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Mosgiel and Auckland car dealer warned over sales claims

30 January 2019

The Commerce Commission has issued a warning to Mosgiel-based motor vehicle trader Taieri Motor Court Limited (TMC), for likely breaching the Fair Trading Act 1986 (FTA) during its sale of two motor vehicles.

TMC trades from branches in Mosgiel and Mt Roskill, Auckland, and via its website and Facebook page.

In the Commission’s view, TMC’s conduct is likely to have breached the FTA by:

• making misleading representations about the distance a vehicle offered for sale had travelled, and about selling vehicles on a private basis

• failing to comply with the Consumer Information Standards (Used Motor Vehicles) Regulations 2008.

The Commission considered a complaint alleging that TMC advertised on its Facebook page a 2001 Subaru Impreza with an odometer reading of 160,000kms. The Subaru’s odometer reading was actually 166,000kms. When responding to the Commission’s enquiries, TMC advised that the Subaru was sold privately and without TMC displaying or providing to the purchaser a Consumer Information Notice (CIN).

“We have warned TMC that, in our view, its odometer representation and its failure to display a CIN likely breached the FTA. Traders must display a CIN in the vehicle and in the online advertisement if selling online, and they must not misrepresent the history of a vehicle, including information such as the distance it has travelled,” said Commissioner Anna Rawlings.

The Commission subsequently identified another vehicle on TMC’s Facebook page (a 2013 Mercedes AMG) being advertised as a private sale. The Commission established that at the time of advertisement, both the Mercedes and the Subaru were registered to TMC.

“Different rights and obligations apply when consumers buy from a person in trade as opposed to a private seller, so telling consumers that they are buying privately has the potential to mislead them about their rights if something goes wrong,” said Ms Rawlings.

The Commission has also written to TMC over its response to the Commission’s enquiry that the Subaru was offered for sale on an “as is, where is” basis, “because it was not yet ready for sale”. In the Commission’s view, this is a possible breach of the FTA and TMC was provided with advice to assist its future compliance.

“Using a term like ‘as is where is’ can suggest that the Consumer Guarantees Act (CGA) does not apply to the vehicle and the consumer has no recourse against the seller if those guarantees are breached. However, this is not the case. Traders are prohibited from contracting out of the CGA when they sell to individuals. Recent court decisions have confirmed this,” said Ms Rawlings.

Motor vehicle retail is a current priority for the Commission, and three cases have recently been or are before the Courts.

In July 2018 an Auckland motor vehicle trader was fined $75,000 for misrepresenting consumers’ rights when selling used vehicles online, and for failing to display essential vehicle information.

In October 2018 another Auckland car dealership and its owner were fined a total of $12,000 for advertising vehicles with the wording “[a]s this is an auction for a complete package of second hand parts the Consumer Guarantee’s [sic] Act does NOT apply” and for failing to include Consumer Information Notices.

Yesterday the Commission announced it had laid 10 charges under the Fair Trading Act against vehicle retailer 2 Cheap Cars Limited for advertising claims and its use of “warranty waiver” documents.

Warning letters
A warning letter advises the recipient that, in the Commission’s view, it has or is likely to have breached the law. It will not state that we have made a ‘finding’ of non-compliance. Only the Courts can determine whether a breach of the law has occurred.

The purpose of a warning letter is to inform the recipient of our view that there has been a likely breach of the law, to prompt a change in the recipient’s behaviour, and to encourage future compliance.


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