Online auction group Grays has been ordered by the Federal Court to pay $10 million in penalties after admitting to making false or misleading representations in hundreds of car ads for two years.
In February this year, the Australian Competition and Consumer Commission (ACCC) instigated legal action against Grays, following the e-commerce firm’s admission that it contravened Australian Consumer Law (ACL).
Between July 1, 2020 and June 30, 2022, Grays made false or misleading representations in at least 750 car ads on its website, which the ACCC estimates resulted in a $3.86 million loss for consumers who bought an improperly described vehicle from the company.
This included listings with manual vehicles advertised as automatics, features which were never offered, the wrong years of production, or an omission of “obvious faults” such as damage or dashboard warning lights.
“As a result, hundreds of consumers may have bought a car they would not otherwise have purchased, or may have paid more than they would have, if they had known the correct details,” said ACCC Commissioner Liza Carver in a media statement.
“Affected consumers often had to invest significant time and energy to convince Grays to provide a remedy, and were made to wait months for a resolution. We are aware of some consumers that paid to repair the vehicle that was incorrectly described or re-sold it at a loss.
“Today’s orders by the Court reflect Grays’ serious conduct which caused an estimated $3.86 million in losses to Australian consumers. Grays’ undertaking to pay compensation to consumers is an important part of the resolution of this matter, and provides a meaningful outcome for affected consumers.”
Grays has already started to contact some affected consumers to redress their losses, while the Federal Court also ordered the business to establish and maintain an ACL compliance program, and to pay a contribution to the ACCC’s costs.
The ACCC noted Grays co-operated with the competition watchdog during its investigation, including by agreeing to jointly seek declarations, penalties, a compliance program and costs.
In a statement provided to CarExpert, Grays chief executive Gary Allen said the impact of the false and misleading ads “affected a very small number of competitive automotive auctions”.
“Grays notes the announcement by the ACCC, relating to the next step in a formal process with the regulator in the Federal Court,” said Mr Allen.
“Grays made joint submissions with the ACCC to the Court for admitted breaches of the Australian Consumer Law. Grays is committed to remediating affected customers and is complying with the ACCC’s directions.
“Overall and proportionally, the issue affected a very small number of competitive automotive auctions we facilitated.
“Grays is well progressed in the proactive remediation of impacted customers and continues to facilitate competitive auctions for its buyers and sellers, providing an excellent service that is easy, fair and transparent.”
Grays continues to sell vehicles through its online auction platform, as well as other items such as appliances and jewellery.
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