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Ford handed $10m fine over PowerShift complaints

By Barry Park, 26 Apr 2018 News

FordFocusLWTitanium_PowerShift 2

Carmaker to review customer complaints over shifty shifters after Federal Court sides with consumer watchdog and affected owners

FORD Australia has copped a $10 million fine from the consumer watchdog over its handling of customer complaints relating to the PowerShift gearbox.

As well, Ford Australia will independently review complaints for customers who requested, but did not receive, a refund or no cost replacement vehicle between May 1, 2015 and November 1, 2016, when the carmaker charged customers to join what it called an Owner Loyalty Program despite potentially being entitled to either a refund or no-cost replacement vehicle.

Ford Focus PowerShiftThe company said today’s announcement of the Australian Competition and Consumer Commission fine and “consumer redress scheme” marked the end of the investigation into its requests for a refund or no cost replacement of certain Ford Focus, Fiesta and EcoSport vehicles fitted with DPS6 dry-clutch PowerShift automatic transmissions.

READ NEXT: Owners take fight to Ford Australia over PowerShift transmissions

“As we said from the outset of this action - we took too long to identify the issues and we acknowledge that PowerShift customers did not have complaints handled appropriately between May 2015 and February 2016,” Ford Australia chief executive Graeme Whickman said.

“We were overwhelmed with the volume of complaints and, while it was not intended, over a 10-month period our processes were inadequate and information provided was either inaccurate or incomplete. We let our customers down and for that we are sorry.”

Ford will also pay $500,000 toward the ACCC’s legal costs.

A former PowerShift owner who had fought for fair compensation told Wheels he welcomed today's announcement, and said he would be fighting to get "every cent back". "I'm very disappointed we didn't have that much support from even the industry body, but now they will pay," he said.

While the fine that the ACCC slugged Ford with is significant, it pales in comparison with the one levied against Japanese shipping company Nippon Yusen Kabushiki Kaisha, which paid $25 million after it was convicted of criminal cartel conduct. Its business? Shipping cars made by companies including Honda, Mazda, Nissan, Suzuki and Toyota to Australia.

“Ford’s $10 million penalty is one of the largest handed down under the Australian Consumer Law and reflects the seriousness of Ford’s conduct," ACCC chairman Rod Sims said. "Ford knew that its vehicles had three separate quality issues, but dealt with affected customers in a way which the Court has declared to be unconscionable.

“Despite knowing that shuddering was a symptom of the quality issues with the vehicles, Ford frequently told customers that shuddering was the result of the customer’s driving style. Ford knew that the symptoms of the quality issues with the vehicles were experienced intermittently, but required customers to demonstrate them on demand in the presence of a dealer in order for repairs to be undertaken,” he said. “In most cases, Ford refused to provide a refund or no-cost replacement vehicle to consumers, even after vehicles had undergone multiple repairs that had not resolved consumers’ complaints.“

Ford said the ACCC investigation into the way it had handled the PowerShift issues – owners were reporting everything from severe shuddering to a loss of power from their gearboxes – had identified the challenges its customers faced and the lack of appropriate processes to effectively handle these.

“Of particular concern was the Owner Loyalty Program, which resulted in customers paying an additional cost to buy new vehicles although they may have been eligible for a refund or no cost replacement vehicle. We now realise this program was flawed as it didn’t ensure an adequate assessment of customers’ rights under consumer law. It was discontinued in November 2016.

“We are committed to making right with these customers,” Whickman said.

Under the settlement with the consumer watchdog, Ford Australia will:

  • Establish an independent complaints review program for customers who requested, but did not receive, a refund or no cost replacement vehicle between 1 May 2015 and 1 November 2016, when the Owner Loyalty Program was in operation

  • Commit to a customer service charter and making information more easily accessible for customers, including about their rights under consumer law

  • Upgrade and independently review its Consumer Law Compliance Program and Complaints Handling System

  • Improve consumer law compliance training for employees, dealers and customer service staff

It said owners of Ford Focus, Fiesta or EcoSport vehicles with a PowerShift transmission who requested, but did not receive a refund or no cost replacement vehicle between 1 May 2015 and 1 November 2016, could have their case independently reviewed.

“Ford will provide compensation to affected customers in line with the independent reviewer’s decision,” it said.

Ford said about 10,500 customer cases were opened between May 1, 2015 and November 1, 2016 and may be eligible to participate in the independent complaints review program.

This includes about 1600 customers who traded in their PowerShift-equipped car and then dipped into their own pocket for a changeover vehicle, and about 180 owners who were offered Ford staff prices for a new car.

The review process will start in early July and run for 12 months. Ford Australia said customers could call 13FORD or visit ford.com.au/powershift to register their email address to receive updates on the independent review process.

The ACCC announced in July last year it would take Ford Australia to the Federal Court alleging that the carmaker had engaged in "unconscionable and misleading or deceptive conduct, and made false or misleading representations in its response to customer complaints".

The resolution of the court action comes a week before a May 4 deadline set by the Federal Court.