Car Auction Website Fined $10 Million for Deceiving Buyers

Car auction website Grays Online has been fined $10 million (US$6.7 million) over deceptive car listings that left successful bidders out of pocket.

In the Federal Court on July 18, Justice John Nicholas ordered Grays eCommerce Group to pay the partial costs of the legal proceedings on top of the fine.

Deceptions included false or misleading descriptions of vehicle make, model, and features, as well as undisclosed obvious faults with the cars.

In hundreds of instances, listings gave the wrong manufacturing year or transmission system, advertised features the cars did not have, and failed to mention faults such as damage to the car or active dashboard warning lights.

The Australian Competition and Consumer Commission (ACCC) began legal proceedings against the online retailer earlier this year.

At least 750 consumers bought a car from Grays that was incorrectly described, meaning hundreds may have bought a car they would not otherwise have purchased or paid more than they would have had they known the correct details, according to the ACCC.

Senior managers were aware at the time of a number of complaints from buyers over the misleading car listings, but did little to address the problem, according to court documents.

In his judgment, Justice Nicholas said Grays encouraged its customer service team to decline refunds to buyers who had been misled, and directed staff to “say no” to buyers requesting refunds for when listings failed to disclose damage.

Grays admitted it engaged in the deceptive conduct between July 1, 2020, and June 30, 2022, and agreed to pay $10 million in penalties before July 18’s ruling.

The online auction house will be given until June 2027 to pay, with the first payment to be made in June 2025 and $1.5 million (US$1 million) to be paid by 2026.

In February, the ACCC accepted a court-enforceable undertaking from Grays to rectify sales to customers affected by the misleading conduct.

Justice Nicholas said Grays has co-operated with the ACCC by agreeing to the facts and making relevant admissions.

A spokeswoman for Grays said the company is committed to remediating affected customers and is complying with the ACCC’s directions.

“Grays is well progressed in the proactive remediation of impacted customers and continues to facilitate competitive auctions for its buyers and sellers,” she said.

The consumer watchdog says the court order reflects the serious misconduct from Grays which caused an estimated loss of $3.86 million (US$2.6 million) to customers.

“Grays’ undertaking to pay compensation to consumers is an important part of the resolution of this matter and provides a meaningful outcome for affected consumers,” ACCC commissioner Liza Carver said.

As of October 2023, Grays has paid over $1.1 million (US$740,000) in refunds to customers and will continue to pay around a further $2.7 million (US$1.8 million) in compensation, according to court documents.