Car maker Ford will pay one of the largest fines under Australian Consumer Law after it was found to have denied customers their legal rights to claim warranty, instead telling customers they were to blame for a known fault.
Between 1 May 2015 and 29 February 2016, Ford was found to have communicated with its dealerships about known problems in the clutch of Focus, Fiesta and EcoSport cars.
The problem led to many complaints from drivers about excessive clutch shuddering, noise from the transmission and jerkiness on acceleration.
However, Ford did not communicate these problems to affected consumers, and in many instances, told customers the problems were actually a result of the driver’s operation of the vehicle, according to the ACCC.
“Despite knowing that shuddering was a symptom of the quality issues with the vehicles, Ford frequently told customers that shuddering was the result of the customer’s driving style. Ford knew that the symptoms of the quality issues with the vehicles were experienced intermittently, but required customers to demonstrate them on demand in the presence of a dealer in order for repairs to be undertaken,” ACCC chair Rod Sims said.
“In most cases, Ford refused to provide a refund or no-cost replacement vehicle to consumers, even after vehicles had undergone multiple repairs that had not resolved consumers’ complaints.”
According to Mr Sims, Ford also breached consumer law by insisting that refunds and replacements were not available to customers.
In an agreement struck with the company, Ford will pay a $10 million fine and establish an independent review process for affected customers to have their complaint reviewed.
“Ford’s $10 million penalty is one of the largest handed down under the Australian Consumer Law and reflects the seriousness of Ford’s conduct,” said Mr Sims.
“Ford knew that its vehicles had three separate quality issues, but dealt with affected customers in a way which the Court has declared to be unconscionable.”
In a statement, Ford said the verdict brings to an end proceedings with the ACCC began in July 2017, and with it comes an opportunity for “making right with these customers”.
“We were overwhelmed with the volume of complaints and, while it was not intended, over a ten-month period our processes were inadequate and information provided was either inaccurate or incomplete. We let our customers down and for that we are sorry,” the company’s Australian president and CEO, Graeme Whickman, said.
“This process has identified the challenges our customers faced and the lack of appropriate processes to effectively handle these.
“Of particular concern was the Owner Loyalty Program, which resulted in customers paying an additional cost to buy new vehicles although they may have been eligible for a refund or no cost replacement vehicle. We now realise this program was flawed as it didn’t ensure an adequate assessment of customers’ rights under consumer law. It was discontinued in November 2016.”
While the ACCC said that at least 2,000 customers had been affected, Ford suggested that number may be significantly higher.
Ford noted that around 75,000 vehicles had been sold in Australia with the problematic transmission, and that an estimated 10,500 “customer cases” were opened between May 2015 and November 2016 that may be eligible to participate in the review process.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.