Retail giant Radio Rentals has been hit with a class-action lawsuit, which claims thousands of customers using the “Rent, Try, $1 Buy” scheme were ripped off after signing misleading and dodgy contracts.

Law firm Maurice Blackburn Lawyers, who filed the lawsuit in Sydney’s Federal Court today, claims Radio Rentals targeted low-income and vulnerable customers, who believed they could “rent-to-own” household goods like furniture, TVs, and electronics, and pay them off at a reasonable rate.

Instead, the lawsuit claims, Radio Rentals drew up contracts which allowed the company to take ongoing and indefinite payments out of customers’ accounts, while always retaining ownership of the item.

“The class action alleges that one of the more insidious aspects of the business is that Radio Rentals continued to draw money on an ongoing basis from its clients’ Centrepay accounts, well beyond the retail value of the goods,” Principal lawyer Ben Slade said.

“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. Rent, Try, $1 Buy is misleading when you delve into what’s involved.”

Some customers have paid up to seven times the value of an item “in the belief that the goods will always be theirs,” before realising what was happening, Mr Slade said.

But he said the “Rent, Try, $1 Buy” contracts never gave the customer the right to own the item.

Up to 200,000 people may be affected by Radio Rentals’ dodgy practices, the lawsuit claims, and together they may be entitled to compensation to the tune of $50 million.

Lead plaintiff Casey Simpson, a mother-of-five from Wagga Wagga, says Radio Rentals took more than $3300 out of her Centrelink account for a used bed and mattress worth $480.

“I have kids and am on a low income – I thought Rent, Try, $1 Buy would be a sensible alternative to get some basic goods in a way we could afford,” she said.

“I never knew I’d have to pay as much as they kept charging me, or that I wouldn’t have a right to buy the goods for $1.”

She says she feels “unfairly treated” and “taken advantage of.”

“If it’s happened to me, it’s likely to have happened to many others,” she said.

“That is why I have decided to stand up and take this action to hold Radio Rentals to account.”

Lawyers for Ms Simpson said when she realised the payments were ongoing and thousands of dollars above the value of the bed set, she contacted Radio Rentals but “wasn’t getting a positive response.”

She then took her case to a legal outreach service, who made her more aware of rights.

While the payments from Radio Rentals have now stopped, and Ms Simpson still has the items, “the company could repossess them at any

time,” Maurice Blackburn Senior Associate Jessica Naimo said.

The practices of Radio Rentals, owned by Thorn Group, an ASX listed company, need to be “called out and stopped,” according to Karen Cox from the Financial Rights Legal Centre.

“A healthy business model is one that delivers real benefits to people needing a service – not one that uses misleading means to get people into situations that only make their personal plights more dire,” Ms Cox said.

As of publishing time, Thorn Group and Radio Rentals have not commented on the lawsuit.