Thursday, 19 July 2018 10:50

Online car dealer cops hefty fine for consumer rights breaches

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An Auckland motor vehicle trader has been hit with a NZ$75,000 fine by New Zealand’s competition regulator for misrepresenting consumers’ rights when selling used vehicles online.

The Commerce Commission had brought charges against Vehicle Logistics Limited under New Zealand’s Fair Trading Act for the breach of consumer rights as well as for failing to display essential vehicle information.

VLL was sentenced in the Papakura District Court on Wednesday on eight charges brought by the Commission.

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.

The other three charges were for failing to display or provide access to Consumer Information Notices. 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 covered 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.

“Those statements (by VVL) 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’,” said Stuart Wallace, the Commission’s consumer manager.

“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.”

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

Judge Winter 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 Commerce Commission says Trade Me repeatedly advised VLL of the errors and VLL took no steps to remedy them – and 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,” Wallace said.

The Commerce Commission’s most recent Consumer Issues Report showed that complaints about motor vehicle retail and sales in New Zealand 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.

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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