But the Australian Securities & Investments Commission (ASIC) claims the company has inflated the price of goods and also overcharged customers on interest contracts.

In one case, ASIC claims a customer was charged more than $4000 over three years for a mobile phone that retailed for less than $1500.

In another, Snaffle allegedly charged $835 more than it should have for a 35L fridge.

Australian regulation limits the amount of interest that can be applied to a credit contract to 48 per cent.

But ASIC alleges Snaffle bypassed the law, leading to cost and interest charges of between 60 and 103 per cent.

This allegedly resulted in customers paying hundreds of dollars more than they should have, according to the watchdog.

Instead of interest being calculated on the unpaid balance of the product, which depreciates over time, ASIC alleges up to 40,430 customers were charged a flat interest rate based on the full purchased cost for the duration of the credit contract.

ASIC Deputy Chair Sarah Court said the regulator is searching for a substantial penalty if the allegations are found by the courts to be true.

‘ASIC alleges Snaffle charged customers a substantial markup on products, as well as a delivery fee they did not incur, operating costs, a profit margin and additional adjustments – all before significant interest was applied, resulting in an unlawful credit contract,” she said.

“We’re especially concerned about the impact on particularly vulnerable people and we think a significant penalty will clearly send that message.”

Consumer Action Law Centre chief executive Stephanie Tonkin says consumers have other options.

“There are far better products out there than Snaffle and other consumer lease products,” Tonkin said.

“There’s a no-interest scheme to help you access a fridge, or other white-goods, or other essential items.”