On 20 February 2018, the ACCC announced that new car retailing was among its top 2018 Compliance & Enforcement Priorities.
Specifically, the ACCC identified as a priority: ‘consumer issues in new car retailing, including responses by manufacturers and dealers to consumer guarantee claims and other matters identified in the ACCC’s 2017 New Car Retailing Industry Report’.
While launching the 2018 Compliance & Enforcement Priorities, ACCC Chairman Rod Sims described consumer guarantees as a ‘perennial issue’ for the ACCC, and stated that the ACCC will have a low tolerance for practices which mislead consumers or fail to deliver the full level of protection to which consumers are entitled. Based on the level of focus the ACCC gave to the new car retailing industry in 2017, the industry can expect the same amount of focus from the ACCC in 2018.
The 2017 New Car Retailing Industry Report identified a number of consumer issues the ACCC regarded as ‘of concern’. These included:
- The need to update complaint handling systems and improve the approach to the handling of consumer guarantee claims;
- Enhancing the Australian Consumer Law to provide additional clarity to consumers about when they are entitled to a refund or replacement under consumer guarantees; and
- The need for ACCC to work with manufacturers and dealers to develop a concise and simple explanation of consumer guarantee rights under the Australian Consumer Law and their interaction with manufacturer warranties — to be provided to consumers when they buy a new car.
The 2017 New Car Retailing Industry Report came following the ACCC’s market study on new car retailing which identified concerns including that there was a systematic failure in consumers enforcing consumer guarantees after the purchase of a new car, and a compliance problem with respect to information given to consumers about their Australian Consumer Law rights at the point of sale.
New car retailing and consumer guarantees was a similar priority for the ACCC in 2017. In 2017, the ACCC uses a varied approach to address its concerns. Other than the New Car Retailing Market Study, the ACCC was very active in its compliance and enforcement activities affecting the new car retailing industry. Among other things, the ACCC engaged in litigation and obtained court enforceable undertakings against a number of manufacturers and distributors of consumer goods.
One issue raised by the ACCC in 2017 that remains to be resolved in 2018 is the extent to which there is any legal obligation on manufacturers and dealers to inform consumers of their Australian Consumer Law legal rights – other than by displaying mandatory text in any manufacturer warranty documentation. Significantly, this issue was tested unsuccessfully by the ACCC in 2017 in the case of ACCC v LG Electronics Australia Pty Ltd. In that case, the Court held that, aside from displaying the mandatory text in warranty documents, there was no obligation on LG to provide information to a consumer about the consumer’s rights under the Australian Consumer Law. The ACCC has appealed that decision and the appeal hearing is expected to commence in the middle of 2018. The outcome of that decision will have a significant impact on sales practices in new car retailing.
This article was written by Evan Stents, Partner and Christian Teese, Senior Associate.