Retailer Urban Rampage has been ordered to stop deducting payments for purchases through deductions from Centrepay benefits.

Financial regulator the Australian Securities & Investment Commission (Asic) has issued an interim stop order to prevent the practice, stating that the retailer was taking advantage of vulnerable First Nations customers.

Urban Rampage sells clothing, household goods and essentials at 10 locations in regional and remote locations across Western Australia, the Northern Territory and Queensland. The stores are operated by Coral Coast Distributors (CCD). 

The commission believes the consumers in the brand’s target markets are low-income recipients of Centrelink benefits and do not have access to other forms of credit. Asic is concerned that these consumers are at risk of financial hardship and that many may currently be experiencing financial distress.

As part of the suspended payment plan, customers can buy products from Urban Rampage with credit that is deducted from their Centrelink income before they receive their support payment. Asic says this poses the risk that they will then be unable to meet essential living expenses from what is left of their benefits after deductions. 

Asic said the arrangement is unsuitable for the consumers in these markets and does not meet their likely needs, objectives and financial situation.

“Asic continues to work closely with financial counsellors in regional and remote communities where CCD operates to understand the impact of these arrangements and the circumstances of consumers experiencing financial hardship,” said deputy chair Sarah Court.

“We are concerned such arrangements are causing vulnerable consumers serious financial harm, and Asic is committed to taking action in these circumstances.”

The interim stop order is valid for 21 days unless revoked earlier. CCD can still offer other payment options such as cash or Eftpos. The business can make submissions before a decision is made about a final stop order.