Ford faces legal action from ACCC: Australian Consumer Law Update
The Australian Competition and Consumer Commission (ACCC) has commenced legal action against Ford for allegedly misleading customers who had purchased faulty vehicles, and on-selling surrendered vehicles without disclosing their mechanical faults. The consumer watchdog launched action against the company, claiming that the manufacturer had made false or misleading representations in response to its customer complaints and had failed to provide refunds or replacements in compliance with the Australian Consumer Law (ACL).
The story so far
The complaints against Ford involved three vehicles: the Ford Focus, Fiesta, and Ecosport. According to the ACCC, 70,000 Ford vehicles sold in Australia were fitted with a faulty dual-clutch automatic gearbox. Following this, almost half of the Ford Focus, Fiesta and EcoSport vehicles with a PowerShift transmission sold between 2011 and 2016 have required at least one significant repair. Customer complaints include that their cars shudder and jerk when accelerating, suddenly lose power or make a lot of noise.
The ACCC alleges that from 2011 to 2015, Ford had been:
- Unlawfully denied the complaining customers their due refunds or replacements, even after multiple repairs failed to resolve the issues;
- Misrepresented to customers who made complaints that the issues with their vehicles were caused by the way the driver handled the vehicle, despite being aware of systematic issues with the vehicles from at least 2013.
Furthermore, customers who requested a replacement vehicle were required to make a significant payment under the company’s “PowerShift Ownership Loyalty Program”. By the end of July last year, more than 800 customers had paid, on average, around $7,000 through the program, totalling more than $6.5 million.
The law on refunds
The ACL was introduced on January 1st 2011 and covers the rights of consumers and guarantees they are afforded in the event of major or minor failures not repaired within a reasonable timeframe. This legislation applies to vehicles under the following circumstances:
- Vehicles that were purchased after the 1st of January 2011
- Any type of product or service under $40,000
- Any type of product or service over $40,000 as long as it is for personal, domestic or household purposes.
Under section 261 of the ACL, if a product or service you buy fails to meet a consumer guarantee, you can ask for a repair, replacement or refund. The remedy you’re entitled to will depend on the severity of the issue.
- If the problem with a product or service is minor, you must accept a free repair if the business offers you one. If the business fails to give you a free repair within a reasonable time, you can ask for a replacement or refund.
- You can ask for a replacement or refund if the problem with the product is major. Replaced products must be of an identical type to the product originally supplied. Refunds should be the same amount you have already paid, provided in the same form as your original payment.
- A major problem with a product or good includes when it is unsafe; it is significantly different from the sample or description; or it has a problem that would stop someone from buying it if they had known.
The law on misleading representations
It is also unlawful to make statements that are incorrect or likely to create a false impression. Section 29 of the ACL governs any false or misleading representations about goods or services.
For instance, a business must not make false or misleading representations about:
- The standard, quality, value or grade of goods or services;
- The composition style, model or history of goods;
- Whether the goods are new;
- The price of goods or services;
- A guarantee, warranty or condition on the goods and services.
ACCC is seeking to strike Ford with declarations, injunctions, pecuniary penalties, consumer redress orders, corrective advertising and compliance obligation programs. This will effectively require Ford to provide refunds or free repairs to its customers and advertise the issue so that any affected buyers are aware of it.
Reaction from Ford
Chief Executive of Ford Motor Company Australia, Graeme Whickman, stated that the manufacturer “strongly” rejected the allegations and would challenge them. Furthermore, the car giant has insisted that it provided refunds and replacements in accordance with the relevant legislation. Ford said that more than 12,000 customers vehicles had already been upgraded, and the company was continuing to reach out to affected drivers.