Online auction site Grays eCommerce Group Limited has agreed to pay a $10 million penalty after admitting to the ACCC that it sold cars to at least 750 customers while making often major misrepresentations about the vehicles’ make, model, features, or faults.
The auction house – which lists hundreds of vehicles at any given time, often selling them for prices that are often just a fraction of their market value – was found to have systematically described the cars it sold with incorrect features, such as describing a car as having an automatic transmission when it was in fact a manual.
Some vehicles were described as having features that they did not in fact have, while others were sold with obvious damage – such as body damage or active dashboard warning lights – that was not mentioned in the description.
Many consumers who bought the cars spent months trying to convince the auction house to resolve the problem, while others paid to repair the vehicle they had bought, or resold it at a loss.
“The purchase of a car is often a significant financial decision,” ACCC commissioner Liza Carver said, “and they should be able to rely on the description in the auction listing to be correct.”
Between 1 July 2020 and 30 June 2022, Grays admitted engaging in misleading or deceptive conduct and made false or misleading representations about the cars offered on its online auction site.
“Businesses must not mislead consumers about what they are buying,” Carver said, adding that due to Grays’ actions “hundreds of consumers may have bought a car they would not otherwise have purchased, or may have paid more than they would have, had they known the correct details.”
The auction house – which last month won an $11.5 million judgement against Mazda for “evasions and subterfuges” as it avoided fixing a number of dud cars – has been working with the ACCC to formulate a joint submission to the Federal Court for breaches of the Australian Consumer Law (ACL), agreeing to a proposed $10 million penalty as well as a court enforceable undertaking to provide redress to affected Grays customers.
Once that undertaking is accepted by the Federal Court, Grays will have 90 days to identify misrepresented vehicles sold during the period, and then contact the affected individuals to discuss “redress” – a process that will be overseen by an independent arbiter.
No room for gray areas when selling online
Even as scammers jump on the opportunity – the ACCC has already received reports of people being approached to facilitate a refund in the wake of the announcement – the Grays undertaking is the latest in a series of successes as the ACCC fights to stop online retailers using misleading advertising and selling practices.
Last year, for example, the ACCC pursued national florist Meg’s Flowers Pty Ltd after confirming that the company had represented itself in 7642 Google Ads, and on 156 location-based websites, as offering “fantastic local service” – when it was in fact fulfilling orders from a central corporate warehouse.
That enforcement – which reflected an ongoing campaign targeting florists who falsely advertised themselves as being “local”, or publishing misleading star ratings and price representations – was particularly relevant in the florist industry because, Carver said at the time, “many consumers prefer to seek out local businesses to support, and many also wish to source the freshest flowers in a suburb close to the recipient’s address.”
ACCC crackdowns have targeted every part of the e-commerce ordering and fulfilment chain, with separate new action alleging that Mosaic Brands – which has 7.8 million online members shopping its apparel brands including Noni B, Rivers, Katies, Rockmans, Crossroads and others – had systematically misrepresented delivery times for its products.
Despite advertising on its websites that products would be typically be delivered in 2 to 17 business days after the purchase date, the ACCC said the company – which it has previously penalised in 2021 and 2022 – had received “hundreds of complaints” that between 23 September 2021 and 31 March 2022 the company “failed to deliver orders within the advertised timeframes, or within a reasonable timeframe, or at all.”
Despite the company accepting payment when the order was placed, the ACCC said, over 26 per cent of products shipped during the enforcement period took at least 20 days to be dispatched while many weren’t sent until more than 40 business days – two months – after the purchase date.
“Excessively late deliveries can be incredibly frustrating and inconvenient for consumers,” Carver said, “especially if they decided to buy goods for a special occasion, such as Christmas, based on the advertised delivery times which were not met.”
Reflecting the ACCC’s current priorities, other recent ACCC enforcement includes a $44.7 million fine for Trivago’s “highly misleading” pricing practices; repeated action against Kogan for deceptive pricing and spam; $56,340 in penalties against domain registrar Dreamscape Networks for ‘subscription traps’; action against Emma Sleep for misleading ‘strikethrough’ pricing; and a $30 million win against Airbnb over its own misleading pricing practices.
