Caravan manufacturer Jayco Corporation Pty Ltd (Jayco), the largest RV manufacturer in Australia, has been ordered to pay a penalty of $75,000 for making a false or misleading representation about consumer guarantee rights to a customer, following ACCC court proceedings.
The ACCC launched the case in 2017 alleging unconscionable conduct towards, and the making of false or misleading representations to four consumers by denying them the right to refunds or replacements for their defective Jayco caravans.
However, in November 2020 (the appropriately named) Justice Wheelahan of the Federal Court dismissed most of the ACCC’s case, including the unconscionable conduct claims, but found Jayco had made a claim to one customer that was likely to be misleading or deceptive, and a false or misleading representation (in breach of ss 18 and 29(1)(m) of the Australian Consumer Law (ACL)).
The Court found that Jayco misled the customer by representing that they were entitled only to have their caravan repaired (because that was the effect of the Jayco warranty), when in fact under the ACL consumer guarantees the customer is entitled to choose a repair, replacement or a refund when there are major defects.
The Court also found that three of the four caravans were not of acceptable quality, with major defects including collapsed roofs, leaks, vibrating doors, cracks, poor joinery and inoperative water tanks. The three affected consumers were entitled to obtain a refund or replacement caravan.
The ACCC and Jayco made joint submissions on penalties and the appropriate form of declaration and costs, which Justice Wheelahan granted.
The maximum penalty at the time the conduct which took place (between 2013 and 2016) was $1.1 million per contravention. Our readers will know that ACL penalties are now much higher, having been aligned with the maximum penalties for breaches of the competition law. Even against the old, lesser maximum, the agreed penalty of $75,000 is at the lower end of the spectrum, which reflects the Court’s finding that the conduct related to one occasion by one employee involving one consumer and was not systemic, repeated or deliberate but inadvertent.
However, the penalty reflects the importance of general deterrence, even where there are isolated instances of misleading conduct and shows that the ACCC is determined in its pursuit of potentially false or misleading claims to consumers, particularly claims which purport to limit or exclude consumers inalienable rights under the ACL’s consumer guarantees.
“This penalty is a reminder to businesses that representations to consumers about their consumer guarantees rights need to be accurate. Consumers have a right to a repair, replacement or refund for goods with major faults,” ACCC Chair Rod Sims said. “Misleading consumers about their rights under the consumer guarantees, particularly by a large well-known manufacturer, is serious misconduct.”
This penalty follows a spate of recent decisions and even higher penalties against various businesses for making false or misleading representations to consumers, including:
- April 2021 – $1.9 million penalty against Megasave in relation to misrepresentations to prospective franchisees, and a $120,000 penalty against the sole director.
- April 2021 – ‘Australian 4WD Hire’ (Smart Corporation Pty Ltd (in liquidation)) was ordered to pay penalties of $870,000 for engaging in unconscionable conduct, made false or misleading representations in relation to insurance cover, and included unfair contract terms in its vehicle rental contracts. Penalties and disqualification orders were also made against directors.
- April 2021 – The Full Federal Court dismissed Volkswagon’s penalty appeal and upheld the record $125 million penalty imposed by Fed Court in December 2019 in relation to misrepresentations about vehicle emissions.
- April 2021 – Court found against Google LLC and Google Australia for misleading consumers about personal location data collection – penalties yet to be determined.
- March 2021 – Superfone ordered to pay $300,000 in penalties for making false and misleading representations and breaching laws in relation to unsolicited calls and agreements. 1400 consumers, many elderly, were targeted and the case highlights the ACCC’s enduring enforcement focus on issues affecting disadvantaged and vulnerable consumers.
- Feb 2021 – Kimberly-Clark was ordered to pay $200,000 for misleading consumers by consumers by falsely representing on its website that its Kleenex Cottonelle ‘flushable cleansing cloths’ were made in Australia, when they were made in Germany, South Korea or the UK (although the products themselves contained the correct information).
In the 10 years since civil pecuniary penalties were introduced for consumer law contraventions, the Federal Court has imposed almost $400 million in penalties in proceedings instituted by the ACCC.
We expect that the ACCC will seek to deploy the Jayco case as part of its continuing advocacy for legal reform to make a failure to comply with the consumer guarantees and unfair contracts terms a contravention of the ACL and subject to penalties, as well as the introduction of a general prohibition against unfair trading.