Regulation: What Should You Be Looking Out For?
In a business with an ever-growing amount of regulation to abide by, you may, at times, feel a bit overwhelmed with the number of rules to be followed to do business legally. Fortunately, there is a wealth of knowledge and helpful advice to tap into should you ever have any questions.
Auto Remarketing Canada had the opportunity to discuss this year’s biggest issues with Terry O’Keefe, the director of communications, education and media relations at the Ontario Motor Vehicle Industry Council; and Laura Lowe, the communications and education manager at the Alberta Motor Vehicle Industry Council.
Overall, one of the biggest issues in both regions stems from noncompliance with advertising regulations. And in Ontario, one of the largest issues continues to relate to improper representation of a vehicle’s all-in pricing.
“There continues to be, unfortunately, far too much noncompliance with the advertising regulations,” O’Keefe said. “Particularly as it relates to all-in pricing, but also as it relates to disclosing former daily rentals in the advertisement. If a vehicle is a former daily rental, that requires disclosure as a former daily rental, and if a dealer is advertising that vehicle for sale, that disclosure needs to be made in the advertisement.”
Checking out OMVIC’s third issue of Dealer Standard for 2014 revealed some interesting insight on some homework the organization did behind the scenes with several dealers in the region.
“We did some undercover shopping earlier this summer and found widespread noncompliance with the all-in pricing,” O’Keefe said. “Of 30 dealers shopped, only 14 dealers provided an all-in price and represented that all-in price when the mystery shoppers went to the dealership. The other 16 dealers were either allegedly in breach of the all-in pricing regulations or there may have been something else that the mystery shopper found.
“Either a non-disclosure of a daily rental and, in one instance, a non-registered salesperson.”
Ontario dealers need to recognize that the only items they can omit from an advertised price includes the harmonized sales tax, or HST, and the licensing fee. Everything else has to be included. According to O’Keefe, a common question asked is whether this Makes charging an administration fee illegal. The simple answer is no. They are perfectly legal, but if you have them, they must be included in the advertised price.
As far as former daily rentals are concerned, O’Keefe wants dealers to know there’s only one situation where that item of information would not be required to be disclosed to a customer.
“Now there is a caveat with that one, and only with that one — you don’t have to disclose it was a former daily rental if the vehicle has been owned by someone other than the dealer,” O’Keefe said. “So, for example, if the dealer has a former daily rental for sale and they sell it to you, and you drive it for two years and you trade it back in and I’m looking at it, they don’t have to disclose three years later, to me, that it was a former daily rental.”
According to Lowe, her organization is seeing a drop in these types of issues as of late.
“AMVIC has seen an increase in advertising compliance over the past year, especially with the use of the AMVIC logo in advertisements and all-in pricing,” Lowe said. “However, some areas require improvement, such as abiding by the cost of credit disclosure rules.”
AMVIC has created a few tools online to help navigate such issues. One tool, AMVIC’s Advertising Checklist, can help a business walk through the legislation to help determine if its ad is within compliance standards. There are also several examples of compliant advertisements in the advertising section of the organization’s website.
AMVIC has also launched two new websites this year, including the new and improved amvic.org and its new portal, which grants access to several services that were traditionally only accessible by phone, email or fax during regular business hours.
In Ontario, O’Keefe says that another prevalent issue he’s seeing is also related to advertising.
“Unfortunately, we see quite a bit of noncompliance, when it relates to advertising, when a dealership is offering a monthly, or a bi-weekly, or even a weekly payment,” O’Keefe said. “Because what will be in the ad might simply be, ‘buy this car for $99 weekly.’”
As part of Ontario’s Consumer Protection Act, if an advertisement offers financing, several other pieces of information are mandatory in addition to the payment amount: the finance term, the interest rate, and the price of the vehicle. Simply including a weekly, bi-weekly, or monthly payment does not provide enough information and is in direct violation of the region’s CPA.
Aside from regulation, there is another widespread issue that remains alive across Canada — curbsiding.
“Curbsiding is still as prevalent of a problem as it ever was,” O’Keefe said. “Despite our enforcement, which is quite vigorous.”
Surprisingly, it seems as though registered dealers can sometimes be part of the problem with curbsiding, as explained by O’Keefe when discussing some recent action’s OMVIC has taken to crack down on illegal sales.
“This news release actually relates to a registered dealer who was convicted of providing inventory to a curbsider, which is illegal here in Ontario,” O’Keefe said. “It’s a clear violation of the Motor Vehicle Dealers Act. And he was fined $7,500 and a further $1,500 fine for ensuring the purchaser received a copy of the sales contract.”
And the folks that he sold the car to? At the time of this interview, they were currently before the courts on curbsiding charges. O’Keefe said this just adds another layer of complexity to a familiar but still prevalent issue OMVIC is trying to eliminate.
“We know the problem with curbsiders,” O’Keefe said. “We know that very often they’re selling vehicles that have undisclosed accident damage. That have potentially rolled-back odometers. That are actually rebuilt write-offs. We know that a common source of inventory for curbsiders is the salvage auctions. So we know the danger that curbsiders pose to the car-buying public are very real simply by the types of vehicles that they’re selling.
“So when we also see registered dealers contributing to curbsiding by selling them the cars that they don’t want on their lot it’s something that OMVIC also has to deal with and to enforce the law … to try and ensure that the registered dealer community isn’t contributing to curbsiders.”
According to Lowe, AMVIC is employing a new method to try to catch curbsiders in the act.
“This fall we implemented a curber strategy which includes investigators who deal solely with curber investigations,” Lowe said. “The investigators use a range of tools including surveillance.”
AMVIC also has a team that investigates business actions that pick up on curbsiding activities.
“We have also hired an industry standards team that inspects businesses for compliance,” Lowe said. “Another new addition is an industry standards officer dedicated to advertising. The industry standards officer reviews advertisements from across the province, not only looking for compliance with the automotive advertising rules and regulations, but the officer may also identify ads that may be posted by a curber.”
Both organizations are active on social media; the following links may prove helpful if you are in either region and looking to get updated on current issues or engage in conversation with these two organizations.