Thorn Group says a $50 million class action involving past lending practices of its subsidiary Radio Rentals could drag on for years.
Maurice Blackburn Lawyers announced the action against Radio Rentals on Wednesday on behalf of customer and lead plaintiff Casey Simpson.
The legal firm alleges that the home appliance rental company's "Rent, Try, $1 Buy" contracts are misleading and deceptive as customers do not get to buy rented goods for $1 at the end of their contract periods.
Thorn Group on Thursday morning confirmed it had been served with a statement of claim but warned the case could drag on.
"Thorn Australia Pty Limited will defend the claim in the ordinary course of the class action process," the company said in a statement to the ASX.
"It is anticipated that the process could take a significant length of time (perhaps years) to run its course."
The Radio Rentals website tells potential customers that at the end of a 24, 36 or 48 month rental plan for an appliance or piece of furniture: "you can make it yours for just $1".
However, Maurice Blackburn principal Ben Slade said the contract fine print states that the impetus is on customers to negotiate to buy rented appliances or furniture for a price agreed by Radio Rentals.
If customers fail to secure a purchase, their contracts automatically roll over into another 24, 36 or 48 month term.
Additionally, Radio Rentals' website states that goods available to buy under those contracts "are similar to (the) rented good in age, dimension and features".
At 1214 AEDT on Thursday, Thorn shares were down 3 cents, or 2.27 per cent, at $1.29.
