RENT-to-own retailer BrightHouse has been told to pay £14.8m to 249,000 customers by the financial regulator, the Financial Conduct Authority (FCA) reports the BBC.
BrightHouse will compensate customers who had cancelled agreements after one downpayment but had not been refunded.
It will also make payments to those who signed up to lending agreements that “may not have been affordable”.
The FCA said BrightHouse had not acted as a “responsible lender”.
The firm, which lets customers pay for household items such as washing machines and televisions on a weekly basis, has been criticised for its business model.
In 2016 a BBC investigation conducted by Ed Miliband, the former Labour leader, highlighted the example of a £358 washing machine that ended up costing more than £1,000.
BrightHouse has apologised to customers about failing to refund them.
There is no need for customers affected to contact BrightHouse. It will write to 213,000 current and former customers by the end of the year, explaining what they are due.
Customers whose deposits BrightHouse failed to refund signed up between April 2010 and April 2017. These customers will receive an average payment of £27.
The second group includes those who took out an agreement between April 2014 and September 2016. They will get an average of £147.
In the case of customers who were not assessed properly at the start of the loan who may have had difficulty making payments, BrightHouse will pay back interest and fees along with compensatory interest of 8% – if they return the goods.
Those who kept the goods will have their balances written off.
FAC chief executive Andrew Bailey told Radio 5 Live the move set a “very important precedent … BrightHouse did not behave as responsible lenders and they failed to meet our expectations”.