Consumer Advice: Used Car Dealer Scams and Unethical Fees

When it comes to paying for your new (or new-to-you) ride, many car dealers are ethical, legitimate and fair. Others see an opportunity to drive up the overall transaction price and put more of your money in someone else’s pocket. In Ontario, and many other provinces, regulations exist to prevent any pricey surprises and fees just before you drive off – though some dealers are in the practice of trying to add these to your invoice, regardless.

Dealers that don’t abide by ethical guidelines may set shoppers up for a negative experience – which those shoppers will probably tell their friends, family and social media contacts all about.

This is a problem for the Ontario Motor Vehicle Industry Council, or OMVIC. OMVIC’s mandate is to maintain a fair, safe and informed marketplace by protecting the rights of consumers, enhancing professionalism and ensuring fair, honest and open competition for licensed dealers. In Ontario, all dealers must be licensed by OMVIC and obey federal and provincial laws.

Created in 1997, OMVIC is responsible for administering the Ontario Motor Vehicle Dealers Act (MVDA), which sets the rules and standards by which salespeople and dealers must abide.

Evolution of that Ontario Motor Vehicle Dealers Act has seen consumer protection enhanced in recent years – for instance, with increased funds available to compensate shoppers, implementation of all-in pricing rules and increased fines for dealers and salespeople who break the rules set out in the MVDA. These aren’t slap-on-the-wrist fines either: individuals can face fines of up to $50,000, and/or nearly two years in jail. Corporations can face fines up to $250,000.  Dealers and salespeople can also have their registration revoked.

In addition to enforcement and mediation of the Act, the OMVIC also maintains a compensation fund for consumers who suffer a financial loss arising from a transaction with an OMVIC-registered motor vehicle dealer. All of this exists with the intent of protecting consumer interests.

Lately, OMVIC says those interests have been compromised by practices relating to the sale and add-on of additional products and services. Unethical in nature, these practices create distrust and reinforce what dealers hoped would be tired and outdated stereotypes.

What’s been happening? Recently, OMVIC has addressed concerns from shoppers presented with a “mandatory” charge for add-on items, like nitrogen tire inflation and anti-theft systems. Charges for any such pre-installed products or services, according to OMVIC, must be included in both the advertised and negotiated prices. A dealer might decide not to sell a vehicle unless these products are paid for, in which case the shopper can decide to purchase or not.

OMVIC’s advice regarding surprise add-ons? Only agree to pay for the ones they believe have value, and the ones they want, or none at all. And remember – if a salesperson states or implies that any charge beyond HST and licensing is mandated or required by OMVIC or the government, the statement is false and misleading. They could, as a result, face administrative action by the council.

Other recently-addressed concerns deal with fees and costs added after the consumer has negotiated the final price. In Ontario, strict regulations apply to dealer advertising, and any ad for a vehicle must represent an all-in price. Adding fees like administration fees, freight, PDI, or a “mandatory” pre-installed service or item to that required all-in price is illegal. Note that administration fees aren’t against the law – but they must be included in that “all-in” price.

If a shopper negotiates a price with a sales representative, OMVIC says the shopper can assume they’re negotiating an all-in price, and that any price representations made by a salesperson during the sales process reflect that all-in price. Remember – only HST and licensing can be added. Any latter attempt by the dealer to add fees can be seen as a breach of the Code of Ethics.

The OMVIC also notes that in Ontario, there’s no cooling-off period on used vehicles – and that the Safety Standards Certificate is not a warranty but rather a certification that the vehicle in question met a minimum safety standard on the day it was inspected.

Article Credit: www.autos.ca

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