Struggling Wagga Wagga mother of five Casey Simpson paid Radio Rentals $3320 for a used bed worth $480, and she still doesn't own it.
Ms Simpson, who is leading a $50 million class action launched by Maurice Blackburn lawyers against Radio Rentals on Wednesday, says its "Rent, Try, $1 Buy" contract misled her.
She says instead of letting her buy the used bed for $1 when her 18-month contract ended, the appliance rental giant continued to deduct weekly payments from her Centrelink account.
"That could come in handy for me and my children, I could have done a lot with that money," she said.
"I think it's a big scam, from the start when I signed the contract."
Thorn Group, which owns Radio Rentals, saw its shares slump on Wednesday after the class action was revealed, accusing the home appliance rentals giant of "unfair and unconscionable practices" that have hurt up to 200,000 customers.
Maurice Blackburn Lawyers principal Ben Slade claims the "Rent, Try $1 Buy" scheme is misleading and has led to customers paying up to seven times the true retail cost of home appliances they have rented.
The Radio Rentals website tells potential customers that at the end of a 24-, 36- or 48-month rental plan for an appliance or piece of furniture: "you can make it yours for just $1".
Mr Slade said that was not correct, as customers do not automatically get to buy their rented items outright for $1.
Instead, the fine print stated that the impetus is on customers to negotiate to buy rented appliances or furniture for a price agreed by Radio Rentals.
If customers fail to secure a purchase, their contracts automatically roll over into another 24-, 36- or 48-month term.
"Here we have a national company that deals with vulnerable people promising them one thing but signing them up to another, at a much higher price than is reasonable," he said in a statement on Wednesday.
"It's not rent, try, one dollar buy, it's rent now, pay forever," Mr Slade said.
Mr Slade estimates that up to 200,000 Radio Rental customers are eligible to join the class action with Ms Simpson.
He said under Australian consumer law, contracts must be fair and companies must not act in a manner that misleads or deceives.
Mr Slade said if Radio Rentals' advertising stated that customers could pay up to seven times the value of a rented product, it would not be misleading but consumers would avoid it.
"Would I think that was a sensible product? No. Would the community think it was a sensible product? No. They would say it was stupid and they would not go anywhere near the shop," he said.
Thorn Group has been contacted for comment. Its shares were down 8.7 per cent at $1.365 as of 2:59 pm.
The class action news comes a week after the company warned shareholders it may have to pay compensation to customers who did not meet minimum income thresholds for their contracts, following a probe by the Australian Securities and Investments Commission.
The matter involves Radio Rentals stores owned and operated by the Thorn Group in states other than South Australia. The South Australian Radio Rentals brand is not associated in any way. In South Australia, Thorn Group stores trade as Rentlo Reinvented.
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