Tell it how it is!
Published Tuesday 16 July 2019
You may have seen some recent ads from the Commerce Commission. They urged motor vehicle traders (MVTs) to tell it like it is, giving the example of an oil leak described as an “engine aeration device”.
“Thankfully that is not an example we’ve come across in the real world, but our message is clear: tell it like it is. Describe vehicles honestly. If you don’t you are likely breaching the Fair Trading Act and you may end up before the Courts,’ said Commission Chair Anna Rawlings.
You might also have seen the recent $438,000 fine handed down by the District Court against a major national dealership, following a Commerce Commission prosecution.
That prosecution and fine was an extremely good example of why you must get your marketing right, says the Commission.
“We prosecuted that dealership over its marketing claims and for a so-called ‘warranty waiver’ document it asked customers to sign. The dealer accepted that its marketing claims about liquidation sales and ‘84% off’ were not accurate, and the court fined it as a result. If your marketing doesn’t tell it like it is, that is likely to get you into trouble,” said Ms Rawlings.
The “warranty waiver” misled customers because, among other things, it stated the vehicle they were purchasing “does not include a warranty of any kind.”
The District Court said the document was “blatantly untrue and misleading” and “designed to encourage (unlawfully) the purchase of insurance.”
In fact, customers are covered by the CGA which includes guarantees of acceptable quality and fitness for purpose. Traders cannot contract out of CGA protections.
“Dealers must not mislead consumers about their rights under the CGA. You cannot tell your customers there’s no warranty on the car, or that the CGA doesn’t cover tyres and batteries, or ask them to waive their CGA rights. The CGA does not allow you to pick and choose what rights you will offer your customers,” said Ms Rawlings.
“Those sorts of claims are not telling customers like it is, and the sentence handed down by the courts shows MVTs how seriously that sort of offending will be taken,” said Ms Rawlings.
You can download the Commission’s tip sheet for motor vehicle traders.