Consumer groups call for new ombudsman to ‘prune’ lemon cars 

Consumer advocates are calling on the Victorian Government to commit to a free and effective dispute resolution service for Victorians who are sold ‘lemon’ cars by car dealers in next year’s Budget.

Consumer Action Law Centre (Consumer Action), Victorian Aboriginal Legal Service (VALS), WEstjustice and Hume Riverina Community Legal Service have made the proposal in their 2022-23 Pre-Budget submission to the Victorian Department of Treasury and Finance. The authors said the dispute resolution service would ease pressure on the Victorian Civil and Administrative Tribunal (VCAT), where it can take people up to two years to resolve lemon car disputes.

“Over 30% of calls to our legal helpline about consumer guarantees relate to defective cars, *” said Gerard Brody, CEO Consumer Action. “This is significantly more calls than for any other type of consumer good or service.”

The Productivity Commission has also estimated that motor vehicle sales are the top consumer guarantee complaint received across state and territory regulators. However, people often find themselves stuck with lemon cars because seeking redress through VCAT is costly, time consuming, and inaccessible.

Mr Brody said an ombudsman ‘with teeth’ – funded by government and industry – would make an immediate and tangible difference to the lives of those Victorians impacted by lemon cars, particularly people on low and middle incomes and those experiencing acute vulnerability.

“Victoria needs a specialist service to help resolve disputes when a ‘lemon’ car is purchased, which would also provide a free, independent expert report. This would solve a critical problem that hurts people and communities and would provide everyday justice to thousands of Victorians,” he said.

A working car is vital especially in regional and rural communities without access to public transport, such as some regional Aboriginal communities. The situation is often worsened when a person is stuck repaying the car loan, insurance and registration for a car that doesn’t work.

“Demand for and prices of used cars are at an all-time high due to a global supply shortage of new cars, and we are likely to see a continued stream, if not an increase, of Victorians needing to resolve motor vehicle disputes.”

Some quick facts from the submission (read in full here), 

  • There were 3045 vehicle defect complaints to CAV in 2020-21
  • 9% of VCAT civil claim matters relate to cars
  • Ombudsman already exist for other industries; energy and water (EWOV), telecommunications (TIO) and finance (AFCA) all are highly effective
  • Our modelling shows an ombudsman in 2022 would help 3000 people get affordable resolutions to their car issues and save them approximately $2.4 million in avoided costs
  • 92.3% of Victorians agree it should be easy to get a refund or repair from a car dealer if they are sold a defective vehicle.

ENDS

*(30.2% of calls to the Consumer Action legal helpline about consumer guarantees from January – November 2020)

 

For media enquiries call Mark Pearce on 0413 299 567  or email mark@consumeraction.org.au

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