Court orders Ford to pay $10 million penalty for unconscionable conduct

26 April 2018

The Federal Court has declared, by consent, that Ford Motor Company of Australia Limited (Ford) engaged in unconscionable conduct in the way it dealt with complaints about PowerShift transmission (PST) cars, and ordered Ford to pay $10 million in penalties.

The Court held that Ford’s conduct in responding to consumer complaints about Fiesta, Focus and EcoSport vehicles fitted with PST between 1 May 2015 and 29 February 2016 was unconscionable

Consumers who purchased Ford vehicles with PST made complaints to Ford and its dealers about their car’s excessive clutch shudder, excessive noisiness from the transmission, delayed acceleration and excessive shuddering and jerking when accelerating.  37 per cent of these vehicles had at least one clutch replacement. 

“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. 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,” ACCC Chairman Rod Sims said.

Ford communicated with its dealers about the quality issues on multiple occasions, but did not provide adequate information about the quality issues to the customers who complained to Ford about their vehicles.

“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,” Mr 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.“

Ford mostly provided replacement vehicles in accordance with its “Ownership Loyalty Program”, which required consumers to make a significant payment towards a replacement vehicle.

“Ford told consumers that refunds and replacement vehicles were not an option, when they may have been legally entitled to these remedies under the consumer guarantees. Buying a new car is a significant financial commitment and Ford’s unconscionable conduct caused considerable distress and frustration to thousands of consumers,” Mr Sims said.

In addition to these Court orders, the ACCC has accepted a court enforceable undertaking from Ford to establish a program to review customer requests for refunds or replacement vehicles made between 1 May 2015 and 1 November 2016. At least 2,000 affected consumers can apply for an independent arbiter to assess their complaints.

Ford has also undertaken to provide customers with access to more information about their cars, including the history of manufacturing defect repairs performed on their vehicles.

“The Court’s decision is a reminder that businesses must have systems in place to properly review consumer claims for refunds or replacements. New car retailing is an enforcement and compliance priority for the ACCC, and we will take action against manufacturers that we believe have breached the Australian Consumer Law.”

Notes to editors

Consumers will be eligible to participate in Ford’s independent complaints review program if they:

  • owned a Ford vehicle fitted with a six speed dry dual-clutch automatic transmission (PowerShift Transmission) between 1 May 2015 and 1 November 2016
  • made a request for a refund or replacement, between 1 May 2015 and 1 November 2016, to Ford (including to Ford's Customer Relationship Centre) either directly or with the assistance of a Ford dealer, and
  • did not receive a full refund or a replacement vehicle at no additional cost.

Further information about the program will be available at www.ford.com.au.

Ford’s enforceable undertaking is available on the ACCC’s website Public Register.

The ACCC has previously accepted court enforceable undertakings from GM Holden Ltd and Hyundai Motor Company Australia Pty Ltd to improve compliance with consumer guarantees under the ACL. Both Holden and Hyundai also committed to reviews of past consumer complaints.

Background

From 2011 to 2016, Ford supplied over 70,000 Fiesta, Focus and EcoSport vehicles fitted with a 6-speed dry dual-clutch transmission system known as the “PowerShift Transmission”.

The ACCC initiated proceedings against Ford in July 2017.

The ACCC released the final report for its New car retailing industry market study in December 2017.

Release number: 
71/18
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