Frustration with vehicle sales dealers: Regulators shift into high gear to slow unauthorized businesses

Purchasing a vehicle can be a complicated process, and many of these complexities are fueled by bad faith actors.

Consumers may not be given adequate details on their new purchase at an unregistered dealership. Thus, itcan result in underhanded sales tactics being used for a quick profit, all to the consumer’s detriment. Shari Prymak, Senior Consultant at Car Help Canada, says that the benefit of purchasing from a registered dealer helps to secure consumer rights.

“If you have an issue with your car at any stage, even after the fact, you can head back to the dealership and resolve it,” Prymak said. “These are things that delegated authorities in provinces are responsible for and helping you with.”

Canadian regulators overseeing the auto sales market are challenging illegal operators on multiple fronts.

The Ontario Motor Vehicle Industry Council, or OMVIC, is one of Canada’s vehicle sales regulators whose mandate is to maintain a fair and informed marketplace, as well as administer and enforce the Motor Vehicle Dealers Act (MVDA), along with certain pieces of the Consumer Protection Act on behalf of the provincial government.

An OMVIC registration process includes a rigorous background check, passing a certification course, and, after becoming licensed, remaining and abiding by professional standards. Every Ontarian vehicle dealership must be registered with OMVIC to operate legally, to which OMVIC Registrar and CEO Maureen Harquail says that consumers will have certain protections on their purchase.

“One of the big protections comes in the form of the Motor Vehicle Dealers Compensation Fund, which helps consumers if something goes wrong [with their purchase],” Harquail said. The Compensation Fund “provides financial assistance to consumers who make a valid claim for a vehicle transaction against an OMVIC-registered dealer,” as stated on the OMVIC website.

Along with the Compensation Fund, featured webinars on OMVIC’s digital platforms and a consumer support team ready to answer any and all motor vehicle-related questions, Harquail says that the organization has a partnership with Georgian College, where the automotive business school of Canada is located.

“We work very closely with Georgian College to develop unique programs, such as the certification course for dealers and salespeople in Ontario,” Harquail said. “This really helps us expand our reach and build upon the consumer confidence that we require.”

To better inform more vulnerable consumers, such as young adults or new immigrants, on how to properly navigate the motor vehicle sales market, Harquail says it is essential to build awareness on “curbsiders” – illegal, unlicensed dealers or salespeople who pose as private sellers.

Curbsiders misrepresent themselves and the vehicles they sell, many of which are previous write-offs or are odometer-tampered, Harquail says. To challenge their establishment in the market, Harquail says that three core factors are integral to OMVIC’s regulatory presence:

• annual consumer awareness campaign via broadcast television and social media, which educates the public about OMVIC’s regulatory mandate;

• OMVIC’s website which has industry leading information and relevant news;

• enforcement of the MVDA, including regular inspection of dealerships, investigations pertaining to industry misconduct and non-compliance.

“In 2021, OMVIC conducted almost 2,400 inspections, and laid 539 charges against 88 alleged curbsiders,” Harquail said. “With our consumer support team and dealer support team working in tandem, it allows us to both increase education for our dealers who have questions, while also ensuring consumers in Ontario are better served.”

Elsewhere in Canada, auto sales regulators are involved in similar efforts.

The Alberta Motor Vehicle Industry Council, or AMVIC, takes the fight to “backyard mechanics,” who operate illegally within the province. Senior Communications Officer Laura Meador says these illegal operators violate municipal zoning laws by conducting business out of residential properties, which creates an unfair marketplace for businesses that are licensed.

By raising heightened awareness on these unfair business practices, and supporting an honest exchange of in-formation between consumers and stakeholders, Meador says that AMVIC continues to actively protect vehicle choppers via:

• mandatory licensing for motor vehicle businesses and salespeople as required by the Consumer Protection Act of Alberta;

• helping automotive businesses understand the legislative requirements by conducting inspections that serve to educate businesses;

• providing a consumer services team trained in alternate dispute resolution that handle consumer questions, as well as complaints that are submitted via AMVIC Online.

Patrick Poyner, Director of Investigations, Licensing and Legal Services of the Vehicle Sales Authority of B.C., says that the regulator stays up-todate with illegal dealership operations via an industry standards team. This team conducts hundreds of inspections annually, allowing the regulator to locate potential operators acting in bad faith, and relay that information to the public.

During investigations, Poyner says that they advise illegal dealerships to cease their operations via an undertaking. This legal agreement is ordered by the Registrar, and states that they will or will not conduct a specified action. Undertakings can be viewed publicly on the VSA’s website.

Website resources, such as a licensee database, are also available to consumers who are not sure about a potential illegal dealership’s operations. A code of conduct, in the Motor Dealer Act (MDA), is posted in every licensee’s dealership and legally establishes everything a dealer is supposed to follow in their operations.

“That code of conduct starts the moment the purchaser walks through the door, and continues until the vehicle drives off the lot,” Poyner said. “Should disputes occur, we are hopeful they can be resolved between the consumer and licensee and, if they can’t, we as the regulator are taking whatever steps are necessary.”

Prymak says a regulator’s website remains the primary resource for consumers who want their questions answered thoroughly.