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Car Traders Must Be Aware Of Obligations

Car Traders Must Be Aware Of Obligations

The Commerce Commission is reminding people who frequently sell motor vehicles on Trade Me or similar sites to be aware of their legal obligations when advertising and selling motor vehicles. “Trade Me is a popular way for both private sellers and motor vehicle traders to advertise and sell cars. A person selling their own car to another consumer is not considered to be a ‘motor vehicle trader’ but anyone who sells more than six cars in a 12 month period is considered by law to be a motor vehicle trader,” said Kate Morison, General Manager, Enforcement, Commerce Commission. As there are different legal obligations for motor vehicle traders than for private sellers, it is important that consumers now if they are dealng with a motor vehicle trader.

“Motor vehicle traders must ensure that consumers have access to Consumer Information Notices (CINs) for all used motor vehicles offered or displayed for sale. The CIN provides sellers with a standard format by which buyers can obtain information about used vehicles in order to make better informed purchasing decisions,” said Ms Mrrison.

“Trade Me makes it clear on their terms and conditions that motor vehicle traders selling cars online must attach a CIN to their listing (either by a photo of the CIN or a link to a webpage displaying the CIN) and provide the original CIN to the successful buyer,” said Ms Morrison.

“Purchasing a car is a significant investment and buyers are entitled to have correct information about vehicles so that they can make comparisons and informed choices. It is particularly important with online sales as the buyer might not always have the opportunity to inspect the vehicle before deciding to make a purchase,” said s Morrison. œMotor vehicle traders have the same legal obligations whether they are selling cars off the lot or online. No matter what the medium, motor vehicle traders who give false or misleading information risk breaching the Fair Trading Act and serious consequences.

The Commission has recently concluded an investigation into a Trade Me seller, Justin Van Malland (‘leahv46’) who had advertised a Honda Civic for sale saying “Selling this car on behalf of my sister as she brought (sic) a new car.” The Commission’s investigation found that this and other statements made about the car’s reliability and service history were not true. The investigation also found that the seller had sold more tha eight ars on Trade Me over a 12 month period, which qualiied the seller as a motor vehicle trader. Consumer Information Notices CINs) had not ben provided on at least two of those sales.

“In this case we issued a warning,” said Ms Morrison. “But all motor vehicle traders should be put on notice that the Commission expects them to take their legal obligations seriously. The Commission will shortly be writing to all registered motor vehicle traders to remind them about Consumer Information Standards regulations.”

“While the Fair Trading Act applies to motor vehicle traders, consumers who encounter problems when buying a car through a private individual may still seek redress through the Disputes Tribunal. If in doubt, consumers who encounter problems when buying a car should seek independent advice about their options,” said Ms Morrison.

Background The Consumer Information Standards (Used Motor Vehicles) Regulations 2008 requires a properly completed Consumer Information Notice (CIN) to be attached to all used motor vehicles offered or displayed for sale. Supplying a CIN containing incorrect information or failure to supply a CIN in accordance with the Regulations is a breach of the Fair Trading Act and could result in a prosecution and fine. Since the introduction of the regulations in 2003, the Commission has prosecuted a number of motor vehicle traders for not displaying CINs on vehicles they have offered for sale. The Commission has also prosecuted motor vehicle traders for not displaying a CIN or a link to a CIN for a vehicle advertised for sale on the Trade Me website.

More information about CINs can be found on the Commerce Commission’s website

The Fair Trading Act. Court penalties for breaching the Fair Trading Act can include fines of up to $200,000 for a company and $60,000 for an individual. Only the courts can decide if a representation has breached the Act.

The Motor Vehicle Sales Act 2003 states: 8 Who is treated as motor vehicle trader (1) A person is treated as carrying on the business of motor vehicle trading for the purposes of this Act if— (a) the person holds out that the person is carrying on the business of motor vehicle trading; or (b) in any specified period, the person sells more than 6 motor vehicles, unless that person proves that those motor vehicles were not sold for the primary purpose of gain;

Any ‘specified period’ is defined in the interpretation provisions of the Motor Vehicle Sales Act as: ‘specified period means any period of 12 consecutive months that commences after the commencement of this Act’ More information, including how to register as a motor vehicle trader is available on the Ministry of Economic Development’s website


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