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Repair price gouging costs rental car outfit $200,000

July 11, 2013 Corporate, Headline News No Comments Email Email

egtmedia59Deliberately overcharging customers for hire vehicle repair and failing to refund overcharged customers has cost a former Tasmanian Europcar franchisee AUD 200,000 in the Federal Court.

The case has led the Australian Competition and Consumer Commission (ACCC) to voice serious concerns “about hire car companies’ lack of open and accountable procedures when charging customers for vehicle damage”.

As well as the penalty against BAJV Pty Ltd (BAJV), the Court also fined BAJV director Brendon Ayers AUD 40,000 for being knowingly concerned in the conduct. EGT_Artical Banner A 250x250

The fines are technically known as civil pecuniary penalties as they are imposed in a civil proceeding.

The Court found, based on the parties’ agreed Statement of Facts and Admissions, that BAJV and Ayers had engaged in unconscionable conduct and made false or misleading representations.

This was in relation to charging customers for hire vehicle damage based on inflated estimated repair costs and failing to refund customers the overcharged amount once repairs had been completed, despite being aware of the actual lower cost of the repairs.

Consumer rip-offs involving two invoices were described.

BAJV’s unconscionable conduct included obtaining two invoices from a bodyworks repairer for the same vehicle repair. The lower invoice amount represented the actual repair costs and was the amount paid by BAJV to the repairer. The higher invoice amount was falsely represented by BAJV to its customers, and to third party motorists, as being the actual repair costs.

Justice Marshall noted the Court’s disapproval of the conduct of BAJV and Ayers and the need for general and specific deterrence for such behaviour. The judge noted that the conduct was designed by Ayers to increase the profitability of BAJV at the expense of customers who were unlikely to be aware that they were being overcharged.

“The ACCC has serious concerns about hire car companies’ lack of open and accountable procedures when charging customers for vehicle damage,” ACCC Acting Chair Delia Rickard said.

“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,” Rickard said.

The ACCC is carefully considering the judgment. In addition to the monetary penalties imposed, the Court also made orders including declarations, costs and a publication order in terms to be agreed.

Written by : Peter Needham

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