Pre-owned BMWs for sale.Fred Lum/The Globe and Mail
User-car buyers in Ontario will be able to shop with more confidence in the wake of tougher industry regulations enacted by the province.
Key changes to the Ontario Motor Vehicle Dealers Act deal with key areas such as advertising, cancellation rights and vehicle history to make dealers more honest about the cars they sell, and strengthen used-car buyers rights.
"Whenever the economy goes through a rough period consumers want to ensure they get the very best value and they are somewhat more selective about the purchases they make," Ontario Minister of Consumer Services Ted McMeekin said.
The amendments were developed to bolster consumer confidence in the used car industry. Used car consumers will be more willing to buy knowing they have enhanced protection to make purchases than before these new laws came into effect and the motor vehicle industry hopes that will stimulate business, he added.
Here's how consumers will be protected:
Advertising practices
As to promotion, dealers are required to offer one-price advertising that must include all fees. GST and PST do not need to be included if the ad state that taxes are not included.
Ads for used current or previous model year vehicles must clearly indicate that it is used.
Ads must state if the vehicle was previously owned by a consumer or other business, that is not a dealer, such as a daily rental, police cruiser, taxi and limousine.
If an extended warranty is included in the advertised price of a vehicle, the ad must state terms of the warranty and maximum individual claim limits. For example, an ad should read: Used 2009 BMW 328xi, loaded, 12,238 km, $38,550, one year warranty, $2,000 maximum single claim, plus taxes.
Cancellation policies
A consumer will now be able to cancel a contract within 90-days for a full refund if certain information is not disclosed.
"If three of 22 items are not disclosed, if the odometer reading, for example, is less than 1,000 of exact reading, if the contract did not state prior use, if incorrect description of make model or year, or if contract states the vehicle is branded, salvaged or rebuilt, a consumer can cancel," says Bob Pierce, director of the Used Car Dealers Association of Ontario.
Where a deal is cancelled, a consumer will be returned to the position as if the sale had not taken place. This includes financing arrangements, any extended warranty, insurance, PST and GST, or any other product that was part of the sale.
"Another important part of the new regulations is the Motor Vehicle Dealers Compensation Fund, which now provides coverage to $45,000, up from $15,000," Pierce adds. "If a customer dealing with a registered car dealer suffers a loss, such as an unpaid lien on a vehicle purchased, a non-submitted third-party warranty or a deposit on an undelivered motor vehicle, the consumer has greater protection."
Sales and Car Dealers Accountable
For used-car buyers, the new regulations are making the dealers more accountable, putting information upfront in writing and making it mandatory.
Salespeople are now personally responsible for disclosing the true condition and history of pre-owned vehicles. A common complaint used-car buyers have about dealerships is a failure to disclose the history of a vehicle, which can lead to big repair costs in the future. That shift in accountability from company to both salesperson and dealership should bolster consumer trust.
Enforcement is also an issue for consumers and Pierce says, "More inspectors have been hired to take administrative action and prosecute sales and dealership, if they break the law."
However, the new regulations do not apply to unregistered private sales.
"The worse thing is going into the marketplace and buying privately," says Pierce, who was previously registrar for motor vehicle dealers at the ministry of consumer and commercial relations, "because consumers who purchase vehicles through curbsiders are not protected by provincial legislation."
Unlicensed dealers, also know as curbsiders, pose as private sellers and trading vehicles that are misrepresented, accident-damaged, odometer-tampered, stolen, or have liens against them.
"We've done the research and curbsiders represent 25 per cent of used-car classifieds," says Pierce.
Stiffer penalties
In January a curbsider received a one-year sentence and the company was fined $375,000, the maximum under the previous Motor Vehicle Dealer Act 2002. The new regulations will double maximum jail time and increase fines to $2,500 per count.
But Pierce expects that in two year's time we'll see significant reduction of curbsiders.
Until then he says consumers can identify registered dealers by the blue and yellow "Ontario-registered dealer" decal posted on dealership doors or windows, or by contacting OMVIC or by searching for a registered dealer online at BuyWithConfidence.ca.
HOW TO PROTECT YOURSELF
Verbal guarantees offer zero protection, says Bob Pierce, director of the Used Car Dealers Association of Ontario. Instead, look for these protections on a used car bill of sale.
- Cooling-off period. Here's an unpleasant surprise: Many used-car buyers believe they are covered by a cooling-off period during which they can cancel a sale, the way gym member are protected from health clubs. But the industry never had one. The most common bill-of-sale mistake is thinking you have 48 hours to return a vehicle, you don't. The sale is final.
- Inducements should now be clearly spelled out to prevent disappointment. Honda, for example, offers a winter promo to buy a car and get a snow blower, or in the spring, a lawn mower. Ensure your trip to Vegas promised during the magic tent sale is in writing.
- Check the back of the contract where you should find information about the Motor Vehicle Dealers Act Compensation Fund. That way, if you do have problem, you're protected up to $45,000.