The Ontario Motor Vehicle Industry Council (OMVIC) announced this week the details of the new Motor Vehicle Dealers Act designed to build stronger consumer confidence in vehicle buying.
Effective Jan. 1, the new act clarifies former "grey areas" by stipulating clear requirements for advertising, pricing, vehicle disclosure, contracts and consumer remedies. The industry council enforces the new act, which applies to more than 8,300 registered vehicle dealers and 22,000 salespeople in Ontario.
"People should know what they’re buying and dealers should know what they’re selling. That’s why the key theme of the new MVDA is disclosure," said Carl Compton, executive director of the council. "The legislation hadn’t been updated in some time, and was sometimes unclear about advertising, pricing and disclosure requirements.
“The new MVDA is very specific and calls for all-in pricing and vehicle history disclosure in all advertisements and contracts. The new MVDA also establishes circumstances in which a consumer can rescind a contract, and provides access to increased financial remedies from a dealer-supported compensation fund.
The measures will increase consumer protection and require more dealer professionalism."
"The new MVDA makes it easier for consumers to shop and compare," said Compton. "Specifically, advertising must be clear, comprehensible, and prominent. All-in pricing is a great example. All-in pricing means all advertisements must include every fee a consumer could expect to pay, including freight and administration fees – there can be no hidden or extra fees.
“Advertisements must also state a vehicle’s model and [if] it was previously used as a police or service vehicle. And, if there are a limited number of vehicles available at a certain price, the advertisement must say how many vehicles are left."
Contract disclosures
The new act also calls for increased vehicle history disclosure in contracts. Dealers are now required to collect and disclose more than 20 facts about a vehicle’s history, including liens, replaced panels or parts, and prior collisions.
"It’s not necessarily bad to buy a vehicle that’s been in a collision or that requires work," said Carey Smith, director of investigations for council. "What’s at stake here is that consumers must know what they are paying for – the average person can’t tell if a vehicle has had previous issues just by looking at it. That’s why full disclosure is so critical."
"The new MVDA increases dealer professionalism by requiring dealers to provide more information so consumers can make informed decisions," said Compton. "The MVDA also outlines instances in which a consumer can cancel a contract if full disclosure is not provided."
Compton said, "The vast majority of vehicle purchases through Ontario-registered dealers are positive. Out of approximately 1.4 million transactions annually, OMVIC historically receives about 30,000 inquiries. Only 1,200 require further action. For consumer cases that cannot be resolved, the MVDA provides consumer remedies through the Motor Vehicle Dealers Compensation Fund, financially supported entirely by Ontario-registered vehicle dealers."
The new act increases the maximum compensation fund payout from $15,000 to $45,000 to reflect the true cost of buying a vehicle today.
"When a major problem occurs, consumers and dealers are first encouraged to sort out issues together, and this is often possible," said Compton. "However, if a resolution can’t be achieved, consumers may apply to the Motor Vehicle Dealers Compensation Fund to be financially compensated."
No private sales
To receive full protection of the new act and the compensation fund, consumers must purchase vehicles from an Ontario-registered dealer. Private sales are not covered under the legislation.
"The new MVDA applies only to transactions with Ontario-registered dealers. It does not cover private sales," said Compton. "People should also be aware that if they purchase a vehicle from a private seller, they risk becoming a victim of a curbsider.
“Curbsiders are unregistered vehicle sellers in the business of selling misrepresented or stolen vehicles. They often operate entirely over the Internet, by mobile phone, and without a sales lot or signage. If consumers choose to deal with curbsiders, there is not much we can do to protect them."
Consumers can identify registered dealers by the blue and yellow "Ontario-registered dealer" decal posted on dealership doors or windows, or by asking dealers for their dealership council registration. Consumers can also find out if a dealer is Ontario-registered by contacting OMVIC or by searching for a registered dealer online at BuyWithConfidence.ca.
