Following an investigation by the ACCC, Kia Motors Australia Pty Limited (Kia) has agreed to amend the terms and conditions of its capped price servicing offer to consumers.

Background

From 2012 onwards, Kia made representations to consumers through its website and other promotional materials that its scheduled service prices for Kia vehicles were capped at a maximum charge, stating on its website that “the capped price available for each service is the maximum you will pay for your scheduled service”.

Kia’s terms and conditions, however, allowed for the scheduled service prices to be amended at any time, and in fact Kia had actually changed its prices four times since the commencement of the “capped price” representations.

In addition to agreeing to amend its terms and conditions to ensure that the service prices were truly capped, Kia agreed a number of remedial steps including to contact affected consumers and confirm the applicable capped service prices, and offer refunds of any amounts paid by consumers above the capped service price that applied at the time they purchased their Kia vehicle.

Implications

The ACCC has stated that it considers capped price offers to require particular attention because of the attractive nature of the pricing model, which allows consumers to fix the maximum charges for particular services. As ACCC Commissioner Sarah Court stated:

Businesses that make capped price offers of this type in their advertising campaigns… must ensure that these offers are not eroded by later reliance on amendment provisions in their terms and conditions which permit price changes.

The ACCC will be reviewing other capped price offerings made by vehicle manufacturers to consumers.

Any businesses that offers capped price offers should consider whether any advertising or other statements have the potential to constitute misleading or deceptive conduct, or the making of false or misleading representations about the price of goods or services, having regard to the other terms and conditions applying to the supply of the goods or services. False or misleading representations attract a maximum pecuniary penalty of up to $1.1 million per contravention under the Australian Consumer Law.