If you live in Ontario and you’re worried about being the victim of scams or dishonest sales while shopping for a new or used vehicle, you should know that there are a number of rights and laws that protect you as a consumer. We created an outline of the various groups, bodies of government, and legislation that exists in the province that helps create honest and fair sales practices among registered car dealerships.
The Ontario Motor Vehicles Industry Council (OMVIC) is a self-regulating body of car dealerships that was created in 1997 to enforce consumer protection laws on behalf of the Ministry of Government and Consumer Services. Today, it specifically enforces the Motor Vehicle Dealer’s Act (MVDA).
Any car dealership in Toronto or any other city in the province is legally required to register with OMVIC, and thereafter adhere to the standards set out in the MVDA. The aim of OMVIC as an organization is to ensure that registered dealerships deal honestly and fairly with consumers, and it does this through the four main protections set out in the MVDA:
- Mandatory information disclosures
- All-in-pricing in advertisements
- Contract cancellation rights
- Compensation Funds
New and used car dealerships and their salespeople who are registered with OMVIC undergo additional training so they understand these laws so they know the best practices for honesty and fairness.
The first of the four main protections set out in the MVDA is a requirement from all registered dealerships and salespeople to openly disclose certain information about a vehicle to consumers.
The purpose is to make sure that consumers know all relevant information about a vehicle so they can make a fully informed decision. In general, every consumer that inquires about a specific vehicle will be provided with written disclosures for things such as the following:
- General Vehicle Information — make, model, trim, year, new or used, current odometer (if used)
- Previous Usage — if it was ever used as a taxi, limo, police car, daily rental, or emergency vehicle
- Repair History — if it was ever damaged and the total cost of repair for each instance
- Parts — if any original parts were replaced or are missing
You can find the full list of mandatory information to be disclosed for every vehicle here. It is worth noting that the dealership is only obligated to share what information they actually know – they cannot be held at fault for not disclosing information they did not know if you come to find out something about the vehicle that you were not told about.
The MVDA also includes a provision that legally allows for a consumer to cancel a contract they signed to purchase a vehicle if the dealer failed to disclose the following information in a timely manner:
- If the vehicle was a taxi, limo, police car, or emergency vehicle
- If the vehicle was a daily rental (unless it was owned by someone else after it was a rental and before the dealer got it)
- The basic information of the vehicle like the make, model, and year
- If the vehicle was classified as irreparable, salvage, or rebuilt and what its latest classification was
- The most accurate odometer reading of the vehicle that the dealer knows or can discern (with a margin for error in some cases)
If you discover that the dealership failed to disclose any of the above, you have 90 days to file a complaint (see below) and cancel the contract to be reimbursed.
The third consumer protection in the MVDA concerns how dealers can advertise the pricing of vehicles. The law requires that registered dealers must use All-In-Pricing in their advertising, meaning that when they advertise they must include the following:
- Freight Fees — the cost to have the vehicle shipped from the factory to the dealership
- Pre-Delivery Inspection Fees — the cost to do a quality assurance inspection before shipping the vehicle
- Administration Fees — the cost to process the transaction on the dealership’s end
- Government Levies — additional government costs and levies aside from normal sales tax
- OMVIC Fees — the cost of a registered dealer to be a member of OMVIC
- Safety Fees and E-Tests — the cost to test a used vehicle to make sure it is safe to drive (with exclusions for unfit or “as-is” vehicles)
This law is designed to create a fair and honest playing field, so consumers will have a better idea how much a vehicle will cost and registered dealers will be showing the same accurate pricing. It should be emphasized again that this is only true for dealerships that are registered with OMVIC, so if you are buying from a private seller or an unregistered dealership you will have to be wary about advertised prices.
Access to Compensation Fund
Lastly, the MVDA also provides that consumers have access to a Compensation Fund in the event that they are the victims of deceptive sales practices. Consumers can gain compensation from this fund of up to $45,000 for a specific transaction as long as they meet certain conditions:
- The consumer is deemed to have a valid claim against registered dealerships
- The dealer did not return the consumer’s deposit on a vehicle that was never delivered
- The dealer failed to properly pay for conditions set out in an extended warranty or service plan they sold
- The dealer sold a vehicle to the consumer that was seized by law enforcement or a lawful creditor and would not be returned to the consumer
You can find more information about the complaint process and a full list of eligibility rules here, or call 1-800-943-6002 ext. 3661 for more information.
Filing a Complaint or Claim
If you wish to file a complaint or claim because you think your rights as a consumer were violated, OMVIC advises to first contact the dealership and see if the issue can be sorted out. A lot of the time there was just a basic human error or miscommunication and the dealership is more than happy to resolve the issue for you. Therefore, OMVIC asks that consumers send a written letter to the dealership so there is a paper trail of communication between you and the dealer about the complaint.
If the dealership fails to address the issue, you should then contact OMVIC. They will contact the dealership and most of the time they can resolve the complaint without going through any formal procedure. If they cannot work out the issue with the dealership you will have to file a civil lawsuit against the dealership.
As a consumer buying a vehicle, the best source for fair and honest sales practices in Ontario is with OMVIC-registered dealerships. They specifically opted into the program and all the legislation and best practices within the Motor Vehicle Dealer’s Act, so consumers have greater than they would if they buy from private sellers or independent dealers.