Kia to refund owners after ACCC rules on ‘misleading’ capped-price servicing program

The South Korean car maker agreed to make changes to the terms and conditions of its capped-price servicing program and reimburse existing owners who were forced to pay above the service price that applied when they purchased their vehicle.

Beginning in 2012, Kia began promoting its capped-price servicing program, informing consumers that “the capped price applicable for each service is the maximum you will pay for your scheduled service”.

Prior to the ACCC’s intervention, however, Kia’s terms and conditions allowed scheduled service prices to be amended at any time – something the company did on four occasions.

The ACCC today concluded that Kia’s advertising of its capped-price servicing offer was likely to amount to a misleading representation to consumers that the price of having their vehicle serviced was fixed at the maximum amount specified, contravening Australian Consumer Law.

“Capped-price servicing offers can be attractive to consumers because they are a means for consumers to lock in the price of servicing their vehicle for a set period,” ACCC commissioner Sarah Court said.

“Businesses that make capped-price offers of this type in their advertising campaigns or represent that consumers can fix the maximum charge for particular services must ensure that these offers are not eroded by later reliance on amendment provisions in their terms and conditions which permit price changes," she said.

Kia has fully cooperated with the ACCC’s investigation and has written to affected customers confirming the applicable service prices for their vehicle and will offer to refund any amounts paid by owners above the capped-price service prices that applied to their vehicle at the time of purchase.

It has also amended its terms and conditions to ensure that service prices are genuinely capped and has introduced systems to ensure that customers are not charged higher prices than the capped-price service prices that applied when their vehicle was purchased.

“Kia is committed to customer service and takes its obligations under the Australian Consumer Law very seriously,” a statement from the company read.

“It cooperated fully with the ACCC to assist the regulator with its investigation which has now concluded. In consultation with the ACCC, Kia has agreed to make changes to its capped-price servicing program.”

As a result of the steps taken by Kia, the ACCC has decided not to take any enforcement action against the car maker.

Misleading or deceptive conduct and making false or misleading representations about the price of goods or services are prohibited by Australian Consumer Law. False or misleading representations attract a maximum penalty of up to $1.1 million.

The ACCC says it now intends to review other capped-price servicing offers made to consumers by vehicle manufacturers to assess whether any similar issues arise.