The Australian Competition and Consumer Commission (ACCC) has successfully pursued former Tasmanian Europcar franchisee BAJV Pty Limited in relation to conduct involving deliberate overcharging for vehicle repairs and a failure to refund overcharged customers.

The case demonstrates the ACCC's continued commitment to its promise to scrutinise the conduct of hire car companies – it obtained a A$200,000 civil pecuniary penalty against BAJV and a 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. Justice Marshall of the Federal Court was therefore able to decide what penalties should be ordered based on an agreed statement of facts and admissions.

The conduct in question involved overcharging customers in two ways:

  • BAJV obtained two invoices from repairers – the first was for the amount actually paid by BAJV, while the second, higher invoice was represented by BAJV to customers and third parties involved in collisions as being the actual cost of repair.
  • BAJV took a damage liability fee from customers if the vehicle was returned damaged, but failed to refund customers if the actual cost of repair was less than the fee.

The court declared the conduct to be misleading or deceptive in contravention of Section 18 of the Consumer Law. It also declared the conduct unconscionable in contravention of Section 21 of the law, as BAJV had acted deliberately in an effort to increase profit.

In imposing the penalty, the court took into account the fact that the company and its director had cooperated with the ACCC, and that the company was a small business and relatively unsophisticated.

Europcar terminated the franchise agreement with BAJV a couple of months before the proceedings were heard. It was not a party to the proceedings. However, it has since introduced a new charging model such that customers are charged for repairs only 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 that they must employ transparent practices in relation to repair costs, with best practice likely involving independent assessments of repair costs being obtained.

For further information on this topic please contact Anne Freeman at Piper Alderman by telephone (+61 2 9253 9999), fax (+61 2 9253 9900) or email (afreeman@piperalderman.com.au).

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