Car dealership and owner fined for CGA misrepresentations

17 October 2018

An Auckland car dealership and its owner have been fined a total of $12,000 on 16 charges under the Fair Trading Act.

1 Dollar Reserve Cars Limited ($1 Reserve) was fined $8,000 and Adam Cooper was fined $4,000 in the Auckland District Court on 12 October. Each had earlier pleaded guilty to eight charges.

Six of the charges were for misrepresenting consumers’ rights under the Consumer Guarantees Act (CGA). Trade Me listings for three vehicles included the wording “As this is an auction for a complete package of second hand parts the Consumer Guarantee’s [sic] Act does NOT apply.”

The remaining 10 charges were for failing to display or provide access to Consumer Information Notices (CINs) for 94 vehicles listed on Mr Cooper’s Trade Me membership, between September 2015 and November 2017.

Mr Cooper told the Commission he regretted his failure to include CINs and that he had been affected by ill-health. He also said he thought he could avoid his CGA obligations by claiming vehicles were a package of second-hand parts.

In sentencing, Judge Mary-Beth Sharp said the ‘second-hand parts’ representations “departed substantially from the truth”, and “there must be general deterrence for offending of this nature.”

Commissioner Anna Rawlings said, “The basic protections offered by the CGA applied automatically to the motor vehicles on offer and this conduct was an attempt to deny consumers those basic protections. Important information contained within a CIN could have informed consumers’ decisions to purchase and $1 Reserve also failed to provide this information.”

$1 Reserve and Mr Cooper had received warnings about 10 vehicle listings from Trade Me for failing to provide CINs on auctions.

“Motor vehicle sales are a focus area for the Commission during 2018/19. We are receiving increased numbers of complaints in relation to the online purchase of vehicles and all motor vehicle dealers need to take careful note of their legal obligations to their customers and make sure that they are operating within the requirements of the law,” said Ms Rawlings.

Background
Consumer Guarantees Act obligations
The CGA requires that goods must be of acceptable quality, fit for purpose and must comply with their description. See the Consumer Protection website for more information.

The CGA applies to the sale of goods and services to a consumer where the vendor is in trade, and traders are prohibited from attempting to contract out of the CGA except in limited circumstances involving business transactions. All registered motor vehicle traders are in trade.

When the CGA applies, descriptions such as “as is, where is” and “no guarantee or warranty” are attempts to contract out of the CGA and are prohibited. In July an Auckland dealership was fined for stating that used vehicles were offered for sale on an “as is where is basis” and/or that “no guarantee or warranty” applied. The total fine in that case of $75,000 included fines for failure to display CINs.

Consumer Information Notices (CINs)
If a vehicle is being sold online, the CIN (or a link to it) must be on the same webpage as the vehicle is listed for sale. More information can be found on the Commission's website.

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