Car sales in remote Indigenous communities: A broken system

In part two of CHOICE’s investigation, we look at the problems faced when trying to get a repair or refund.

It’s July 2022 and Marilyn and Peter are sitting in the Cairns office of the Indigenous Consumer Assistance Network (ICAN). They’ve been waiting for this day for a long time. 

This is an article from CHOICE. It was originally published on 27th September, 2022. It is the second part of a two-part investigation. The first part can be found here.

It has been a year-long process of legal advice, affidavits and mechanics reports to get their case against a Cairns based used-car dealership heard at the Queensland Civil and Administrative Tribunal (QCAT). 

The nervous couple have come down from just outside Wujal Wujal, four-and-a-half hours away, just for this hearing. 

“We’ve been through a lot with this car,” Marilyn says. “It affected us mentally and physically a lot over this last year,”. 

The couple paid a Cairns dealership $9000 for a Subaru Forester in June last year. They say the clutch broke within days and the vehicle didn’t even make it home. It now sits broken-down out the back of ICAN’s office. 

Peter says he wishes he had never bought the car. 

“I’m a bit illiterate. I never read the contract properly, I struggle with that, but I made the mistake when I bought that car,” he says.

A daunting experience

In the first part of this series, we travelled to the remote Cape York community of Wujal Wujal to investigate reports of dodgy cars being sold to Indigenous community members there.

Jillian Williams, operations manager from ICAN, says that in most of the cases of people affected by dodgy car sales people don’t seek redress. Peter and Marilyn are a rare case, having chosen to go through the long process of fighting for their consumer rights. 

The process of seeking compensation or other forms of redress can be a daunting experience

Williams says that while QCAT is meant to be set up in a way that is accessible for consumers, for many people from remote communities, the process of seeking compensation or other forms of redress can be a daunting experience. 

“QCAT is not accessible when it comes to claims for faulty vehicles, it’s costly, intimidating and technical in terms of what’s required to enforce your legal rights,” she says. 

As well as waiting up to a year and sometimes longer, those taking a case to QCAT are required to provide their own independent mechanic’s reports, which can cost thousands of dollars. 

Melanie Wilson, acting supervising solicitor at the Cairns Community Legal Centre, says assisting remote Indigenous clients with their QCAT applications is a big task. 

“QCAT is great in theory and for what it is meant to represent, an avenue to justice for unrepresented people. But the reality is that, with the evidence needed to establish a successful claim at QCAT, a lot of people do need legal help to access it or their applications to QCAT struggle,” she says. 

Around the country 

As we explored in the previous article, the issue of dodgy and exploitative car sales to remote Indigenous communities is not limited to Far North Queensland, and neither is the issue of accessing redress. 

Sarah Black is the deputy managing lawyer at the North Australian Aboriginal Justice Agency, which works throughout the Northern Territory. She says the Northern Territory Civil and Administrative Tribunal (NTCAT) is only effective to a point, because while they can make orders about money that might be owed to consumers, “If a respondent isn’t minded to actually follow the orders of the NTCAT, then it becomes a pretty costly and cumbersome exercise to try and get those orders enforced through the local court through garnishee orders.”

The fact that a dealer is able to ignore a QCAT ruling highlights problems with the system

Carolyn Cartwright from MoneyMob works throughout the remote APY Lands in South Australia and says many car sales there are done without paperwork, which makes seeking a remedy for a lemon car an impossible task. 

Won’t pay the refund 

Back in Cairns, Marilyn and Peter are excited. They won their QCAT case with the adjudicator ordering them to return the car to the dealership and for the dealer to repay over $9000 to the couple to cover the purchase cost and repairs they paid for. 

But their elation quickly fades when the dealer tells them they won’t accept the vehicle back and won’t pay the refund as they believe the judge should have ordered a repair instead and they plan on appealing the decision. 

The fact that a dealer is able to ignore a QCAT ruling highlights problems with the system and the struggle consumers have, even when sellers are found to have breached Australian Consumer Law. 

Marilyn says the process of going to QCAT has been long and stressful. (Photo: Jarni Blakkarly.)

Dealership responds 

A spokesperson for the dealership confirmed to CHOICE that they would not be repaying Peter and Marilyn and that they intend to appeal the decision within the statutory time period. 

The spokesperson said they had provided all the correct information and evidence to QCAT, that they had done nothing wrong, and added that the judge had treated them “very unfairly” in the ruling. 

“Maybe because they are Aboriginal native people the judge gave them the favour in this case,” the spokesperson says. “It doesn’t matter if you are Aboriginal Torres Strait Islander or not, you should all have the same rights.” 

The spokesperson added that they had supplied a mechanic’s roadworthy certificate and other documentation to the court which proved the vehicle was in working condition when it was sold to Peter and Marilyn. 

Action needed 

Williams from ICAN says that more action needs to be taken against the small number of car dealers in Cairns that they see repeatedly breaching Australian Consumer Law and customer guarantees. 

“Dealers need to be made aware that they can’t get away with breaching Australian consumer law. Regular and hard, firm action by the Office of Fair Trading against dealerships that are breaching the laws is necessary,” she says. 

Similarly, Wilson at the Cairns Community Legal Centre says they have filed a high number of complaints against a handful of Cairns dealerships to the Office of Fair Trading, but little action has been taken against them. 

The Queensland Office of Fair Trading (OFT) told CHOICE that in the last five years they had received approximately 155 complaints about car sales in the Cairns region. The complaints included consumer guarantee issues, warranty matters, contractual matters, representations and trade-ins. They added that the motor vehicle industry remained one of the most complained-about industries across the state every year. 

The motor vehicle industry remained one of the most complained-about industries across the state every year

When asked about what action had been taken against dealers found to consistently breach the law, the OFT said 17 enforcement actions had been taken in the last five years in the Cairns region, including four infringement notices, three administrative disciplinary actions and three prosecutions. 

The office did not directly respond to questions about whether dealerships who regularly breached the law should lose their license to trade, saying it was an issue for the local courts. 

“The OFT takes allegations of breaches of consumer laws seriously. All complaints received are assessed and if possible breach of the legislation we administer for which enforcement action can be taken is detected, the matter is investigated,” they say. 

“Where sufficient evidence is available to prove a breach of legislation for which enforcement action can be taken, the OFT will progress the matter under its compliance and enforcement framework. Prosecution action for most motor dealer breaches fall within the jurisdiction of the Magistrates Court. The penalties issued by the court are a decision for the court. Penalties can impact a dealer’s license,” they add.

Impacting everyone

The issue of a lack of redress for lemon car sales nationally impacts all communities in Australia. Queensland introduced lemon car laws in 2019, but advocates say these don’t go far enough. 

In Melbourne, the Consumer Action Law Centre (CALC) says approximately 25–30 percent of all calls to their legal advice lines about consumer guarantees relate to defective cars. 

Meanwhile, the state enforcement body, Consumer Affairs Victoria, receives more than 3000 vehicle consumer guarantee complaints a year.

CHOICE conducted a survey of over 1000 people in June 2022*. It found that of those who had bought a second-hand vehicle from a dealership in the last five years and had a minor or a major fault, 37 percent didn’t involve the dealership with a repair or replacement. 

The remoteness of some Indigenous communities … increases the power imbalance between buyers and dealers

Only 23 percent had the dealership arrange a repair or replacement at no cost to them, while 16 percent got a repair or replacement from the dealer at a cost to them. 

In 11 percent of cases the dealer refused to arrange a repair or replacement. 

Williams says that while the issue affects everyone, the remoteness of some Indigenous communities, as well as other vulnerabilities, increases the power imbalance between buyers and dealers and also puts up even more barriers to accessing consumer rights and redress. 

A better system needed

Brigette Rose is a senior policy officer with CALC who has been working extensively on the issue of lemon cars. 

The organisation has been calling for the state government of Victoria to establish a motor vehicle ombudsman to handle disputes between dealers and consumers, saying the current VCAT system isn’t working for vulnerable people. No state or territory currently has a motor vehicle ombudsman scheme.  

As well as waiting up to two years for a resolution, Rose says VCAT applicants have to pay at times up to $2000 for independent mechanical assessments of vehicles, which is unaffordable to many. 

No state or territory currently has a motor vehicle ombudsman scheme

“It can be a really difficult system to navigate, particularly if you are experiencing any sort of vulnerability,” she says. 

She thinks that an industry-funded Ombudsman scheme with the power to make binding decisions, similar to those seen in other essential service industries such as electricity and water, would provide consumers with an accessible path to justice. 

“For our First Nations clients sold lemon cars, as well as for our non-First Nations clients, not being able to access justice has such a big impact on their lives, from their independence to their mental health, especially on such a big purchase,” she says.

The community of Wujal Wujal. (Photo: Jarni Blakkarly.)

Consumer Guarantee penalties

Dean Price, senior campaigns and policy advisor at CHOICE, said another thing that could help the situation would be for the federal government to legislate stronger penalties for when businesses fail to follow the consumer guarantee provisions of the Australian Consumer Law, something which is already being considered by the government. 

“When you buy a second-hand car from a dealership, it should be safe to drive. A dealership still has legal obligations to ensure that the car they are selling is fit for purpose, and they must repair, replace or give you a refund if the car they sold you has a major fault. The cost of selling faulty goods must be paid for by dodgy dealerships and not fall on the victim of exploitative practices,” he says. 

“Dealerships shouldn’t be able to get away with denying people their consumer rights simply because they believe they won’t get punished or penalised. Without penalties for breaching the consumer guarantee provisions of the ACL, dodgy dealerships will continue to exploit this weakness in the ACL and people will continue to pay the price,”. 

The long wait

Back in Cairns, Marilyn and Peter are packing up their things and preparing to make the long trip back to Wujal Wujal. 

They arranged a tow truck to drop the car back to the dealership, but don’t know if or when they will see their refund as ordered by QCAT. 

They are both dejected and resigned to the fact that the long-running saga is far from over. 

“We got to keep fighting I guess,” Peter says with a sigh. 

Read the first part of the investigation. 

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