Franchising

Former Europcar franchisee pinged with $200,000 fine for deception

Melinda Oliver /

A former Europcar franchise owner in Tasmania has been fined $200,000 for deliberately deceiving customers.

The Federal Court found the franchisee, BAJV, had knowingly overcharged customers for hire vehicle repair costs. It found it had failed to refund overcharged customers.

In addition to the $200,000 civil pecuniary penalty, the court ordered the company’s director, Brendon Ayers, to pay a $40,000 civil pecuniary penalty for being knowingly concerned in the conduct.

The Court declared BAJV and Ayers had engaged in “unsociable conduct” and made false representations. Customers were charged for vehicle damage based on inflated estimated repair costs, but they were not refunded the difference when costs came in lower after repairs.

This conduct reportedly included obtaining two invoices from a bodyworks repairer for the same vehicle repair job. The franchise opted for the lower cost repair, but the higher cost invoice was passed on to the customer.

In a statement, Australian Competition and Consumer Commission acting chair Delia Rickard says the regulator has “serious concerns” about hire care companies having a “lack of open and accountable procedures when charging customers for vehicle damage”.

“Many consumers are likely to have a limited knowledge of the cost of vehicle repairs and are therefore in a vulnerable situation when a hire car company charges for vehicle repair costs,” Rickard says.

Partner at Hall & Wilcox Sally Scott told SmartCompany this morning that in this case the finding of deliberate misconduct would have contributed to the size of the penalty.

“In determining a penalty, the Federal Court takes into account factors such as whether the company is a serial offender, the size of the company, the seriousness of the offence and whether the conduct was intentional,” she says.

“Over the past one to two years, we’ve seen fines in the million dollar plus category and, at the other end, fines of around $20,000 to $50,000. I believe the fine of $200,000 is about right.”

Scott explained that the million dollar fines are usually handed out to large companies, to ensure they don’t see it as an “acceptable cost of doing business”.

“The million dollar plus fines have been handed out to companies such as Optus, Apple, Harvey Norman and most recently, Hewlett Packard on Friday.”

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