Centrepay

Centrepay was first established in 1998. The scheme allows welfare recipients to authorise automatic deductions from their welfare payments to pay for various goods and services, including accommodation, utilities, transport and education.{{cite web |author1=Department of Social Services |title=Centrepay Reform – Discussion Paper |url=https://engage.dss.gov.au/wp-content/uploads/2024/06/Centrepay-Reform-Discussion-Paper-Final.pdf |publisher=Australian Government |access-date=25 December 2024 |date=May 2024}} The goal of the scheme was to help welfare recipients at risk of financial hardship to maintain financial stability and pay for essentials like rent and electricity by automatically deducting money from their welfare payments.{{cite news |last1=Bajkowski |first1=Julian |title=Shorten takes broom to Centrepay parasites |url=https://www.themandarin.com.au/282928-shorten-takes-broom-to-centrepay-parasites/ |access-date=25 December 2024 |work=The Mandarin |date=4 December 2024}} In a 1999 media release, Minister for Community Services Warren Truss said that the scheme would "give Centrelink customers greater choice to help them manage their finances and avoid debt situations".{{cite web |last1=Truss |first1=Warren |title=CENTREPAY - EASY BILL PAYING FOR CENTRELINK CUSTOMERS |url=https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id:%22media/pressrel/A6806%22 |publisher=Australian Governnment |access-date=25 December 2024 |format=Media release |date=7 May 1999}}

Concerns began to be raised in the early 2010s regarding exploitative and predatory practices facilitated by the Centrepay system. Anna Buduls conducted an independent review of the scheme for the Gillard government in 2012 but has alleged that her report was "buried" when the Coalition won government at the 2013 election. Buduls found that the scheme featured “exploitation of financially vulnerable people by some unscrupulous operators” and recommended a significant overhaul. Her recommendations included an increased focus on compliance, a code of conduct for businesses accepting payments through Centrepay, a complaints phone line, and an approval process for businesses wishing to accept Centrepay payments.{{cite news |last1=Knaus |first1=Christopher |last2=Allam |first2=Lorena |title=Centrepay report that found major failings 'ignored' by successive Coalition governments, author says |url=https://www.theguardian.com/australia-news/article/2024/aug/07/centrepay-report-that-found-major-failings-ignored-by-successive-coalition-governments-author-says |access-date=25 December 2024 |work=The Guardian |date=7 August 2024}} A 2015 report by the Australian Securities and Investments Commission raised the alarm about Centrepay being used to overcharge consumers for households goods like appliances, finding that there was substantial price discrimination and that Centrelink recipients were being charged significantly more than other customers for leases on household goods.{{cite web |author1=Australian Securities and Investments Commission |title=Cost of consumer leases for household goods |url=https://download.asic.gov.au/media/3350956/rep-447-published-11-september-2015.pdf |access-date=25 December 2024 |archive-url=https://web.archive.org/web/20221108062043/https://download.asic.gov.au/media/3350956/rep-447-published-11-september-2015.pdf |date=September 2015 |url-status=dead|archive-date=8 November 2022}} In a 2022-23 financial year audit, Services Australia found that 42% of government-approved businesses taking payments through Centrepay were non-compliant.{{cite news |last1=Knaus |first1=Christopher |last2=Allam |first2=Lorena |title=Corporate regulator urges crackdown on Centrepay after more than 40% of businesses found to be non-compliant |url=https://www.theguardian.com/australia-news/article/2024/jul/24/asic-urges-crackdown-on-centrepay-as-dozens-of-non-compliant-businesses-uncovered |access-date=25 December 2024 |work=The Guardian |date=24 July 2024}}

As of 2024, 79% of payments made through Centrepay were for accommodation and utilities. The scheme is used by more than 600,000 customers and by over 15,000 businesses. Almost a third of Centrepay users are Aboriginal Australians, predominantly Aboriginal women living in remote communities.{{cite news |last1=Knaus |first1=Christopher |last2=Allam |first2=Lorena |title=Predatory rent-to-buy operators barred from Centrepay debit system in sweeping Albanese government reforms |url=https://www.theguardian.com/australia-news/2024/dec/01/rent-to-buy-operators-barred-from-centrepay-debt-system-in-sweeping-reforms-from-albanese-government-ntwnfb |access-date=25 December 2024 |work=The Guardian |date=2 December 2024}} In 2023 there were 23.7 million Centrepay transactions worth a total of $2.7 billion.

In December 2024, the Australian government announced that it would be making reforms to Centrepay to better protect customers. These reforms included removing high-risk goods and services, such as consumer leases and household goods, from the scheme and imposing mandatory end dates and target amounts for most deductions. The reforms also included a stronger compliance framework, including an application process for businesses wishing to accept payments through Centrepay and an improved complaints system.

Many clothing and appliance retailers, particularly those in outback Australia, allow customers to pay for their purchases through credit arrangements through Centrepay. Residents in remote communities often enter into credit arrangements to pay for appliances, clothing and other household goods through rent-to-buy schemes. There is no limit on the number of Centrepay agreements that a customer can enter into or on the amount of their welfare payment that can be deducted through Centrepay, meaning that customers may enter into multiple Centrepay agreements with a variety of rent-to-buy operators to pay for items like clothing, televisions, and other household goods. Welfare recipients, some of whom have low levels of financial literacy, may then be left with insufficient funds to pay for essential expenses like housing and food after Centrepay deductions are made from their welfare payments.{{cite news |last1=Allingham |first1=Kate |title=A scheme meant to help people avoid debt is now causing it – Centrepay needs urgent repair |url=https://www.theguardian.com/commentisfree/2024/apr/04/centrepay-debt-scheme-centrelink-payments |access-date=25 December 2024 |work=The Guardian |date=4 April 2024}}

The Australian government has banned a number of clothing and household goods stores in remote communities, including Indy-C and Urban Rampage, from accepting payments through Centrepay due to these concerns. ASIC alleged in 2024 that Indy-C entered into credit arrangements with Aboriginal Australians to buy clothing and appliances "without considering whether the credit arrangement would be consistent with the consumer’s objectives, financial situation, and needs".{{cite news |last1=Elton |first1=James |title=ASIC kicks second NT clothing shop off Centrepay as rules tightened for use |url=https://www.abc.net.au/news/2024-12-05/asic-kicks-nt-clothing-shop-indy-c-off-centrepay/104686682 |access-date=25 December 2024 |work=ABC News |date=5 December 2024}} Urban Rampage was banned from the scheme in 2024 after ASIC found that its credit arrangements placed customers at "significant risk" of financial hardship. Urban Rampage labelled the decision "racist and paternalistic" and vowed to appeal.{{cite news |last1=Allam |first1=Lorena |last2=Knaus |first2=Christopher |title=Urban Rampage banned from using Centrepay to sign up mostly Indigenous customers to credit arrangements |url=https://www.theguardian.com/australia-news/2024/apr/26/urban-rampage-banned-centrepay-centrelink-scheme-indigenous-customers-credit-arrangements |access-date=25 December 2024 |work=The Guardian |date=26 April 2024}}

Appliance lease operators have been identified as one of the primary sources of exploitative practices through Centrepay. A 2015 ASIC report found that appliance rental companies were targeting Centrelink customers and charging prices up to five times greater than their ordinary retail prices.{{cite news |last1=Knaus |first1=Christopher |title=Centrelink gave companies accused of exploitation direct access to welfare payments |url=https://www.theguardian.com/australia-news/2018/jan/17/centrelink-allowed-companies-accused-exploitation-deduct-payments-welfare |access-date=25 December 2024 |work=The Guardian |date=17 January 2018}} In 2023, 7:30 profiled a disability pensioner who had entered into various Centrepay agreements that eventually took up over a third of her welfare payment, including being charged $6760 for a phone that retailed for just $1800.{{cite news |last1=Hunjan |first1=Raveen |last2=Robinson |first2=Lee |title=Appliance rental store charges disability pensioner $6,760 for phone |url=https://www.abc.net.au/news/2023-11-16/disability-pensioner-charged-thousands-for-rental-phone-730/103097440 |access-date=25 December 2024 |work=ABC News |date=16 November 2023}} Several appliance rental companies that took payments through Centrepay, including Amazing Rentals, Rent the Roo and The Rental Guys, were ultimately found by ASIC to have breached responsible lending rules. In 2015, Credit Suisse published a report claiming that leading appliance rental company Radio Rentals received almost half of its revenue in Australia from Centrepay customers, who were often charged inflated prices.{{cite news |last1=Taylor |first1=Josie |title=Radio Rentals made $90 million from Centrelink payments last year |url=https://www.abc.net.au/news/2015-03-20/radio-rentals-reaps-$90-million-in-centrelink-payments/6333690 |access-date=25 December 2024 |work=ABC News |date=20 March 2015}}

Several energy retailers have been referred to the Australian Energy Regulator over their use of the Centrepay scheme. AGL Energy was fined $25 million by the Federal Court of Australia in December 2024 for failing to comply with its obligations around overcharging Centrepay customers.{{cite web |author1=Australian Energy Regulator |title=AGL penalised $25 million for breaches of overcharging rules related to Centrepay payments |url=https://www.aer.gov.au/news/articles/news-releases/agl-penalised-25-million-breaches-overcharging-rules-related-centrepay-payments |access-date=25 December 2024 |date=19 December 2024}} AGL overcharged 483 Centrepay customers a total of $468,310 between 2016 and 2021 after they had ceased to be its customers.{{cite news |last1=Terzon |first1=Emilia |last2=Morwood |first2=Maddy |title=AGL apologises for overcharging 'vulnerable' welfare recipients but says it may appeal $25m fine |url=https://www.abc.net.au/news/2024-12-19/agl-fined-25-million-over-centrepay-scandal/104745688 |access-date=25 December 2024 |work=ABC News |date=19 December 2024}}{{cite news |last1=Allam |first1=Lorena |last2=Knaus |first2=Christopher |title=Energy giant wrongly received thousands from welfare payments of former customers under Centrelink scheme |url=https://www.theguardian.com/australia-news/2024/mar/27/energy-giant-wrongly-received-thousands-from-welfare-payments-of-former-customers-under-centrelink-scheme |access-date=25 December 2024 |work=The Guardian |date=27 March 2024}} The Australian Energy Regulator confirmed in September 2024 that it was considering taking action against at least three additional energy retailers for similar practices.{{cite news |last1=Knaus |first1=Christopher |last2=Allam |first2=Lorena |title=Regulator may take action against three energy retailers over alleged misuse of Centrepay system |url=https://www.theguardian.com/australia-news/article/2024/sep/04/centrepay-australian-energy-regulator-agl-origin-ergon |access-date=25 December 2024 |work=The Guardian |date=4 September 2024}} Origin Energy{{cite news |last1=Knaus |first1=Christopher |last2=Allam |first2=Lorena |title=Centrepay scandal: energy firm Origin wrongly received funds from welfare payments of former customers |url=https://www.theguardian.com/australia-news/article/2024/may/13/centrepay-scandal-energy-firm-origin-wrongly-received-funds-from-welfare-payments-of-former-customers-ntwnfb |access-date=25 December 2024 |work=The Guardian |date=13 May 2024}} and Ergon Energy{{cite news |last1=Knaus |first1=Christopher |last2=Allam |first2=Lorena |title=Second energy firm wrongly received money from welfare payments under Centrepay scheme |url=https://www.theguardian.com/australia-news/2024/apr/01/second-energy-firm-wrongly-received-money-from-welfare-payments-under-centrepay-scheme |access-date=25 December 2024 |work=The Guardian |date=1 April 2024}} had previously confirmed that they were working with Services Australia to return overpayments.

Aboriginal Community Benefit Fund, also known as Youpla, was a funeral insurance provider for Aboriginal Australians that collapsed in 2022, leaving many low-income Aboriginal people with insufficient funds to pay for family members' funerals after paying premiums for decades. Some advocates claimed that Centrepay had "legitimised" the failed scheme, which was the only funeral insurance provider approved to take payments through Centrepay.{{cite news |last1=Allam |first1=Lorena |title=Federal governments legitimised predatory funeral fund that targeted Indigenous Australians, advocates claim |url=https://www.theguardian.com/australia-news/2022/nov/28/federal-governments-legitimised-predatory-funeral-fund-that-targeted-indigenous-australians-advocates-claim |access-date=25 December 2024 |work=The Guardian |date=28 November 2022}} The company received $170 million in premiums from Aboriginal people during its three decades in operation, much of this paid through Centrepay, despite a history of misleading claims and legal troubles.{{cite news |last1=Blakkarly |first1=Jarni |title=Disgraced business grew rich on Centrelink payments |url=https://www.choice.com.au/money/insurance/insurance-advice/articles/disgraced-business-grew-rich-on-centrelink-payments |access-date=25 December 2024 |work=Choice |date=12 September 2023}} The fund had faced numerous ASIC court actions in the early 2000s, and Anna Buduls' 2012 independent review of Centrepay had recommended that Youpla's access to the scheme be removed. Despite this, Youpla had kept access to Centrepay until 2017.{{cite news |last1=Bainbridge |first1=Amy |last2=Florance |first2=Loretta |last3=Wellauer |first3=Kirstie |title=Funeral insurer Youpla 'grew and grew' off welfare payments, then collapsed |url=https://www.abc.net.au/news/2022-06-16/centrepay-centrelink-payments-behind-acbf-youpla-growth/101109642 |access-date=25 December 2024 |work=ABC News |date=16 June 2022}} The government ultimately agreed to pay out policyholders who had been affected by Youpla's collapse during the years that it had been approved to accept payments through Centrepay.{{cite news |last1=Florance |first1=Loretta |last2=Wellauer |first2=Kirstie |title=Government to pay out Youpla/ACBF customers after failed insurer made millions off Centrelink payments |url=https://www.abc.net.au/news/2024-02-08/government-gives-youpla-funeral-fund-members-resolution-package/103442350 |access-date=25 December 2024 |work=ABC News |date=8 February 2024}}

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Category:1998 establishments in Australia

Category:Welfare in Australia

Category:Government programs