Nelson car dealer fined $15,000 for misleading car sales

Nelson based The Car Company Limited has been fined $15,000 for five offences under the Fair Trading Act.

In the Nelson District Court on Thursday, The Car Company pleaded guilty to not including on-road costs in its advertised prices, misleading a customer about a warranty, and not providing the Supplier Information Notices or SIN cards required by law for all car dealer sales.

The Car Company had been warned by the Commission on two previous occasions for similar behaviour.

The issue of on-road costs applied to a number of advertised cars, while the warranty and SIN card charges related to a second hand car sold to a 17-year-old Nelson woman. The Car Company has also paid the woman $1,202.84 in compensation to cover repairs required to get a warrant of fitness, which was due six weeks after the car was purchased.

Commerce Commission Director Fair Trading Deborah Battell says the case highlighted three important issues for car dealers - and consumers - to be aware of.

"The Car Company's newspaper advertisements did not make the total price of the cars clear to consumers. Additional on-road and grooming costs of $350 - $450 were either not shown or were inadequately disclosed in fine print," says Ms Battell.

Ms Battell also noted that car dealers should not set up false 'tender' processes to try and avoid their obligation to deal with faults that may arise after the sale of the car.

"While cars sold by tender can be exempt from Consumer Guarantees Act obligations, this only applies if the sale process is a genuine competitive tender, an auction or if the sale is to another business."

In this case, the customer was given a price to 'tender' and was the only person involved in the so-called 'tender' process.

"This was not a tender situation, it was a straightforward car sale, and The Car Company should not have tried to avoid its legal obligations."

Finally, Ms Battell noted that car dealers are required to display Supplier Information Notices (SINs) when offering vehicles for sale. These give important details about the car and its history.

The Car Company has undertaken to change its advertising practice and ensure prices include on-road and grooming costs.

Background

Price advertising.

Three charges of misleading representations as to price (Fair Trading Act 1986, ss 13(g) & 40)The company website disclosed prices for vehicles on a summary page for the type of vehicle, with additional 'on road' charges ($350 or $450) mentioned only in fine print after clicking on and moving to the individual vehicle page. They also ran two newspaper advertisements. One did not show the additional on-road charges, in the other, the charges were only disclosed in fine print.

Tender process.

Misleading representation concerning the existence of a warranty (Fair Trading Act 1986, ss 13(i) & 40) The Car Company sold a car by 'tender' when there was no tender process. The car was so 'as is, where is'.

SIN cards.

Supplying goods to which Consumer Information Standards apply, without complying with Consumer Information Standards. (Fair Trading Act 1986, ss 28 & 40 and Regulation 6(1) Consumer Information Standards (Used Motor Vehicle) Regulations 2003). Sale of the same tender vehicle without a Supplier Information Notice (SIN)