, advisers called the retailer to implement a series of measures which they believe are necessary for stores to meet community expectations and their legal obligations.
They include setting purchase caps on transactions, reducing Centrepay’s maximum reimbursement to $50 per fortnight and introducing a limit of one Centrepay agreement per customer, at any one time.
Advisors also recommended stores advertise a refund and return policy in local Indigenous languages.
In response to questions from the ABC, Urban Rampage said all of the allegations about its business practices were “simply untrue”.
A company spokesperson said Urban Rampage operated in a “heavily regulated” industry for “good reason”.
“Indigenous customers are vulnerable and can be exploited by unscrupulous operators,” the spokesperson said.
“We have been in business for almost 25 years.
“We are subject to regular audits and compliance checks. We have never failed a single audit.”
The spokesperson also said that representatives of the company had offered to meet with the financial advisers to discuss the concerns listed in their letter, but had “not heard from them”.