Ford, Telstra hit with record fines after consumer watchdog takes action

The US$7.6-million penalty on Ford for "unconscionable" conduct matches the largest-ever handed down under Australian consumer law
AFP

Sydney (AFP) – Ford and Telstra were each ordered by an Australian court to pay Aus$10 million (US$7.6 million) in penalties Thursday following separate legal proceedings launched by the country’s consumer watchdog.

Car giant Ford was slugged with the record fine for its “unconscionable” handling of gearbox complaints.

In a separate case Thursday leading Australian telecom company Telstra was penalised after more than 100,000 customers unknowingly bought extra content, such as ring tones or games.

The Australian Competition and Consumer Commission (ACCC) began legal action against Ford last year after the car manufacturer failed to properly deal with thousands of complaints about shuddering in PowerShift transmissions fitted to its Fiesta, Focus and EcoSport models.

“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,” ACCC Chairman Rod Sims said in a statement.

“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.”

The payout matches the largest-ever handed down under Australian consumer law, the ACCC said, equalling a $10-million penalty against supermarket chain Coles in 2014 for misusing its bargaining powers against suppliers.

“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,” Sims said.

About 75,000 cars fitted with the PowerShift transmission have been sold in Australia and over 10,000 people may be eligible for remediation after making complaints between May 2015 and November 2016.

“We were overwhelmed with the volume of complaints and, while it was not intended, over a ten-month period our processes were inadequate and information provided was either inaccurate or incomplete,” ‎President of Ford Motor Company Australia Graeme Whickman said. 

“We let our customers down and for that we are sorry,” he said in a statement.

In a separate case Thursday, Telstra was fined $10 million by the court for failing to adequately advise customers in 2015 and 2016 that a third-party billing service was set as a default on their accounts.

Known as a Premium Direct Billing (PDB), customers were unknowingly subscribing to additional digital content like apps and videos without entering payment details or having their identity checked, the ACCC said.

“Telstra was aware that children were at risk of inadvertently subscribing on a family member’s phone,” the Sims said, adding the weight of the fine “recognises the seriousness” of the firm’s behaviour.

Telstra said more than 100,000 customers may have been affected by the PDB, which it has stopped using.

“PDB services have been recognised as an issue for the broader telecommunications industry and while we took a number of steps to improve our processes we acknowledge we could have done more and done it faster,” a Telstra spokesperson said in a statement.

The company has been refunding affected customers.

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