A motorist drives a car near the giant flag of the self-proclaimed Turkish Republic of Northern Cyprus
AFP

The Australian Federal Court has ordered Grays eCommerce Group to pay AU$10 million in penalties after it was found to have rendered misleading information about 750 sold cars on its platform between July 2020 and June 2022.

The Australian Competition and Consumer Commission (ACCC) initiated legal action against the online auction business for making hyperbolic claims against manufacturers, models, characteristics, and faults in the cars, as a result of which consumers lost an estimated $3.86 million, ABC reported.

Grays has agreed to compensate the impacted customers as part of the court-enforceable obligation, apart from paying a part of the ACCC's legal costs.

"Grays made false or misleading representations in at least 750 car descriptions on its website. As a result, hundreds of consumers may have bought a car they would not otherwise have purchased, or may have paid more than they would have, if they had known the correct details," ACCC Commissioner Liza Carver said, as per an ACCC statement.

"Affected consumers often had to invest significant time and energy to convince Grays to provide a remedy, and were made to wait months for a resolution. We are aware of some consumers that paid to repair the vehicle that was incorrectly described or re-sold it at a loss."

"Today's orders by the Court reflect Grays' serious conduct which caused an estimated $3.86 million in losses to Australian consumers. 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," Carver said.

The compensations will be offered under a redress program to consumers who bought cars driven by the misleading claims. The impacted customers stand to gain full refunds, partial refunds based on the impact of the errors, or a fixed refund amount.

"Grays is committed to remediating affected customers and is complying with the ACCC's directions," Grays CEO Gary Allen said. "Overall and proportionally, the issue affected a very small number of competitive automotive auctions we facilitated.

"Grays is well progressed in the proactive remediation of impacted customers and continues to facilitate competitive auctions for its buyers and sellers, providing an excellent service that is easy, fair and transparent."