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Make it Mine could be penalised by $1.7 million after being accused by ASIC of breaching consumer credit laws, including the responsible lending obligations.
The company sells electronic devices and white goods via instalment payments to people who receive government benefits.
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ASIC's civil penalty proceedings, filed in the Federal Court of Australia, allege Make It Mine failed to collect financial information from customers and failed to assess whether the contracts were suitable.
The regulator also alleges the company failed to comply with the credit licensing laws.
Make It Mine has also voluntarily started its own proceedings before the court, according to ASIC.
The firm has admitted that it failed to include in its contracts details regarding the interest rate being charged as well as the market value of the goods being purchased, ASIC said.
ASIC deputy chairman Peter Kell said credit providers must give customers all the information they need to make an informed choice about entering into what are often costly contracts.
"This is especially important when it comes to financially vulnerable people," Mr Kell said.
"Responsible lending laws are important in protecting customers from taking out loans they can't afford."
In addition to financial penalties, ASIC is seeking declarations that Make It Mine contravened its responsible lending obligations and that the firm engaged in credit activities without the appropriate licence.
The maximum penalty for a company for breaching responsible lending laws is $1.7 million for each contravention.
The proceedings are listed for a directions hearing in the Federal Court in Melbourne on December 8.
[Related: ASIC action results in $42,500 penalty for lender]
