Kia Motors Australia Pty Limited (Kia) has agreed to amend the terms and conditions of its capped price servicing offer to consumers, following an investigation by the Australian Competition and Consumer Commission
Beginning in 2012, Kia made statements on its website and in other promotional material which represented to consumers that its scheduled service prices for Kia vehicles were capped at a maximum price. In particular, Kia represented on its website that ‘the capped price applicable for each service is the maximum you will pay for your scheduled service’.
However, prior to the ACCC’s intervention, Kia’s terms and conditions allowed scheduled service prices to be amended at any time and, in fact, these prices had been changed by Kia four times since 2012.
The ACCC considered that Kia’s advertising of its capped price servicing offer was likely to amount to a misleading representation to consumers that the price of having their vehicle serviced was capped at the maximum amount specified, in contravention of the Australian Consumer Law (ACL).
“Capped price servicing offers can be attractive to consumers because they are a means for consumers to lock in the price of servicing their vehicle for a set period,” ACCC Commissioner Sarah Court said.
“Businesses that make capped price offers of this type in their advertising campaigns or represent that consumers can fix the maximum charge for particular services must ensure that these offers are not eroded by later reliance on amendment provisions in their terms and conditions which permit price changes”.
Kia fully cooperated with the ACCC’s investigation. In response to the ACCC’s concerns, Kia agreed to:
- amend its terms and conditions to ensure that its service prices were genuinely capped;
- write to affected consumers confirming the applicable capped service prices for their vehicle;
- offer to refund any amounts paid by consumers above the capped service prices that applied to their vehicle when it was purchased;
- introduce systems to ensure that consumers are not charged higher prices than the capped service prices which applied when their vehicle was purchased; and
- implement a consumer law compliance program.
The ACCC now intends to review other capped price service offers made to consumers by vehicle manufacturers to assess whether any similar issues arise.
Misleading or deceptive conduct and making false or misleading representations about the price of goods or services are prohibited by the ACL. False or misleading representations attract a maximum penalty of up to $1.1 million per contravention.