Recent action taken by the ACCC against car company Kia Motors has again highlighted the need for companies to ensure their marketing material is accurate and clear to consumers to avoid breaching Australian consumer laws.
The ACCC’s investigation into Kia Motors was in relation to its capped price servicing advertising that it had been offering since 2012. The capped price servicing advertising stated that the price of scheduled services on Kia vehicles would not exceed a maximum capped price for a set period of time, or a set number of services, after purchasing a new vehicle.
The practice of offering capped price servicing is not unique to Kia with many other brands now offered the practice and it has become a key marketing point for many companies and competition of the practice has increased, with manufacturers now seeking to outdo the period of time they offer capped price servicing.
However the terms and conditions of Kia’s capped price servicing allowed it to change the price of its scheduled services from time to time, with the ACCC finding that this had occurred four times between 2012 and 2015.
The ACCC did not find the Kia’s terms and conditions to contravene the Competition and Consumer Act as an unfair term or otherwise, however it did find that the way in which Kia advertised its capped price servicing was likely to mislead the ordinary consumer. Kia’s website specifically stated that ‘the capped price applicable for each service is the maximum you will pay for your scheduled service.’ The ACCC found that this misrepresentation amounted to a contravention of the Australian Consumer Law (“ACL”).
Following the ACCC’s findings Kia has agreed to:
- amend its terms and conditions to genuinely cap its service prices;
- write to consumers to confirm their current capped service prices;
- 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 findings of the ACCC highlights the need for companies to not only ensure their terms and conditions do not breach consumer laws, but also that their marketing materials are not likely to mislead consumers on what exactly they are receiving upon making a purchase.