The ACCC has taken action after completing an
investigation into Kia Motors' capped price servicing
advertisements. Since 2012, Kia has been advertising that the price
for scheduled services on Kia vehicles would not exceed a maximum
capped price for a set period of time, or for a set number of
services, after purchase.
Offering capped price servicing has become a widespread practice
in the automotive industry. The practice allows consumers to
'lock in' the price of servicing their vehicle over a set
period and consumers often choose to buy particular
manufacturer's car over others if capped price servicing is
offered for a longer period of time.
Kia's terms and conditions allowed the price of scheduled
services to change from time to time. Kia changed its 'capped
prices' four times between 2012 and 2015.
Kia's terms and conditions allowing the change in price were
not found to contravene the Competition and Consumer Act
as an unfair contract term or otherwise.
However, the ACCC considered that Kia's advertising
of its capped price servicing offer was likely to mislead a
consumer, as the website specifically stated that 'the capped
price applicable for each service is the maximum you will pay for
your scheduled service'. The ACCC determined that this
misrepresentation, among others, amounted to a contravention of the
Australian Consumer Law (ACL).
As a result of the ACCC's findings, Kia has agreed to:
amend its terms and conditions to genuinely cap its service
write to consumers to confirm their current capped service
offer a refund to consumers who have paid service prices above
the price that applied when they purchased their vehicle;
introduce systems to ensure that consumers are not charged
higher maximum prices; and
implement a consumer law compliance program.
The ACCC has indicated it will be reviewing the practices of
other vehicle manufacturers to assess if there are similar issues
in other capped price service offers.
This ACCC action is part of a wider crackdown on
anti-competitive behaviour following the release of the Harper
Competition Review Draft Report on 22 September 2014. The final
report is expected to be handed down in the next couple of
The clear message from the ACCC for suppliers is to ensure that
the terms on which goods and services are provided to consumers are
fairly and accurately represented in marketing material.
Making false or misleading representations or engaging in
misleading or deceptive conduct about the price of goods or
services is prohibited by the ACL. This conduct can attract a
maximum penalty of up to $1.1 million per contravention for a
company and $220,000 for an individual.
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The Federal Court decision is likely to encourage the ACCC to maintain unconscionable conduct as an enforcement priority.
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