Australian Competition and Consumer Commission (ACCC) Chairman, Rod Sims, has accused the Australian automobile industry of being out of touch for wanting to remove ‘lemon laws’, of which the industry believes some consumers are taking advantage of.

Automakers argue that full refunds on lemon cars are an “unfair windfall gain” for motorists and want gone the money back guarantee drivers claim when they show a car would not “have been acquired by a reasonable consumer fully acquainted with the nature and extent” of a failure that emerged later.

The Federal Chamber of Automotive Industries (FCAI) has even suggested that some refund claims are made up. In its submission to the ACCC’s inquiry into new car retailing, the FCAI said Dealers noticed a “spike in the number of consumers seeking a refund” when the final finance payment – often a large lump sum – falls due.

In its submission to another review, that of Consumer Affairs ANZ into Australian Consumer Law, the FCAI argues that a full refund for a consumer who “might have had the use of the vehicle, sometimes for an extended period of time” is a major failure and “an unfair windfall gain”.

“If the consumer is entitled to a ‘refund’, an appropriate allowance should be made to take into account the consumer’s use of the vehicle,” the FCAI submission said.
Mr Rod Sims retorted that such an argument has not been made for a defective fridge or TV.

“I think it just reflects this industry is not much attuned to the consumer guarantees in Australian consumer law,” he said.

Other consumer advocacy organisations, including the Consumer Action Law Centre, support specific protection against ‘lemons’, while Choice says ongoing minor defects – if unresolved within a reasonable time – can amount to a major failure, hence consumers deserve a refund.

The FCAI, however, says consumers should not be able to reject a car in those circumstances provided they are given the use of a loan car and do not “suffer any significant loss while their vehicle is being repaired”.

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