Car dealership tried to avoid CGA responsibilities

Press Release – Commerce Commission

Issued 19 July 2018
Release No.12

Car dealership tried to avoid CGA responsibilities with ‘as is where is’ ads

An Auckland motor vehicle trader has been fined $75,000 over misrepresenting consumers’ rights when selling used vehicles online, and for failing to display essential vehicle information.

Vehicle Logistics Limited (VLL) was sentenced on 18 July in the Papakura District Court on eight charges brought by the Commerce Commission under the Fair Trading Act.

“This case demonstrates that motor vehicle traders must not attempt to mislead consumers about their rights, and that there can be serious consequences if they do. By stating that vehicles were, for example, ‘as is where is’ this trader was attempting to avoid its obligations under the Consumer Guarantees Act (CGA),” said Stuart Wallace, the Commission’s Consumer Manager.

VLL trades as Ssangyong Takanini. It sold trade-in vehicles via $1 reserve auctions on Trade Me.

Five of the charges arose from representations VLL made in Trade Me listings, that the used vehicles were offered for sale on an “as is where is basis” and/or that “no guarantee or warranty” applied.

“Those statements were misleading, because they were an attempt to contract out of the CGA. Traders cannot evade their responsibilities to provide guarantees and remedies under the CGA by using phrases such as ‘end of life vehicle’ or ‘suitable for parts only but runs well’. Where consumers buy vehicles from traders, rather than private sellers, the purchase will always be covered by legal statutory guarantees, including that the vehicle is of acceptable quality and complies with its description. Any attempt by traders to mislead consumers about their rights is likely to breach the Fair Trading Act,” said Mr Wallace.

In sentencing, Judge Gerard Winter said “the company was lazy if not wilfully blind to its obligations in the internet space.”

He said there is “absolutely no difference” between physical and online sale. “Any attempt to contract out is extremely important … particularly in the case of the internet which could lead to a breach of trust for consumers who use e-commerce in their daily lives.”

The other three charges were for failing to display or provide access to Consumer Information Notices (CINs). Motor vehicle traders are required to include a CIN (or access to it) in their online advertising for a vehicle, when it is possible for a consumer to buy the vehicle via the internet.

The charges cover a total of 382 vehicle listings between June 2015 and January 2017, offered for sale via two Trade Me memberships operated by VLL sales consultants.

Trade Me repeatedly advised VLL of the errors and VLL took no steps to remedy them.

VLL changed the way it listed used motor vehicles on Trade Me in January 2017, after being informed of the Commission’s investigation.

“The Commission is concerned about the conduct we see in the motor vehicle trade and the number of complaints we get. Already this year we have warned Auckland trader Motor Me and its owner over representations made about the quality of vehicles it sold, and we have other open investigations. Traders should take particular note of the fine handed down to VLL following the Commission’s prosecution, and should carefully consider their own conduct,” said Mr Wallace.

Background
Our most recent Consumer Issues Report showed that complaints about motor vehicle retail and sales were the third highest category of complaints under the Fair Trading Act to the Commission during the 2016-17 year, after telecommunication service providers and domestic appliance retail.

Buying a car features in episode 9 of the Commission’s animated series It’s All Good.

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