The ACCC has successfully pursued former Tasmanian Europcar franchisee, BAJV Pty Limited, in relation to conduct involving the deliberate overcharging for vehicle repairs and failure to refund overcharged customers.

The ACCC has kept good its promise to scrutinise the conduct of hire car companies, with it obtaining a $200,000 civil pecuniary penalty against BAJV, and a $40,000 penalty against its director, for being knowingly concerned in the company’s conduct.

Both the company and the director cooperated with the regulator, and Justice Marshall, in the Federal Court, was able to decide what penalties should be ordered based upon an agreed Statement of Facts and Admissions.

The conduct in question involved overcharging customers in two ways:

  • BAJV obtained two invoices from repairers; the lower amount was paid by BAJV whereas the higher invoice was represented by BAJV to customers and third parties involved in collisions as being the actual cost of repair.
  • BAJV took from customers a Damage Liability Fee if the vehicle was returned damaged but failed to refund the customers if the actual cost of repair was less than the Damage Liability Fee.

The Court declared that the conduct was misleading or deceptive in contravention of section 18 of the Australian Consumer Law (ACL). It also declared the conduct to be unconscionable in contravention of section 21 of the ACL, the conduct having been engaged in deliberately, in an effort to increase profit.

In imposing the penalty, the Court took into account that the company and the director has cooperated with the ACCC, the company was a small business and relatively unsophisticated.

Europcar terminated the franchise agreement a couple of months before the hearing of the proceedings. It was not a party to the proceedings but interestingly it has introduced a new charging model such that customers are only charged for repairs once an independent assessment of the costs has been obtained.

Although the conduct involved in this case was extreme, the decision serves as a warning to all companies charging customers for repair to employ transparent practises in relation to repair costs, with best practice likely involving independent assessments of repair costs being obtained.