Honda Australia Ordered to Pay $6 Million for Misleading Customers

What can businesses learn from Honda Australia’s penalty for misleading customers?

In a recent Federal Court ruling, Honda Australia has been found guilty of engaging in misleading and deceptive conduct. The court determined that Honda had made false or misleading representations to customers of three former authorised dealerships. As a result, Honda has been ordered to pay penalties totaling $6 million. Let’s delve into the details and understand what led to this judgement.

The Australian Competition and Consumer Commission (ACCC) alleged that between January and June 2021, Honda Australia misled customers of three dealerships regarding their closure. They claimed that these locations either had closed or were about to close and therefore could no longer service Honda vehicles. The misrepresentations were made through emails, text messages, and phone conversations with customers. Call center employees used phrases such as ‘that dealership is closing down’ and reminder text messages mentioned that ‘your previous service dealer has closed’.

Honda Australia, acknowledging its breach of Australian Consumer Law (ACL), admitted that certain statements were misleading. However, the company contested that other statements were not in violation of the ACL. The restructuring of Honda Australia and the shift to an agency sales model led to the termination of franchise agreements with the three dealerships. Despite this, the dealerships continued to operate as independent service centers, able to service and repair vehicles, including Hondas.

The ruling by Justice Moshinsky highlighted the seriousness of the contraventions, despite them not being deliberate. The large number of contraventions occurring over several months led to the imposition of a substantial penalty. Honda’s cooperation with the ACCC throughout the process was deemed substantial, which reduced the penalty. Honda Australia will have to pay $5.5 million for misleading service reminder communications and an additional $500,000 for the misrepresentations made by its call center.

A spokesperson for Honda Australia expressed the company’s cooperation with the ACCC and its commitment to providing a great customer experience. The ACCC commissioner, Liza Carver, stated that Honda’s conduct deprived consumers of making informed choices for servicing their vehicles and caused financial loss to the dealerships. The substantial penalty sends a strong message to businesses about the consequences of misleading statements to consumers.

In a separate issue, Brighton Automotive Holdings, one of the former dealerships, has raised allegations regarding the termination of their agreement. They claim to have been told with no prior notice that their agreement would end earlier than expected. The dealership further alleges that the compensation methodology used by Honda and Deloitte significantly undervalued their loss. Legal action regarding this matter is ongoing.

• Honda Australia has been penalized $6 million for misleading or deceptive conduct.
• The company made false representations to customers of three former dealerships.
• The Australian Competition and Consumer Commission (ACCC) filed legal action against Honda.
• Honda admitted to breaching Australian Consumer Law.
• Justice Moshinsky characterized Honda’s cooperation with the ACCC as substantial.
• The penalty serves as a strong message about the consequences of misleading statements to consumers.

The Federal Court’s ruling against Honda Australia emphasizes the importance of transparency and honesty in business dealings. Misleading representations can harm both customers and dealerships, impacting trust and financial well-being. By imposing a $6 million penalty, the court has made it clear that misleading statements to consumers will not be tolerated. This verdict serves as a reminder to all businesses to prioritize accurate and truthful information.