Ford issuing refunds over dodgy transmissions

Carmaker fined $10 million for denying consumers their rights to a refund or replacement.

  • 10,500 Fiesta, Focus and EcoSport drivers could be entitled to redress
  • Ford made $6.5m from denying consumer rights and forcing upgrades
  • Another 60,000 customers may be eligible to join a class action

Ford drivers frustrated with their cars shuddering, jerking and lagging may be entitled to a refund or replacement under a redress program that brings the Australian Competition and Consumer Commission's (ACCC) Federal Court proceedings against the company to a close.

But the redress program is only eligible to a fraction of the 70,000 customers who bought the affected cars, leaving the vast majority with the option of turning to a class action lawsuit by Bannister Law.

The program comes after the Federal Court handed Ford a $10 million penalty for failing to honour refund and replacement rights enshrined in Australian Consumer Law.

Who's entitled to a replacement car or refund?

People who bought a Ford Fiesta, Focus or EcoSport car fitted with the company's defective PowerShift Transmission (PST) may be eligible for a replacement car or refund. As per an enforceable undertaking accepted by the ACCC, the decision will come down to an independent arbiter appointed by Ford.

Ford has been selling the models with defective transmissions since 2011, but the program only covers cars bought between May 2015 and February 2016.

About 10,500 customers bought one of the defective cars during this period, though they'll only be eligible if Ford denied them a refund or replacement at no cost.

The ACCC says at least 2000 customers will be entitled to one of these redress options – a long way from the 70,000 customers who bought a car fitted with the defective transmission since 2011.

Won't affect our class action: Bannister Law

The other 60,000 disappointed drivers may be able to turn to a class action lawsuit brought by Bannister Law.

Principle of the firm, Charles Bannister, says people who do get redress under the ACCC program might still be entitled to additional losses under the class action.

"Our class action seeks compensation for the 70,000 current owners and those that have suffered loss and already sold the vehicle," he says.

"We are considering how this may affect group members within the class action, and if group members that fall within the period can claim additional losses."

It's unlikely that all 70,000 Ford owners will be eligible for the class action, Bannister adds.

What did Ford do wrong?

Fords fitted with the PowerShift Transmissions shuddered, jerked, made loud noises, and lagged in acceleration. The company knew it was a pervasive issue, but continued to deny refunds and replacements, choosing instead to lay blame on people's driving style.

The ACCC estimates at least half of the 70,000 PST cars sold since 2011 had at least one repair related to the transmission.

And in hundreds of cases alleged by the ACCC, Ford strong-armed consumers into paying $7000 more to upgrade their car to a new one under its "ownership loyalty program", when they could have been entitled to a free replacement or refund. It's estimated the company made more than $6.5 million in the nine months the loyalty program was running.

One of the strongest enforcement actions yet

The $10 million penalty – one of the largest handed down under Australian Consumer Law – reflects the seriousness of Ford's conduct, says Rod Sims, chair of the ACCC.

"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.

"The Court's decision is a reminder that businesses must have systems in place to properly review consumer claims for refunds or replacements."

Ford recognised it fell short of its responsibility as of May 2015, after chief executive Graeme Whickman says the company was overwhelmed by the volume of complaints.

"As we said from the outset of this action – we took too long to identify the issues and we acknowledge that PowerShift customers did not have complaints handled appropriately between May 2015 and February 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.

"We let our customers down and for that we are sorry."

When something breaks or doesn't work, you should get a refund. Help us call on the government for law reforms and stronger consumer rights.

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