Choice condemns car industry refund policy

Consumer advocate group calls for more car companies to offer 60-day refund guarantees

Consumer group Choice is calling for tougher automotive lemon laws to protect the rights of buyers who purchase vehicles that fail to deliver on their advertised functionality.

Currently only three of Australia's mainstream automotive brands go beyond their obligations under the Australian Consumer Law (ACL) by offering a 60-day refund policy.

Only Holden, Toyota and Volkswagen offer 60-day vehicle refund policy in Australia, the latter as part of a court-enforceable undertaking with the Australian Competition and Consumer Commission (ACCC) in September 2018.

Under Volkswagen Group Australia’s year-old ‘60-day policy’, the company will “offer refunds or replacements without the need for a consumer to demonstrate a major failure, if a defect prevents a vehicle from being driveable within the first 60 days after purchase”.

All mainstream car companies now offer five-year warranties in Australia and the ACCC has taken a hard line on brands that massage the terms and conditions of their capped price service programs, as Kia discovered in 2015.

In the two and a half years since the ACCC released its final report on Australia’s new-vehicle retailing industry in December 2017, it has also taken action against Ford over the PowerShift transmission in Fiesta, Focus and EcoSport models, and sought court-enforceable ACL undertakings from Holden and Hyundai.

Now Choice is urging consumers to sign a petition to encourage all major automotive brands to adopt a 60-day returns policy like that offered by Holden, Toyota and Volkswagen.

Choice says seven of the 10 most popular car brands in Australia need to lift their game – Ford, Honda, Hyundai, Kia, Mazda, Mitsubishi and Nissan – and is petitioning them to adopt 60-day car refund policies to protect consumers against vehicles with chronic issues.

"This promise – to refund someone if their brand new car stops working in 60 days – is a bare minimum acknowledgement of consumer rights," said Choice consumer rights advocate Amy Pereira.

"The bar is low, but so many of our car companies can't even get a pass mark here," she added.

"While we give Toyota, Holden and Volkswagen a pass, they had to be dragged kicking and screaming towards a fair and clear policy," says Pereira.

The verbal spray is somewhat at odds with comments made by the ACCC in September 2018.

“We are pleased Volkswagen will offer its new car customers remedies in some cases beyond what the law requires and believe this positive step will be appreciated by new customers,” said ACCC Commissioner Sarah Court at the time.

Choice's Pereira says the automotive industry's approach to lemon laws is untenable.

"As for others, right now, you get better treatment with a faulty $40 toaster than a faulty $40k car when it comes to refunds."

The calls for stronger consumer protection for car buyers follows a 2016 Choice report that showed two third of Aussies had issues with their car within the first five years of ownership. A further 14 per cent reported problems so serious it affected the operation of the car or stopped it from functioning.

Choice says it will continue pressuring major car manufacturers to offer refunds for cars that don't operate as intended.

"Cars are a vital and expensive purchase. We rely on them for work and family, and to be given the runaround when things go wrong is unacceptable," said Pereira.

"We deserve better, especially for such a significant purchase. If the car companies are smart, they'll recognise that fair refund practices and honest interactions when something goes wrong is the best way to keep us as customers long term."