ACCC considering issues raised over retailer Urban Rampage’s use of Centrepay in disadvantaged communities

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A retail chain expanding rapidly across disadvantaged communities in regional Australia has come under fire over its business practices, which financial counsellors say are predatory and exploit welfare recipients.

Describing itself 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 the Australian Competition and Consumer Commission (ACCC) and the national corporate regulator are investigating issues raised about the retailer, following complaints regarding the company’s use of Centrepay.

Centrepay is a financial management tool allowing welfare recipients to have essential expenses such as rent and energy bills deducted from their Centrelink payments before the money hits their bank accounts.

It was designed to reduce financial risk for the user.

But some financial counsellors based across regional Australia have told the ABC that Urban Rampage is using Centrepay in a manner that “achieves the complete opposite” and leaves welfare recipients unable to afford necessities.

A business model ‘specialising’ in Centrepay

Alan Gray, a financial counsellor at Bush Money Mob in the Kimberley, said the company’s business model focused on getting “instant access” to customers’ Centrelink payments without sufficiently explaining how the money was being taken.

“They specialise in signing people up through Centrepay, which is direct access to their Centrelink payments before people even get the money to buy basics like food,” he said.

“I’ve not once ever seen Urban Rampage do any kind of budget assessment to see if the client could afford to have these payments come out of their Centrelink.

“They have no interest and no idea whether they’re leaving that person short of funds for food.”

The retailer’s eclectic product mix includes clothing, scooters, blankets, speakers and jewellery.

It has proven a successful venture, with the Darwin-based company recently opening its eighth store in Alice Springs and spruiking plans to branch out further.

Through his work, Mr Gray has travelled to several regions across northern Australia where Urban Rampage operates.

“In my experience, there’s very little information provided to the customer about these Centrepay accounts,” he said.

“The shops are taking money from people every fortnight, and often the welfare recipient doesn’t even realise that the shop is still taking money from them until we get their bank statements and explain it to them.

“Taking advantage of the goodwill of remote people is not a good enough excuse for continuing a sharp business practice.”

In de-identified Centrelink income statements seen by the ABC, some customers have racked up debts totalling more than $1,000 from the retailer in one hit, with one welfare recipient accumulating more than $3,700 in deductions over the course of nine months.

The statements show deductions of $200 or more are often made from customers’ Centrelink payments, which can be equivalent to about one third of a person’s fortnightly income if they are on receiving the JobSeeker payment.

Clients presenting for emergency funding

Over the border in Nhulunbuy, Anglicare NT financial counsellor Fiona Pettiford said she held concerns over the number of Urban Rampage customers presenting for emergency relief funding after shopping at the retailer.

Ms Pettiford said clients began presenting to Anglicare’s financial counselling arm within weeks of the retailer opening in the town.

“That was the first time we became aware of the issue,” she said.

“That emergency relief funding is for when people have literally got no money left for necessities … and often it’s not just themselves they are supporting.

“My concern is that Urban Rampage’s business model sets out to deliberately exploit the financial vulnerability of First Nations customers for their own financial gain.”

Product quality and pricing called into question

Counsellors have also raised concerns over the quality and pricing of the retailer’s products, which they say are in some cases two to four times higher than equivalent items at nearby stores.

It has also been submitted that prices are not displayed on some items, and that goods are poorly categorised 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 welfare payments — had allowed Urban Rampage to continue using Centrepay.

“Centrepay is being abused,” she said.

“It’s extremely rare for us to get a client who presents to us who actually understands what has happened.”

She claimed Urban Rampage’s conduct flew in the face of the Centrepay policy, which required businesses to act in a manner that did not “take unfair advantage of customers” and was not “predatory towards the disadvantaged or vulnerable”.

A spokesperson for Services Australia said the concerns raised about the retailer were being investigated and “appropriate action” would be taken against any business found in breach of the Centrepay policy.

“This may involve suspending a business, imposing additional conditions, or withdrawing their ability to use the Centrepay service at any time,” the spokesperson said.

Operating in a ‘heavily regulated’ industry

In a letter sent to the company operating Urban Rampage, Coral Coast Distributors, counsellors have called on the retailer to implement a suite of measures they claim are necessary for the stores to meet community expectations and their legal obligations.

They include setting purchasing caps on transactions, reducing the maximum Centrepay repayment to $50 per fortnight, and introducing a limit of one Centrepay agreement per customer, at any given time.

Counsellors have also recommended stores advertise a refund and returns policy in local Indigenous languages.

In response to questions from the ABC, Urban Rampage said all allegations about its business practices were “simply not true”.

A spokesperson for the company said Urban Rampage operated in a “heavily regulated” industry for “good reason”.

“Aboriginal clients are vulnerable and can be prone to exploitation from 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 representatives of the company had offered to meet with the financial counsellors to discuss the concerns listed in their letter, but had “not heard from them”.

(Original ABC Article)