Former labour leader Ed Miliband has teamed up with the credit union organisation for the campaign and said he wanted to put an end to what he described as ‘the Great British rip-off.’
The Doncaster North MP claimed a number of specialist stores are enticing customers in with cheap weekly repayments for goods like TVs, settees and fridge freezers - only for the total price to run into thousands of pounds over a number of years.
He explained how a number of constituents have told how many rent to own stores are failing to make their customers fully clear on how much they will owe by ‘burying it in the small print’.
At the campaign launch, held at the South Yorkshire Credit Union base in Mexborough, Mr Miliband said: “This is a Great British rip-off. There is a lot of people out there that get into debt and it can cause people untold misery.
“These companies make hundreds of millions of pounds off the back off people in Mexborough and other areas.
“I am not willing to let people suffer and be ripped off. We want a fair deal for people.”
At the launch event, a number of people who had been affected by alleged overcharging spoke about their experiences.
Couple Lee Machin, aged 44, and Maureen Jones, aged 39, of Wath, claimed goods including a freezer, TV and settee set them back around £2, 500 from rent to own store BrightHouse.
Maureen said: “There are lots of different figures and small print but the end figure you need was hard to come by.”
Mr Miliband urged members of the public to use an alternative system set up by the credit union, which has recently launched its own store called ‘My Living’ in Mexborough selling household goods.
The credit union said they had found one store selling a three seater sofa for a total price of more than £2000, which involved paying £13 a week over three years. The organisation said the same item sold through the credit union would cost just over £600.
Gary Simpson, head of development for the South Yorkshire Credit Union, said many rent to own stores impose high levels of annual percentage rate (APR), which ramps up the price.
He said: “What some of these companies essentially do is they fail to complete the sentence. They say ‘its great, you pay so much off per week’, but then they don’t say ‘but it will cost you thousands of pounds or whatever by the end of it.’“
The My Living household goods store has been a hit with credit union members since it launched a year ago.
Murdo Macleod, chief executive of the South Yorkshire Credit Union, said the shop has sold £2 million worth of items in its first year.
He said profits from the sale of household goods such as TVs, washing machines and sofas, are put back into the organisation for the benefit of members and new My Living shops are due to open soon in Scawthorpe and Wombwell.
He said: “It is very simple to use. We tell you out right what it will cost in the end and then it’s up to you.”
Mr Miliband and credit union members said a number of residents locally had raised concerns about rent to own store BrightHouse, which has five branches in South Yorkshire, including Doncaster and Mexborough.
The All Party Parliamentary Group on Debt and Personal Finance last year published a report of its inquiry into the rent to own (RTO) sector, which concluded that the Financial Conduct Authority should investigate overcharging and do more to protect customers.
Chair of the APPG Yvonne Fovargue MP said of the report: “Rent to own stores like BrightHouse charge inflated prices to some of the poorest people in the country. Customers are often obliged to take out additional warranties and insurance, as a result paying several times the true value of the goods.”
In a statement, BrightHouse claimed the APPG ‘did not conclude that we have been overcharging customers’ and the company is ‘constantly exploring ways to make our offer to customers even more transparent and competitive.’
The company added that their prices ‘have always been clearly displayed and explained to each customer in store’ and ‘last year we also added a breakdown of the cost of the individual elements of our service package on our price tickets and website.’
The statement went on to say their records show the two customers mentioned in the Free Press coverage ‘have never made a complaint to BrightHouse.’
A spokesperson added: “BrightHouse is proud to serve low income customers, an under-served and often misunderstood group. We provide our customers with a straightforward agreement with transparent pricing. This allows them to pay in affordable instalments, usually weekly and spread over three years.
“We offer a fair and competitive service to our family-centric customers. They are savvy shoppers who understand the value of money and take exception to being patronised. We are proud that our customers do not hesitate to recommend BrightHouse to friends and families.
“Every time a customer takes out an agreement with BrightHouse we spend time talking face-to-face, to ensure that the agreement is right for them. Knowing that the weekly payment is fixed, over an agreed period with service included, gives customers peace of mind. If the product breaks down during the life of the agreement, BrightHouse will fix it, or if not replace it, free of charge.
“One of the significant advantages of rent-to-own, and one we know our customers like, is that there is no long-term obligation. The customer can cancel the agreement and return the product at any time.”