A former Tasmanian Europcar franchisee, BAJV Pty Ltd (BAJV), has been ordered by the Federal Court to pay a $200,000 civil pecuniary penalty after admitting to deliberately overcharging customers to repair damaged hire vehicles and failing to issue refunds. BAJV’s director, Brendon Ayers, was also ordered to pay a $40,000 civil pecuniary penalty for being knowingly concerned in the conduct.
Based on an agreed Statement of Facts and Admissions, the Court held that BAJV engaged in misleading and deceptive conduct between December 2006 and February 2012. Amongst other things, the Court found that BAJV had:
- developed a set of standard charges for items or types of damage charged to customers returning their hire vehicle;
- knowingly charged customers an estimated repair cost that was more than the total repair cost paid by BAJV to the repairer or parts supplier;
- failed to notify customers of their entitlement to a refund and process the refund, unless BAJV had received an inquiry from a customer;
- charged customers the full amount of the damage liability fee for accidents involving a third party, regardless of the nature of the accident; and
- developed a policy of retaining the full amount of the damage liability fee charged for 7 years and failed to create the necessary accounting records.
The Court also found that BAJV’s conduct was unconscionable because it enabled the company to deliberately retain monies to which it wasn’t entitled in circumstances where the customer did not, and could not be expected to have, any substantial knowledge, experience or understanding of the cost of repairing a vehicle and were not given the opportunity to independently verify the cost of the repairs. BAJV’s standard form contractual terms permitted BAJV to charge customers in their absence and without their knowledge. By contrast, BAJV had substantial knowledge and experience in relation to assessing the seriousness of the damage and the cost of repair.
Justice Marshall in his judgment emphasised the deliberateness of the conduct and the need for deterrence, stating that some of the conduct “may have flowed from poor management systems but nevertheless most of it concerned deliberate conduct which involved BAJV taking advantage of its customers.” In assessing the quantum of penalties, the Court had regard to the small-medium size of the family business and its cooperation with the ACCC. In addition to the monetary penalties, the Court also made declaration orders, costs orders and a publication order in terms to be agreed.
The ACCC’s Acting Chair, Delia Richard, expressed the ACCC’s concern with the transparency of hire car companies stating that “many consumers are likely to have a limited knowledge of the cost of vehicle repairs and are therefore in a vulnerable situation when a hire car company charges for vehicle repair costs. Hire car companies must behave honestly in relation to these charges and ensure that they have adequate systems in place to refund any overcharged amounts”.
Interestingly, the Court made note of the ACCC’s conduct, stating that it should have taken a more proactive role in responding to BAJV’s invitation to meet for discussions before instituting the proceeding. The ACCC has announced in its media release that it is carefully considering the judgment.
In May of this year, Europcar terminated its franchise agreement with BAJV.