Consumer Leases and Consumer Protection: Regulatory Arbitrage and Consumer Harm

Abstract

Consumer leases are regulated in Australia separately from credit contracts. This has created opportunities for regulatory arbitrage and has resulted in significant harm to consumers. Recent reforms, which commenced on 1 March 2013, have addressed this problem by applying to consumer leases many of the statutory protections available to consumers under credit contracts. However, the distinction between consumer leases and credit contracts has been retained. We argue in this article that the distinction is artificial and should be abandoned. We also examine how the uneven regulation of consumer leases and credit contracts has harmed consumers and we assess the recent reforms to the regulation of consumer leases. Finally, we investigate the practice of consumer leasing in Australia by reference to our survey of the consumer leasing industry, the cost of consumer leases, and selected “real life” case studies.