Consumer watchdog slaps Kia's wrist

Kia Motors Australia is under fire from Australia's peak consumer watchdog – with more car companies expected to face scrutiny – after the Korean importer was found to have mislead customers over its capped-price service program.

That's the word from the Australian Competition and Consumer Commission (ACCC), which says such practices are in contravention of Australian consumer law.

Kia was one of the first Australian importers to offer a capped-price servicing program, in 2012, but similar schemes have since been adopted by most mainstream brands here in an attempt to give owners peace of mind by capping each service at a certain cost.

After consultation with the ACCC, Kia has agreed to change its terms and conditions – the fine print – which states that it reserves the right to change scheduled service prices at any time. It has done so four times since 2012.

Kia has also agreed to refund customers who paid above the amount outlined when they bought their new car, but motoring.com.au understands that customer refunds will be in the single dollar range, with the majority involving less than a dollar.

The company has also agreed to ACCC recommendations to "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".

Many other car companies in Australia also retain the clause to change pricing at any time, something the ACCC is well aware of.

The ACCC released a press statement indicating that it "intends to review other capped price service offers made to consumers by vehicle manufacturers to assess whether any similar issues arise".

The ACCC argues that by calling the program 'capped price' it is "likely to amount to a misleading representation to consumers" and is in contravention of the Australian Consumer Law.

"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," said Sarah Court, ACCC Commissioner.

"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," she said.

The ACCC noted that "Kia fully cooperated" with the investigation and that the car company would now amend its terms and conditions "to ensure that its service prices were genuinely capped" and also inform affected customers of the overcharging and offer refunds.

Kia has avoided the maximum penalty enforceable – a fine of up to $1.1 million per contravention – in cases of "misleading or deceptive conduct and making false or misleading representations about the price of goods or services are prohibited by the ACL" after agreeing to take the above actions.

In its very public admonishment of Kia, the ACCC is sending a strong message to all car brands to ensure they do not break Australian consumer laws.

Kia Australia's General Manager of Media and Corporate Communications, Kevin Hepworth, told motoring.com.au: "We're pleased with the findings".

"We complied fully with all requests from the ACCC. The end result is what we believe to be industry-best practice," he said of the revised capped-price service program.

Going forward the new system is linked to a vehicles VIN number, which means customers can see exactly what they'll pay for the duration of the seven-year capped-price regime.