The Australian Consumer Law 2011 (ACL) says that if you buy a new car and it has a “major failure” you are entitled to take it back to the dealer and claim a refund, or a replacement — either an identical new car or a car of similar value. The choice is yours.
A major failure is when a reasonable consumer would not have bought the car if they had known about the problem, or when the car is substantially unfit for its normal purpose.
In other words, the car is a lemon.
To date, the Australian Consumer and Competition Commission has not prosecuted dealers or manufacturers for breaches of the law.
It has the industry in its sights, though, particularly over the practice of forcing consumers to sign confidentiality agreements as a condition of refunding money or replacing a car.
This year, the commission tells Carsguide, it has made a priority of “consumer issues arising in relation to new car retailing, including responses by retailers and manufacturers to consumer guarantee claims”.
“The ACCC is aware that in some instances consumers have signed confidentiality agreements as part of settlement agreements with car manufacturers,” it says.
“The ACCC would have some concerns when a business seeks to impose confidentiality clauses as a condition of providing remedies a consumer is entitled to under the consumer guarantee provisions of the Australian Consumer Law.”
Tony Weber of the Federal Chamber of Automotive Industries says that car buyers have exercised their rights under the consumer law in a “very low proportion” of new car sales.
A review is under way on the effectiveness of the legislation. Have your say — public submissions are open until May 27. View consumerlaw.gov.au.