The Federal Court has found Mazda liable for failing to comply with the ACL, imposed significant penalties and ordered compensation payments, in addition to non-monetary penalty obligations

The Federal Court of Australia (Court) recently delivered its final decision regarding Australian Consumer Law (ACL) breaches by Mazda Australia Pty Ltd (Mazda) in Australian Competition and Consumer Commission (ACCC) v Mazda Australia Pty Ltd (No 3) [2024] FCA 83.

How did Mazda breach the ACL?
The Court found Mazda breached ACL section 18 (misleading and deceptive conduct) and section 29(1)(m) (false or misleading representations), multiple times in respect of representations made to consumers regarding the ACL consumer guarantees.
The Court noted that forty-nine false representations were made to consumers in breach of the ACL in respect of seven vehicles purchased from Mazda dealers.
Broadly, the false representations were made in relation to two categories, as follows:
• false representations regarding the existence and effect of the consumer guarantees, and the rights and remedies available in respect of the consumer guarantees; and
• false representations regarding whether Mazda had reasonable grounds for forming the opinion that a consumer was not entitled to a remedy (in this instance the remedy of a refund or replacement vehicle at no cost), when Mazda had no reasonable grounds to form such an opinion.

What were the consequences of the breaches?
As a consequence of the breaches, the Court imposed substantial penalties on Mazda, amounting to $11.5 million dollars.
The amount of the penalty was based on several factors, including the size and profitability of the company, and the need to achieve general deterrence.
Due to Mazda failing to cooperate with the ACCC at the outset, the Court did not reduce the amount of the penalty.
In addition to the penalty, the Court ordered that compensation was payable to the consumers in various amounts representing the difference between any amounts they were paid by Mazda, and the amount they would have received for a refund or replacement (being the remedy sought by the consumers). This amount was a total of $82,291.
The Court also imposed non-monetary obligations on Mazda, including the implementation of compliance programs to facilitate future compliance with the ACL and issuing public notices acknowledging the breaches and informing consumers of their rights.

What can your business do to reduce risk?
Although Mazda is a vehicle manufacturer and large company, the ACL applies to both small and large businesses. It follows that it is prudent for a business to identify ways to reduce the risk of breaching the ACL.
A business can take steps that may help reduce the risk of breaching the ACL including, for example:
• ensuring that all staff understand the ACL consumer guarantees (including when and what rights and remedies are available) and receive training to help them avoid making false or misleading representations;
• remember that a warranty offered by a business does not replace the ACL consumer guarantees;
• implement a process to address customer complaints aimed at facilitating compliance with the ACL, for example:
– nominate a person who is familiar with the ACL to address customer complaints;
– implement a process to assess customer complaints aimed at complying with the ACL (including assessing if the business is liable and having a reasonable basis for denying liability); and
– ensuring staff do not make any false representations regarding the consumer guarantees (including availability of consumer guarantees, rights and remedies)
• seek advice on compliance with the ACL.

Key Takeaways
• A business will breach the ACL if false or misleading representations are made regarding consumer guarantees;
• A business will breach the ACL if they fail to comply with the consumer guarantees;
• The penalties imposed for a breaching of the ACL may be significant and encompass compensation, financial penalties and non-monetary obligations; and
• It is prudent for a business to take steps to reduce the risk of breaching the ACL.

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This document is intended for general information purposes only and should not be regarded as legal advice. Please contact Industry Legal if you require legal advice