Anyone within the motor industry will be aware of recent decisions by the ASA regarding the advertising of ex-fleet vehicles previously used for business purposes as ‘one owner vehicles’. Recent court decisions involving a Middlesbrough-based Evans Halshaw branch has now clarified the legal position and may represent some hope for motor dealers.
Consumer Protection from Unfair Trading Regulations
The CPUTRs came into force in May 2008 and were amended and strengthened in 2014 by The Consumer Protection (Amendment) Regulations 2014. The CPUTR expressly forbid, as the name would suggest, unfair business practices that could detrimentally impact a consumer or sway their decision to buy a vehicle. This includes misleading acts, such as describing a vehicle as having one owner when that one owner was a hire company, as well as misleading omissions such as failing to disclose important vehicle history such as previous accident write offs.
Under the CPUTR a trader is required to actively disclose any information that would cause or is likely to cause the average consumer to take a transactional decision he would not have taken otherwise.
However, the CPUTR are not motor trade specific and do not provide a definitive list of information that should be disclosed. The question therefore becomes what information would a reasonably informed consumer need to take a transactional decision. You will not be surprised that organisation focused on Consumer protection and Trade organisations do not agree.
March 2017 ASA Ruling
Guidelines issued by the Advertising Standards Authority on how ex-fleet vehicles should be advertised for sale required that any fleet operator selling ex-fleet vehicles provide information regarding the nature of the vehicle and its use within any advertising. This followed an earlier decision where 2 vehicles had been described in advertising as having one owner when in fact that owner was a fleet company and the vehicle was ex-fleet. Within the revised complaint the ASA stated that :
“if a dealer was aware that a vehicle was ex-fleet because it had previously been used for business purposes, then that was material information likely to influence a consumer’s decision to purchase it. Furthermore, if a dealer knew that such an ex-fleet vehicle was used by multiple users, then that too, was material information for consumers to make an informed decision.”
The Evans Halshaw case 2018
Last year Evans Halshaw was prosecuted by Trading Standards for failing to tell a consumer that the one previous owner was a rental company within a vehicle advert when selling a vehicle. Whilst initially found guilty, a recent appeal quashed the conviction with the appeal judge confirming that the courts exist to protect consumers against bad bargains where the playing-field is not level, and not irrational prejudice against ex-business use vehicles whose values are entirely unaffected.
Whilst the case will not form a precedent, it does inform the debate and one conclusion can be that one factor to consider is whether the characteristic would irrationally negatively affect the value of a vehicle.
Going forward
It remains a question of fact for a court to decide what characteristics are relevant and we will see more investigations and prosecutions unless or until a definitive list is compiled. This is however a positive approach from the courts. Commenting on the case Sue Robinson, director of the National Franchised Dealers Association, stated
“It is extremely positive to see that Pendragon have won their appeal on multi-user vehicles, following their conviction of unfair commercial practice after advertising an ex-rental car as having one registered keeper.
The conviction was overturned by the court due to the fact that the vehicle’s value was not affected by its previous business use.”
There are steps that motor dealers can take when selling vehicles to protect themselves.
Due Diligence
There is no requirement to disclose anything of which you are not aware. Where a company can establish that they have taken reasonable steps to ensure the accuracy of their description of the vehicle and to ascertain whether there are any material facts that should be disclosed, there will be no breach.
The following actions that would help establish due diligence and protect dealers from prosecution under the CPR’s are:
- Vehicle history checks pre-sale
- Vehicle Mileage Check pre-sale
- Disclose Mileage Discrepancies
- Pre-sales mechanical checks
- Check to see if the vehicle is subject to any recalls
- Record all vehicle checks in case there is a need at a later date to refer to them.
We would also strongly advise all motor dealers to obtain advice at a very early stage should you be contacted by Trading Standards. In our experience the most successful defence is an effective trading standards interview which will allow you to dispel any concerns they may have regarding your conduct and any due diligence processes you may take. An effective interview will significantly reduce the likelihood of prosecution.
Conclusion
Remember, as an RMI member you have access to the RMI legal advice line, as well as a number of industry experts for your assistance. Should you require further information in respect of the article above, contact the legal advice line at any stage for advice and assistance as appropriate.
Motor Industry Legal Services
Motor Industry Legal Services (MILS Solicitors) provides fully comprehensive legal advice and representation to UK motor retailers for one annual fee. It is the only law firm in the UK which specialises in motor law and motor trade law. MILS currently advises over 1,000 individual businesses within the sector as well as the Retail Motor Industry Federation (RMI) and its members.
Links
ASA Rules: https://www.asa.org.uk/news/selling-used-cars-advertising-ex-fleet-vehicles.html
ASA ruling: https://www.asa.org.uk/rulings/glyn-hopkin-ltd-and.html
CPUTR: http://www.legislation.gov.uk/uksi/2008/1277/contents/made
