Modernizing the Motor Vehicle Dealers Act, 2002
Proposals to Enhance Consumer Protection, Reduce Burden, and Improve Regulatory Efficiency
How to Respond
Your input is important. We welcome your feedback on the questions posed in this document and any additional comments you may wish to offer.
We understand that not all topics are relevant to every individual or organization. Please provide feedback on the topics that are relevant to you or your organization. Where possible, please provide concrete examples or evidence to support your suggestions.
Please submit feedback through Ontario’s Regulatory Registry to mvda@ontario.ca by May 21, 2024. When responding, please provide your name and contact information, including an email or mailing address.
Name/Organization Name:
James F. Hamilton, Executive Director, Used Car Dealers Association of Ontario
Contact Information (Email or Mailing Address):
j.hamilton@ucda.org
Please also check a box to indicate whether you are commenting primarily as a:
☐ Registered motor vehicle dealer (please indicate registered name)
☐ General Dealer
☐ Broker
☐ Wholesaler
☐ Exporter
☐ Outside Ontario Dealer
☐ Lease Finance Dealer
☐ Fleet Lessor
☐ Registered salesperson (you may provide your name)
☒ Industry association / stakeholder (please indicate name of organization)
☐ Consumer (you may provide your name)
☐ Consumer Association (please indicate name of organization)
☐ Academic
☐ Other – You may enter your answer here:
Used Car Dealers Association of Ontario
Thank you for taking the time to review these proposals. If you have any questions about this consultation, please email mvda@ontario.ca.
Privacy Statement
The Ministry of Public and Business Service Delivery’s collection of any information, including personal information, as part of this consultation process is for the purposes of considering whether to develop proposals for legislative and/or regulatory amendments to the Motor Vehicle Dealers Act, 2002. The collection of this information is necessary for the development of potential proposals for changes to address the issues described in this document. Please note that unless otherwise agreed to by the ministry, if you are participating in this consultation process on behalf of an organization, or as an individual who has indicated an affiliation with an organization, the feedback provided will be considered public information and may be used to assist in developing statutory or regulatory proposals. As such, this information may be disclosed to various stakeholders for that purpose.
If you are participating in this consultation process as an individual and do not indicate an affiliation with an organization, your feedback will not be considered public information unless you expressly request otherwise; however, your feedback may be used by the ministry to assist in developing potential proposals for changes to the Motor Vehicle Dealers Act, 2002. If you have questions about the collection, use and disclosure of personal information in relation to this initiative, you may contact mvda@ontario.ca.
Introduction
The Motor Vehicle Dealers Act, 2002 (MVDA) and its regulations regulate motor vehicle dealers and salespersons (registrants) in Ontario, and provide protections for consumers such as mandatory disclosures by registrants, claim coverage under the Motor Vehicle Dealers Compensation Fund of up to $45,000, and a $5,000 minimum fine upon conviction for acting as a registrant without being registered as such under the MVDA.
The Ontario Motor Vehicle Industry Council (OMVIC) is an independent, not-for-profit corporation designated as the administrative authority responsible for administering and enforcing the MVDA and its regulations. OMVIC’s mandate is to maintain a fair, safe, and informed marketplace. This includes protecting consumers, enhancing industry professionalism, and promoting fair, honest, and open competition for registrants.
The Ministry of Public and Business Service Delivery (the ministry) is seeking input on potential changes to the MVDA and its regulations that, if implemented, would enhance consumer protection, reduce regulatory burden, and improve OMVIC’s regulatory efficiency. The proposed changes build on proposals from the ministry’s 2021 consultation, and include new recommendations from key stakeholders, OMVIC, and the Auditor General’s 2021 value-for-money audit of OMVIC.[1]
The proposals and questions presented in this paper are intended to facilitate discussion. Should a decision be made to proceed with these proposals, the comments received during consultation will be considered during the preparation of proposed legislative and regulatory changes. The ministry has not made any final decisions regarding proposing legislative and regulatory changes. As a result, the proposals included in this paper do not represent the ministry’s final policy position or government direction and they are subject to change as a result of the consultation process.
- “Registrant” refers to a motor vehicle dealer or salesperson registered with OMVIC under the MVDA.
- “Consumer” refers to a customer who is not a registered motor vehicle dealer.
- “Trade” refers to the buying, selling, leasing, advertising, or exchanging an interest in a motor vehicle, as well as negotiating or inducing or attempting to induce the buying, selling, leasing, or exchanging of an interest in a motor vehicle.
- “Motor vehicle” refers to any automobile, truck or other vehicle that is propelled other than by muscular power (e.g., by a motor), excluding a motorized snow vehicle or vehicles primarily intended for farming or construction purposes.
- “Motor vehicle dealer” refers to an individual who trades in motor vehicles and owns a dealership.
- “Salesperson” refers to an individual who is employed by a motor vehicle dealer to trade in motor vehicles on behalf of the motor vehicle dealer.
[1] “Value-for-Money Audit: Ontario Motor Vehicle Industry Council”, Office of the Auditor General of Ontario, December 2021: https://www.auditor.on.ca/en/content/annualreports/arreports/en21/AR_OMVIC_en21.pdf
Proposals
1. Requiring a Cooling-Off Period on All Transactions
The MVDA does not provide a cooling-off period to consumers. However, some registered motor vehicle dealers voluntarily offer a money-back guarantee or motor vehicle return policy. Buying a motor vehicle is a significant purchase for most consumers and is often the second-most expensive purchase after a home. The many factors that go into buying a motor vehicle (such as which motor vehicle to select, financing, and upgrades or services that can be added) may be overwhelming, especially given the high-cost and inability to cancel the agreement once the contract is signed.
The ministry is proposing a pre-possession two-day cooling-off period for the purchase or lease of new and used, including “as-is”, motor vehicles. The cooling-off period would apply to all transactions, including those involving a vehicle trade-in.
During the proposed two-day cooling-off period, the consumer would not take possession of the motor vehicle. This means that the motor vehicle would remain at the dealership and would not be registered in the consumer’s name until the two-day cooling-off period has ended. In transactions that include a vehicle trade-in, registrants would not take immediate possession of, or pay the outstanding loan on, the trade-in vehicle. Should a consumer wish to take possession of the motor vehicle prior to the end of the cooling-off period, registrants would be required to seek written confirmation from the consumer that they wish to waive the cooling-off period to take immediate possession of the motor vehicle, finalize the sale, and process the vehicle trade-in, if applicable.
A two-day cooling-off period would provide consumers with additional time to consider their purchase outside of the sales environment, as well as understand their rights and the role of OMVIC.
What do you think? 1. What are your views on this proposal? Please explain. Opposed. UCDA MEMBER SURVEY 99.29% AGREE WITH THE UCDA By the time a consumer puts ‘pen to paper’ they have done a good deal of legwork and research. It’s the consumer that wants fast delivery of the vehicle they chose to buy or lease. Most, if not all, consumers will choose to opt out of a two-day period before they can drive their newly acquired vehicle. What happens to the trade-in during this two-day window? If the customer keeps driving it, that potentially reduces its value, risking mechanical failure or collision damage, and potentially changing the trade-in allowance needed on the contract. At the least, the dealer will need to reappraise the vehicle, adding more delay. Another concern is that this will push the time forward that a customer will use to take their “deal” and shop it around to other dealers, something that consumers do now and which leads to disputes over deposits and the like. The problem that confronts dealers is what to do while they wait. They won’t want to go and register a vehicle and safety it until the two-day period ends so it will just delay further, as much as four to six days, before the consumer gets the vehicle. The consumer will not want that either. Most dealers will cancel a sale on request anyway. The Ministry previously wanted bills of sales and leases to alert the buyer to the serious nature of the contract they were entering into. Why confuse consumers? They know that, after buying a house – this is probably the next most expensive thing they will buy. Presumably, they have thought long and hard about it – so we are not convinced a cooling-off period is needed. A more effective policy is to educate consumers about their rights and responsibilities when they buy – there are publications that help people to understand how to inspect vehicles and to ask the right questions. There has to be some responsibility on consumers to make informed decisions. It will be the consumer, not just dealers, pushing back on this requirement. This policy has been considered in the past and it was discarded for the reason that getting a vehicle ready for delivery involves time and expense to the dealer; all this does is build further delay and uncertainly into the buying process. It also adds to costs. If a dealer has to sit on a sold vehicle for two-days, during which time they can’t sell it to other buyers, then have a buyer walk away, requiring them to relist the vehicle for sale and hope for a quick sale that may not come, will add to losses (advertising, insurance, interest on inventory costs) that will inevitably cause used car pricing to rise in an environment where costs are already sky high for consumers. Meanwhile, the salespeople that worked with the customer to put the deal together make no commission on the sale, all their time is lost, and if that happens a few times a month, this could drive people out of the industry. Another question is, will it apply to a business buyer or just consumers, business buyers presumably needing less such protection. Also, we are concerned curbsiders could use this two day ‘window’ to shop the vehicle around and reduce their risk of not having a buyer for their flip. 2. Regarding the option for the consumer to waive the cooling-off period: a. Do you foresee any risks to the consumer (e.g., registrants pressuring consumers to opt out of the cooling-off period to avoid potentially losing a sale)? No, as mentioned above, it will be the consumer pushing back on this requirement. If yes, do you have any suggestions to mitigate these risks? Please explain. b. Do you have any concerns about the “prior to possession” condition applying to new and used, including “as-is” vehicle purchases or leases? This policy has been considered in the past and was discarded for the reason that getting a vehicle ready for delivery involves time and expense to the dealer, all this does is build further delay and uncertainly into the buying process. Please explain. 3. If you are a registrant: a. Would this proposal add burden to your operations? Please explain. b. If so, how might this burden be mitigated? |
2. Requiring an Information Guide for Consumers
The MVDA does not require registrants to provide an information guide to consumers, who may be unaware of their rights when purchasing or leasing a motor vehicle. This lack of awareness may increase the risk of consumers being taken advantage of by registrants engaging in bad business practices such as improper advertising, or incomplete disclosures related to the motor vehicle. Many consumers are unaware of how OMVIC may assist them if a registrant is not following the requirements under the MVDA. In OMVIC’s 2022 Annual Report, it noted that only 39% of consumers have knowledge of all-in pricing requirements,[1] and 27% of consumers know that motor vehicle dealers and salespersons must be registered to operate in Ontario.
The ministry is proposing that OMVIC be required to develop an information guide to inform consumers of their rights under the MVDA and of the role of OMVIC. The ministry is also proposing that registrants be required to provide the guide to consumers.
Under this proposal, OMVIC would be required to develop an information guide. The guide could include information such as the duties of the registrant under the MVDA, business practices that are considered unlawful, the rights of and protections available for consumers, and an explanation of OMVIC’s role. OMVIC’s Registrar would have the authority to add other information they consider to be relevant and necessary for the consumer to know prior to purchasing or leasing a motor vehicle.
Registrants would be required to provide the guide prior to a consumer signing a contract; however, the ministry is not proposing to require registrants to explain the contents of the guide to the consumer. The guide would also be available on OMVIC’s website, and dealership websites would be required to include a link to the guide.
An information guide would help ensure that consumers are better equipped to make informed decisions when purchasing or leasing a motor vehicle. It would also provide them with the information needed to better identify illegal practices by registrants, and where to seek help if they think they have been a victim of unethical selling practices. If implemented, requiring an information guide would be more effective in enhancing consumer protection if a two-day cooling-off period is also implemented, as consumers would have time to review the guide during the cooling-off period.
[1] The price advertised for a motor vehicle must include all fees and charges the motor vehicle dealer intends to collect, with the exception of HST. Also, the advertised price must clearly and prominently indicate HST is not included. For more information on all-in price advertising, please refer to OMVIC’s website: https://www.omvic.ca/buying/your-rights/all-in-price-advertising/
What do you think? 1. What are your views on this proposal? Please explain. Opposed UCDA MEMBER SURVEY 98.82% AGREE WITH THE UCDA Adding more material during the purchase process is not going to educate consumers. They will not read it. Most of the information about OMVIC and its role is already required to be on contract and lease forms in use in Ontario. The better approach is to educate consumers before they buy or lease and OMVIC can do that via website, ads and information sessions aimed at consumers. OMVIC’s website address is already printed on all standard sale and lease forms in use in Ontario. 2. Regarding the content of the information guide, what information do you feel is important for consumers to know prior to purchasing or leasing a motor vehicle? 3. As a consumer: a. Do you believe that an information guide provided to you prior to a purchase or lease of a motor vehicle would help you make more informed decisions? Please explain. b. Do you believe that an information guide would decrease risks to consumers (e.g., consumers misunderstanding part of the contract of sale or lease, or purchasing from an illegal motor vehicle dealer)? Please explain. 4. As a registrant: a. Do you believe that making an information guide available to consumers prior to their purchase would help increase consumer knowledge and help prevent common issues when purchasing a motor vehicle (e.g., consumers misunderstanding part of the contract of sale or lease)? Please explain. No, see above. b. If not, do you believe there is a better way to inform consumers about their rights when purchasing or leasing a motor vehicle? Please explain. Yes, see above. |
3. Allowing Trade Outside the Place of Business
The MVDA prohibits motor vehicle dealers from inviting consumers to trade outside their registered place of business. However, the motor vehicle sales sector has changed significantly since the MVDA came into force, and consumers are getting increasingly comfortable engaging with motor vehicle dealers online to purchase or lease a new or used motor vehicle.
The ministry is proposing to enable registrants to conduct all aspects of trade (e.g., buying, selling, leasing, or inciting) outside of their place of business under certain circumstances, such as if the consumer invites the registrant to do so. Regardless of where the trade is conducted, all registrants would still be required to maintain a place of business in Ontario.
While this proposal would modernize the MVDA to reflect how the motor vehicle sales sector is evolving, the ministry recognizes the potential increased risk to consumers related to facilitating trade outside the place of business. For instance, if a consumer invites a registrant to trade at the consumer’s residence, it becomes more difficult for the consumer to walk away and reflect on the transaction before it is finalized.
The ministry is proposing several ways to help mitigate this potential risk to consumers, including:
- A two-day cooling off period (as described above);
- An information guide, which would be provided to the consumer before signing the contract (as described above); and
Only permitting trade outside the place of business when the consumer has initiated contact with the registrant and requested a trade outside of the place of business.
What do you think?
- What are your views on this proposal? Please explain.
Opposed
UCDA MEMBER SURVEY 95.27% AGREE WITH THE UCDA
When we first encountered this proposal, we wondered, if it goes forward, why ANY dealer would need a physical address anymore. Taken to its logical conclusion, a dealer would be able to conduct business remotely, electronically and virtually, and consummate a sale with whatever paperwork is required in the consumer’s driveway, kitchen or at a Tim Hortons. Dealers would operate like Amazon or Casper mattresses and never have to invite a consumer to their “dealership”.
What policy reason is there for doing this? What is the problem that the government is trying to remedy? Just because a consumer wants the dealer to go to his/her house to sign a contract – should this happen? The proposal justifies this by saying that any concerns would be dealt with by a cooling-off period – which the UCDA is not in favour of. In any event, that does not answer the essential question – what is the reason for the policy – what problem are you trying to fix?
The seriousness of buying a car – as we touched on above – is more likely to be observed at a dealership – including the consumer actually being convinced that the person selling the car is an actual dealer. Think of everything else that happens at a dealership during the sales process – documentation, identity verification, copying, for example – easier at a dealership.
Here are the problems and why we find this so unacceptable:
Consumers will not know for sure who they are really buying from or dealing with. This problem exists now on financed deals and this will grow even worse if this proposal carries.
Consumers will not fully appreciate the serious nature of the contract they are entering into if it’s as easy as ordering a pizza or a pair of shoes.
Local by-laws and municipalities will not allow such operations to be conducted from private dwellings, nor should they. No one wants to live next to a house with cars constantly coming and going and test drives being taken on roads where children are playing.
Insurance concerns will arise in respect of liability for homeowners in the context of off-site sales. Insurers will be concerned if this proposal is implemented.
The policy objective was that dealers would have a proper place of business to conduct transactions, and not operate out of trailers, sheds, the trunks of their car or, worse, nowhere at all. It was established in the 1960’s and has rightly survived MVDA regulatory review in 1972 and again in 2010.
The struggle now is to ensure that the distinction between credible motor vehicle dealership businesses and virtual curbsiders / private sellers is not further blurred, so that there is no doubt which side of the line dealers fall on.
Operating from an identifiable premises that meets prescribed minimum requirements, provides a sense of permanency and legitimacy to the dealer. Financial institutions and insurers expect that is where fraud prevention will begin and end, with vehicle record, buyer identity and credit-worthiness confirmation performed on site.
Just to be clear, this is not like selling over the internet or by email, something that has been going on in one form or another for years, long before “disruptors” or disasters like COVID came along. We realize that fighting that reality is just tilting at windmills. Having said that, when these kind of sales have been practiced by professional dealers, it is with the knowledge that behind the dealer there is an identifiable place of business, adding confidence to the purchaser’s decision to buy, knowing that they have somewhere to go back to in case things go wrong.
It’s much easier for unregistered curbsiders to trick consumers when they do not work from identifiable premises.
So, to summarize, s. 4 (2) is there because the public, financial institutions, insurers, regulators, the government, the media, and stakeholders want it there. So do we. To suggest otherwise poses unnecessary risks to consumers, and asking them to sign away those protections (as this proposal suggests) hardly addresses these grave concerns.
- What additional protections might be needed for consumers if they choose to engage in trade outside the motor vehicle dealer’s place of business?
That ‘choice’ should not be available.
4. Limiting Add-On Goods and Services in a Motor Vehicle Sale
The MVDA requires the advertised price of a motor vehicle to include all charges and fees related to the purchase or lease of the motor vehicle, such as freight, pre-delivery inspection/expense, administration fees, and the OMVIC transaction fee – this is known as all-in pricing. The MVDA also requires motor vehicle dealers to include disclosures in the contract with a consumer, which vary depending on whether the transaction is for the sale or lease of a new or used motor vehicle. This helps to ensure transparency in all components of the transaction. Once the motor vehicle contract is signed, it is binding.
Motor vehicle shortages arising from the pandemic have resulted in some motor vehicle dealers engaging in tied selling, which occurs when goods or services are added to contracts without being requested by the consumer. In these instances, consumers are forced to purchase additional goods or services (e.g., warranties, service plans, additional insurance) as a condition for purchasing or leasing a motor vehicle. These goods and services are often included in the price of a motor vehicle, making it compliant with the all-in pricing requirements. However, consumers do not have the option to remove these goods or services from the contracts before signing, which can amount to anywhere between $1,000 to over $10,000 above the Manufacturer’s Suggested Retail Price (MSRP).
The ministry is proposing to prohibit motor vehicle dealers from requiring consumers to purchase add-on goods or services that were not requested by consumers and, in the case of goods, were not already affixed to the motor vehicle.
Prohibiting motor vehicle dealers from requiring consumers to purchase add-on goods or services not already affixed to the motor vehicle would give consumers greater control over what they want to purchase or lease (and, therefore, how much they’re willing to spend), as well as the option to shop around for goods and services associated with the motor vehicle from other vendors for a competitive price.
What do you think? 1. What are your views on this proposal? Please explain. It is not necessary because tied-selling is already illegal (Consumer Protection Act). The problem is not the law, but education and enforcement. UCDA MEMBER SURVEY 97.17% AGREE WITH THE UCDA 2. To help address tied selling, which of the following approaches do you think would be most effective: · As proposed. generally prohibit motor vehicle dealers from charging consumers for add-ons that are not already affixed to the motor vehicle at the point of sale and were not requested by the consumer; or, · Include a list in regulation of the goods and services a motor vehicle dealer cannot add to the contract (e.g., anti-theft and theft protection services, appearance protection plans, additional insurance, maintenance plans, paintless dent repair contracts, key replacement contracts, tire and wheel plans, windshield protection contracts)? Please explain the rationale for your preferred approach. |
5. Limiting the Sale of “As-Is” Vehicles
Under the MVDA, motor vehicles with a current safety standards certificate cannot be sold “as-is” and contracts of sale for “as-is” vehicles must include the following statement:
Vehicle sold “as-is”
The motor vehicle sold under this contract is being sold “as-is” and is not represented as being in road worthy condition, mechanically sound or maintained at any guaranteed level of quality. The vehicle may not be fit for use as a means of transportation and may require substantial repairs at the purchaser’s expense. It may not be possible to register the vehicle to be driven in its current condition.
Ontario is the only jurisdiction – among provinces that regulate motor vehicle sales – that stipulates requirements for the sale of “as-is” vehicles. The ministry has heard that the current “as-is” provisions are difficult for registrants and consumers to understand, which may be leading to misuse of the provisions to avoid certain disclosures and all-in pricing requirements.
Although “as-is” vehicle sales account for a small percentage of overall motor vehicle sales, the potential for harm to consumers is significant. Lack of disclosures and pricing requirements put consumers at risk of purchasing motor vehicles with serious unknown issues, and creates an uneven playing field for motor vehicle dealers who are following all-in pricing requirements.
The ministry is considering three options to address long-standing consumer harm issues associated with the sale of “as-is” vehicles:
- Prohibiting the sale of as-is vehicles, except to wrecking yards;
- Replacing the requirements for “as-is” vehicles with requirements for “unfit” vehicles; or
- Requiring “as-is” vehicles to include the price of repairs and prohibiting the sale of safety certification.
Option 1: Prohibiting the Sale of “As-Is” Vehicles, Except to Wrecking Yards
This option would prohibit the sale of “as-is” vehicles to consumers, and limit sales to wrecking yards. This would help to address issues with the “as-is” vehicle market which may be a source for curbsiders (unregistered motor vehicle dealers) to acquire motor vehicles, which are then passed on to consumers, often missing vital information and/or with the odometer rolled back.
Option 2: Replacing the Requirements for “As-Is” Vehicles with requirements for “Unfit” Vehicles
Under the Highway Traffic Act a motor vehicle with a status of “unfit” cannot be driven until a safety standards certificate has been issued by a Motor Vehicle Inspection Station (MVIS) and is submitted to ServiceOntario, allowing the status to be changed to “fit”. This option would allow motor vehicle dealers to sell “unfit” vehicles to consumers if they disclose to consumers, at a minimum, an estimated cost or range of costs for repairs needed for the “unfit” vehicle to pass a safety inspection and be issued a safety standards certificate by an MVIS. The motor vehicle dealer would be responsible for working with a mechanic to determine a plausible cost or range of costs for repairs. Consumers intending to purchase an “unfit” vehicle for parts would be able to do so if the vehicle is towed off the motor vehicle dealer’s lot, and consumers with the intention to purchase an “unfit” vehicle for road use would be responsible for taking the steps necessary to change the status from “unfit” to “fit”.
This option would enhance consumer protection by:
- Removing the motor vehicle dealer’s discretion to determine whether a motor vehicle should be sold “as-is”. This would help to level the playing field for motor vehicle dealers and would better support compliance with all-in pricing and disclosure requirements.
- Providing greater clarity for consumers that the motor vehicle they are purchasing is not currently fit for use on the road, as they would not be granted a licence plate for the motor vehicle before MVIS issues a safety standards certificate.
- Providing consumers with a better understanding of the true cost of the purchase, depending on the intended use for the “unfit” vehicle.
This option would create minimal burden for motor vehicle dealers as they would only be required to disclose to the consumer, at a minimum, an estimated cost or range of costs for repairs required for the consumer to have the status changed from “unfit” to “fit”. The ministry recognizes that the cost of repairs for a motor vehicle depends on several factors, including when the estimate for cost of repairs was conducted, and the pricing for the cost of repairs across various repair shops. For these reasons, motor vehicle dealers would not be expected to know the exact cost for repairs, and the intent is that consumers would knowingly enter into a contract of sale that continues to include an element of “buyer beware”.
Option 3: Requiring “As-Is” Vehicles to include the all-in price of repairs, and Prohibiting the Sale of Safety Certification
Under this option, the MVDA would continue to allow for the sale of “as-is” vehicles to consumers; however, the advertised all-in price of an “as-is” vehicle would have to include the complete cost of repairs required for the vehicle to pass a safety inspection and be issued a safety standards certificate by MVIS. Motor vehicle dealers would also be prohibited from offering safety certification at an additional cost to consumers.
This option would require motor vehicle dealers to disclose to consumers the complete cost of repairs required for the “as-is” vehicle as determined by the dealership’s repair department or third-party repair shop, rather than an estimated cost or range of costs for repairs as proposed under option two.
What do you think? 1. What are your views on this proposal? Please explain. Eliminate “As Is” Sales Between dealers, vehicle sales have always been “as is”. In 2010 this was modified in the Code of Ethics to place upon dealers the added obligation to declare accident damage, make other declarations and to declare “Any other fact about the vehicle that affects the structural or mechanical quality or performance of the vehicle and that, if disclosed, could reasonably be expected to influence the decision of a reasonable purchaser or lessee to buy or lease the vehicle.” The sale of vehicles on an “As Is” basis to consumers has long caused confusion for both consumers and dealers. Many consumers think buying such a vehicle is the same thing as buying a vehicle without a safety certificate, and quite simply that is not the case. The dealer knows little about the unit and the consumer accepts all the risk that the cost to get it on the road someday might exceed their reasonable expectations. Very few consumers buy such vehicles expecting it to cost them thousands of dollars to get the unit on the road, and when they inevitably find out it will, it leads to endless arguments and complaints between consumers and dealers. “As Is” vehicles are also a favorite of curbsiders because they can buy them cheap, fix them poorly, sell them for good profit and no disclosure to the innocent consumer buying it. Option 3 – To expect a dealer to put a price on what it would cost to certify such a vehicle is unworkable. How could any dealer possibly know what number to put on such a unit without going through the same work it would take to actually certify the unit? In fact, it feeds into the incorrect assumption that all such a vehicle needs to get on the road is a safety certificate- and that is often far from the truth. Similarly, many dealers do not understand what an “As Is” sale really is. Not “roadworthy” could mean the vehicle might need a new water pump, a transmission, framework, body-work, engine or electrical work and not just minor work such as determining whether the horn works or the headlights are operating; that is what a safety check is for. Having said that, few dealers realize that OMVIC still expects disclosure, as on dealer to dealer sales, of material facts, accident damage and other disclosures that “As Is” sales do not exempt dealers from, so the protection afforded by the concept of “As Is” sales is a myth at best. Option 1 or 2 holds more promise, but Option 2 still carries the risk of misunderstandings between consumers and dealers when an “As Is” vehicle is simply more problematic than a safety inspection could possibly hope to address. The reality is that Option 2 already exists as OMVIC allows dealers to sell vehicles to consumers without a safety, which is “unfit” and this is NOT the same thing as “As Is”: https://www.omvic.ca/selling/dealer-guidelines-and-resources/advertising-guideline/ Dealers are permitted to sell unfit vehicles and shall include in the ad the following wording in a clear, comprehensible and prominent manner: “This vehicle is not drivable and not certified. Certification is available for $[include cost of certification].” The advertised cost of a safety standard certificate should reflect the actual market cost of the service. If a vehicle is roadworthy, dealers are expected to observe the appropriate ethical and professional standards in pricing the vehicle. In cases of “unfit” sales without a safety, the consumer can drive away with a temporary permit to go get a safety, on “As Is” sales the dealer is not supposed to allow the consumer to drive it at all, as the vehicle is not represented as “roadworthy”. Our preference would be Option 1 for “As Is” sales, eliminate the sale of non-roadworthy vehicles to consumers. UCDA MEMBER SURVEY 75.41% AGREE WITH THE UCDA 2. Do you support any of the proposed options for addressing the risks associated with the sale of “as-is” vehicles? Please explain which option(s) and why. 3. If you do not support any of the proposed options, why not? What alternative solution do you suggest? 4. If you are a registrant: a. How many motor vehicles do you typically sell “as-is” on an annual basis? b. For what reason do you sell those motor vehicles “as-is”? 5. If you are a consumer: a. Why is access to “as-is” vehicles important? b. What information do you need to make an informed decision when purchasing an “as-is” vehicle? c. What information do you need to make an informed decision when purchasing an “unfit” vehicle? |
6. Requiring Mandatory Continuing Education for Registrants
Currently, prospective registrants are required to take the Automotive Certification Course (provided by Georgian College on OMVIC’s behalf) prior to initial registration under the MVDA. However, there are no additional courses required to keep registrants’ knowledge up to date, such as courses on ethical selling practices to ensure registrants are aware of their responsibilities under the MVDA, or that include information on current risks to consumers in the sector.
The ministry is proposing to require all registrants under the MVDA to complete mandatory continuing education prior to applying to renew their registration.
The proposed mandatory continuing education program would be planned and managed by OMVIC, or potentially a third party designated by OMVIC. OMVIC would decide the structure of the program, as well as set any fees that may be associated with the courses. Salespersons and dealers in each of the seven motor vehicle dealer registration classes could be required to complete a course (or courses), with possible content variation depending on the registration class.
In British Columbia, the Vehicle Sales Authority requires all licensees to take mandatory continuing education courses. These courses vary per year and provide licensees with updates on regulatory amendments and industry best practices. In Ontario, several other regulated sectors require registrants to complete continuing education courses as a condition of renewing their registration. For example, the Trust in Real Estate Services Act, 2002, and the Funeral, Burial and Cremation Services Act, 2002 set out requirements for continuing education that registrants and licensees must fulfill before renewing their registration/licence. Fees are determined by the administrative authority based on a cost-recovery model. In the real estate sector, real estate brokers and salespersons pay a $44 fee for continuing education as part of the renewal of their registration every 2 years.
Requiring mandatory continuing education as part of the registration renewal process would help to ensure that each registrant is acquiring the necessary knowledge and skills to provide competent and professional services to consumers and improve compliance with the MVDA.
What do you think? 1. What are your views on this proposal? Please explain. Support UCDA MEMBER SURVEY 89.74% AGREE WITH THE UCDA We support this as a necessary requirement in a mature regulated industry. We like the notion of a course that delivers content online, perhaps in modules, with quiz questions at the end of each module that require a 100% pass. When a question is answered wrong, in an open-book format, the registrant must go back to the module, re-read the content and get the question correct before being able to move on to the next module. We would hope such a course would not take too much time to complete and be cost-effective for registrants. We do not see this approach of being overly onerous especially when no one will really “fail”, but will be educated instead. The UCDA should be involved in the development of the course material and delivery given that we are already involved in the education of dealers and we have the infrastructure in place to expand. 2. As a registrant: a. Do you believe that requiring registrants to undertake continuing education courses should be mandatory? Please explain. b. Should continuing education courses be tied to a registrant’s renewal of registration? As long as this does not delay the renewal process, if it is online, it could work. For those that choose to do it, an option could be offered to allow registrants to take the course before renewal is pending and, if they do, the pass will reflect when they renew. Another question is how often will the course be required. Annually, every two years, every 4 years? We think every 4 years makes more sense. If not, what should trigger the requirement to complete continuing education courses? |
7. Requiring Prompt Payment of Unpaid Loan Amounts
The MVDA provides that if a dealer agrees, as part of a trade-in arrangement, to pay any outstanding loan on the vehicle, or pay any outstanding bill for the repair or storage of the vehicle, the dealer must fulfill the obligation.
However, the MVDA does not specify a time period within which this must be completed.
Issues pertaining to unpaid loan amounts that are secured by a lien typically arise in motor vehicle transactions involving a vehicle trade-in, and were the basis for one of the most common consumer complaints to OMVIC in 2023. If a motor vehicle dealer agrees to pay the outstanding loan amounts but then fails to pay the amounts after a trade-in transaction, the consumer trading in the vehicle is liable for payments on the motor vehicle that was purchased in addition to the outstanding payments on the vehicle they traded in.
Under the eligibility criteria for the Motor Vehicle Dealers Compensation Fund (MVDCF), a consumer in this circumstance cannot seek compensation unless the motor vehicle dealer’s registration has been revoked, or the motor vehicle dealer has gone into bankruptcy. This exacerbates the financial harm borne by the consumer.
The ministry is proposing to require motor vehicle dealers who agree to pay unpaid loan amounts on motor vehicles that were part of trade-in transactions to do so within five business days. To reinforce the effectiveness of this proposal, the ministry is also proposing that failure of a motor vehicle dealer to pay unpaid loans in this circumstance within five business days be added to the eligibility criteria for the MVDCF so consumers can seek compensation.
What do you think? 1. What are your views on this proposal? Please explain. Support UCDA MEMBER SURVEY 98.10% AGREE WITH THE UCDA We support this, but need to more about the time line. Within 5 days of what? Is 5 days reasonable or realistic? How do we deal with uncooperative secured parties? Many banks refuse to talk to anyone but their debtor (citing privacy concerns) even though the PPSA requires secured parties to share lien details with any party with an interest in the vehicle. A secured party has 30 days to discharge a lien once it is paid. #7. Prompt payment of trade in. I agree and if not already done the consumer should see documentation in a timely manner. I would assume they get a release from the financial institution. 2. As a registrant: a. What factors hinder the prompt payment of an outstanding loan on a vehicle trade-in? b. Is it feasible to be expected to pay any outstanding loan on a vehicle trade-in within five business days? If not, what time period would you recommend? |
8. Expanding Eligibility for the Motor Vehicle Dealers Compensation Fund
The Motor Vehicle Dealers Compensation Fund (MVDCF) is a fund of last resort for consumers who have suffered a financial loss (in specified circumstances) arising out of a trade involving a motor vehicle and a registered motor vehicle dealer who is unwilling or unable to pay the consumer. Eligible claims could result in compensation of up to $45,000, provided that they are submitted within two years of the claim first meeting the relevant criterion. Purchases from curbsiders (i.e., unregistered motor vehicle dealers) are ineligible for compensation from the MVDCF.
The MVDA sets out the eligibility criteria for claims made to the MVDCF including, among others:
- The motor vehicle dealer has had its registration revoked or suspended by the Registrar, and one of the reasons includes issues related to the consumer’s vehicle transaction.
- The motor vehicle was legally seized by a creditor, other than a creditor of the consumer, and the motor vehicle will not be returned.
- The motor vehicle dealer failed to return a deposit to a consumer on a motor vehicle that was not delivered within the time period required by the contract.
- The motor vehicle dealer has failed to remit payment on an extended warranty contract, or has not paid for a repair which would have been covered by the motor vehicle dealer’s warranty contract, or has not paid for a repair which would have been covered by the motor vehicle dealer’s warranty and/or has not refunded the warranty premium paid by the consumer.
- The motor vehicle dealer has become bankrupt, a receiver has been appointed, or a winding-up order has been made.
The ministry is considering expanding the eligibility criteria for the MVDCF to enable consumers to receive compensation for additional losses associated with the purchase or lease of a motor vehicle.
Additional eligibility criteria may include:
- The motor vehicle dealer has failed to pay any agreed to outstanding loan payments on a vehicle trade-in. This would help to ensure consumers are not at risk of being responsible for payments on both their recent motor vehicle purchase and the motor vehicle that the consumer traded-in; or
- The motor vehicle dealer has sold a motor vehicle to a consumer that has serious mechanical defects identified by the Ministry of Transportation. This would help to ensure consumers are not at risk of purchasing a motor vehicle that requires more repairs than expected, or that was sold with a fraudulent safety standards certificate.
Expanding eligibility for the MVDCF would have a significant impact on consumer protection. If these changes are made, the ministry and OMVIC may need to consider changes regarding the MVDCF, including changes to motor vehicle dealers’ contribution to the MVDCF upon registration, the minimum balance requirements, and maximum compensation awarded to consumers.
What do you think? 1. What are your views on this proposal? Please explain. Support UCDA MEMBER SURVEY 98.35% AGREE WITH THE UCDA We could support the additional criteria indicated. 2. What additional eligibility criteria should the MVDCF cover? It should not cover consumers who buy from curbsiders ie. unregistered sellers. |
9. Updating Contract Disclosures
The ministry is considering the following proposals to reduce burden related to contract disclosures. If approved, the ministry would propose that changes would come into effect at the soonest possible twice-annual-effective date (i.e., July 1, 2024, or January 1, 2025) depending on consultation feedback.
Increasing the Threshold for the Value of Repairs
The General regulation under the MVDA requires that contracts of sale and lease include a disclosure statement if a motor vehicle has previously undergone repairs in excess of $3,000 for damage caused by an incident and a statement of the total costs of repair, if known by the motor vehicle dealer. This disclosure helps to ensure that consumers are provided with the complete history of the motor vehicle so they can make an informed decision to purchase or lease.
Several stakeholders have proposed increasing this mandatory disclosure from $3,000 to $5,000 to reflect the increased cost of motor vehicle parts and labour due to new and better technology in modern vehicles. Increasing the threshold would also better ensure that these disclosures only capture significant repairs to motor vehicles.
The ministry is proposing to update the disclosure on repairs previously done on a motor vehicle due to an incident by increasing the threshold from greater than $3,000 to greater than $5,000.
There is a risk to consumers that increasing this threshold may result in the non-disclosure of important information for older motor vehicles that cost less to repair; however, this risk would be mitigated by existing requirements to disclose any other fact about the motor vehicle that could reasonably be expected to influence the consumer’s decision on whether to purchase or lease a motor vehicle.
What do you think? 1. What are your views on this proposal? Please explain. We have always felt the dollar limit is a poor substitute for the “material fact” disclosure requirement because it creates the false impression amongst registrants that if the vehicle has sustained damage of $4,999 they are not required to disclose that to a buyer. Of course, we agree the number is higher overall than it was in 2010, but the need for a number at all is what we question. UCDA MEMBER SURVEY 91.73% AGREE WITH THE UCDA |
Updating the CAMVAP Disclosures
The Canadian Motor Vehicle Arbitration Plan (CAMVAP) is a cross-Canada program that consumers can use to resolve disputes with a manufacturer about defects in a motor vehicle’s assembly or materials, or how the manufacturer is applying or administering its new motor vehicle warranty program. Disputes are resolved through binding arbitration.
The MVDA sets out requirements for contracts of sale and lease to contain disclosures regarding CAMVAP. The wording varies depending on whether the manufacturer participates in the program. In practice, motor vehicle dealers need to maintain up-to-date information about which manufacturers are participating in the program and to update contracts accordingly.
This disclosure helps to increase consumer awareness of the program, so that if a qualifying issue arises, consumers know how to contact CAMVAP. However, maintaining updated information may be burdensome to some motor vehicle dealers as not every motor vehicle manufacturer participates in CAMVAP, and manufacturers may leave the program from time to time.
The ministry is proposing to replace existing CAMVAP disclosure requirements with the following general statement:
The Canadian Motor Vehicle Arbitration Plan (CAMVAP) allows consumers to resolve disputes with participating manufacturers about possible defects in a vehicle’s assembly or materials, or how the manufacturer is applying or administering its new vehicle warranty. Please contact CAMVAP for more information about the program and to see if your vehicle qualifies.
What do you think? 1. What are your views on this proposal? Please explain. We would prefer to see the disclosure requirement removed entirely as it applies to so few makes and years, with less manufacturers participating such as BMW and Stellantis. Having said that, the proposed language has the advantage of being considerably shorter than what is required now. Many dealers are using DMS’s so the changes can be made quickly through those platforms. Users of paper forms rely on providers like the UCDA, and we are able to amend fairly swiftly, but a reasonable phase-in would allow old stock to be used up and not wasted. Consumer education is the better approach here. UCDA MEMBER SURVEY 96.69% AGREE WITH THE UCDA 2. As a registrant: a. Do you anticipate potential cost and/or time savings if this proposal is implemented? If yes, what is the total cost and/or time savings? b. How many weeks/months are needed for you to update your contracts with the proposed CAMVAP statement? 3. As a consumer, do you anticipate any difficulty with determining if the motor vehicle you purchased is covered under CAMVAP? |
10. Adding Flexibility for the Contact Information Included in Advertisements
The MVDA requires advertisements that attempt to induce the trade of a motor vehicle must include, in a clear, comprehensible, and prominent manner, a registered name and the business telephone number of the motor vehicle dealer. The exception to this requirement is if the advertisement indicates it is being placed by a registered motor vehicle dealer, and the medium has practical limitations on the amount of information that can be included (e.g., a classified advertisement in a newspaper, magazine, billboard or broadcast on radio or television).
The ministry is proposing to replace the requirement for registrants to include a business telephone number in advertisements with a requirement to include contact information that the registrant chooses, provided that the same contact information is included in the information that was provided to OMVIC as part of their registration. Contact information could include a business telephone number (cellphone or landline), website, email address, or address of the place of business. Under this proposal, impacted advertisements would still need to note the registered name of the registrant. This proposal would not impact the requirement to provide a motor vehicle dealer’s name and address in a lease or sales contract.
This proposal would align Ontario with other provinces where a business telephone number is not required in advertisements, and modernize the regulation as telephone numbers are not always the preferred method of communication for consumers. This proposal may provide cost savings to registrants that advertise motor vehicles for sale.
What do you think? 1. What are your views on this proposal? Please explain. UCDA MEMBER SURVEY 99.29% AGREE WITH THE UCDA We support the idea of allowing a phone number to be a landline or cell phone, but not the elimination of that requirement entirely. What is the policy reason? Similar to the proposal to allow operations from dwellings, why would anyone argue that a dealer should not provide phone numbers in advertisements? It seems counter-intuitive to make dealers more difficult to contact. Moreover, why a dealer would want that in the first place should raise concerns for consumers. It is suggested that this will have little impact on consumers, but we do not agree. If you are trying to contact a dealer it could certainly have a great impact.
The argument this will save dealers money might have made sense 20 years ago when they paid by the line for print ads. However, dealers advertise digitally these days and the idea that not requiring a telephone number will result in dealer savings is spurious. Also, when a phone number is used in an ad it helps to identify who has placed the ad or who is responding to it, as sometimes those numbers lead OMVIC to unregistered salespeople/curbsiders. Interestingly, at one time OMVIC had stopped supplying phone numbers for wholesalers on their public database for “find a dealer” but they very soon reverted back to providing those numbers, likely because OMVIC realized making wholesalers virtually impossible to contact was counter-productive. We must keep in mind not everyone is technically savvy, and the elderly still rely on phone numbers as the main point of contact, for example. 2. Do you have any concerns with the broad term of “contact information”? Please explain. |
11. Expanding the Scope and Powers of OMVIC’s Discipline Committee
The rules and procedures of OMVIC’s Discipline and Appeals Committees are set out in the MVDA. The Discipline Committee may consider and determine whether a registrant has failed to comply with the code of ethics established by the Minister and may issue a fine or require a registrant to take educational courses. Should a registrant appeal the Discipline Committee’s decision, the appeal is brought to OMVIC’s Appeals Committee. The Appeals Committee may overturn, affirm, or modify an order of the Discipline Committee.
Currently, if a registrant’s conduct violates the code of ethics as well as the MVDA or General regulation, these determinations would go through separate processes – the violation of the code of ethics is heard by the Discipline Committee and the violation of the MVDA or General regulation could form the basis for a Registrar’s proposal to suspend or revoke a registration or could be subject to prosecution. Providing the Discipline Committee with a wider range of matters to hear and a wider range of order-making powers would support OMVIC’s ability to efficiently and effectively address conduct that warrants disciplinary action and streamline its disciplinary tools and processes.
The ministry is proposing to broaden the scope and powers of OMVIC’s Discipline Committee to give it authority to consider whether a registrant has failed to comply with any provision in the MVDA or its regulations, and to provide it with the power to suspend, revoke or apply conditions to a registration, in addition to its existing order-making powers. In addition, appeals would be brought to the Licence Appeal Tribunal (LAT) rather than an OMVIC Appeals Committee.
LAT is an independent, quasi-judicial agency that adjudicates applications and resolves disputes concerning compensation claims and licensing activities.
These proposed changes would be consistent with the approach adopted under the Trust in Real Estate Services Act, 2002 for the real estate services sector in Ontario.
What do you think? 1. What are your views on this proposal? Please explain. Opposed UCDA MEMBER SURVEY 99.29% AGREE WITH THE UCDA The Discipline Committee was never intended to be a court. It was meant to provide OMVIC an option, in cases of less severity or concern, to mete out discipline of a basic nature, modest fines, education orders, those kind of remedies, in a fast, fair and expedient manner. Panels are comprised of non-lawyers, or mostly non-lawyers, who are advised on questions of law by lawyers who are paid by OMVIC. The proof of this low-level of adjudication is the fact, in over two decades of operation, the vast majority of these cases settle without a hearing and of the ones that go to a full contested hearing OMVIC have only lost one or two such cases in all that time. OMVIC still lose cases from time to time at the Licence Appeal Tribunal (LAT) which is chaired by lawyers generally. This, we think, illustrates an appropriate forum for serious penalties is LAT. We do not think that an OMVIC Discipline Committee should be given the power to suspend, revoke or apply conditions to a registration. These are matters best left to an independent body, like LAT, as it is the ultimate punishment that can be dealt to a dealer and the Committee is too close to OMVIC for it to be impartial. One of the hallmarks of adjudication is independence and impartiality – the LAT is independent of OMVIC. The committee and OMVIC are too close. There is an argument to be made that having an independent review of conduct – independent of an OMVIC committee – will promote the view that the process is fair, dealt with by a tribunal with legal expertise, expertise that would promote the need for consistency in decision-making, etc. Justice will be seen to be done. To do otherwise leaves OMVIC open to challenges based on lack of natural justice. |
12. Increasing Fines that OMVIC’s Discipline Committee May Levy
Currently, the MVDA and its regulations set minimum standards that all registrants must follow when conducting business. If the Discipline Committee determines that a registrant has failed to comply with the code of ethics, the Discipline Committee may, among other things, order that the registrant pay a fine up to a maximum of $25,000.
Penalties for registrants who engage in unethical behavior may be outdated and, as a result, may no longer be an effective deterrent. In addition, a single maximum fine that is applicable to both salespersons and motor vehicle dealers does not reflect the additional responsibility of motor vehicle dealers to oversee salespersons and ensure that salespersons comply with the MVDA.
The ministry is proposing to:
- Apply distinct maximum fines for individuals (i.e., salespersons) and businesses (i.e., motor vehicle dealers); and,
- Increase the maximum fine that OMVIC’s Discipline Committee may impose from $25,000 to $50,000 for individuals, and from $25,000 to $100,000 for businesses.
To support the ministry’s consumer protection mandate, it is important that OMVIC has access to appropriate compliance tools to continue to address misconduct in the industry. It is also important that fine amounts are effective in discouraging unethical behaviour by registrants. Increasing fines would enable OMVIC to better apply progressive penalties against repeat offenders. These proposed changes would be consistent with the Trust in Real Estate Services Act, 2002.
What do you think? 1. What are your views on this proposal? Please explain. Opposed UCDA MEMBER SURVEY 99.06% AGREE WITH THE UCDA While we understand these maximums are rarely applied, even at the $25,000 threshold, to give the discipline panel that kind of authority is a step too far in our opinion. There are few individuals or businesses in our industry, that would not face bankruptcy or business closure over such a punitive maximum should it ever be applied. |
Given this, and similar to the arguments we have made under #11, fines as high as $50,000 for individuals or $100,000 for businesses should be left to an independent arbiter, like LAT, where dealers will have a neutral third party adjudicate questions that could mean the end of a career or a livelihood.
13. Prohibiting Cross-Appointments Between OMVIC’s Board of Directors and the Board of Trustees for Motor Vehicle Dealers Compensation Fund
The Motor Vehicle Dealers Compensation Fund (MVDCF) is a fund of last resort for consumers who have lost money (in specified circumstances) arising out of a trade involving a motor vehicle and a registered motor vehicle dealer who is unwilling or unable to pay the consumer. The MVDCF Board of Trustees reviews claims against the MVDCF and determines whether to approve or reject claims.
In the past, concerns were raised regarding actions taken by the OMVIC Board of Directors to cross-appoint three members from the Board of Directors to the MVDCF Board of Trustees, and the associated real or perceived conflicts of interest. As part of the 2021 value-for-money audit of OMVIC, Ontario’s Auditor General recommended regulatory amendments to disallow OMVIC’s Board of Directors from appointing its own members to the MVDCF Board of Trustees.
The ministry is proposing to prohibit cross-appointments between OMVIC’s Board of Directors and the MVDCF Board of Trustees. This proposal would enhance governance of OMVIC and the MVDCF.
What do you think? 1. What is your view of this proposal? Please explain. We take no position on this. UCDA MEMBER SURVEY 99.29% AGREE WITH THE UCDA |
14. Updates to the Motor Vehicle Dealers Act to Capture Terms Distinct to Electric Vehicles
Growth in the electric vehicle (EV) market has been steady and is expected to continue. The MVDA was drafted before the emergence of EVs and includes language that is more appropriate for internal combustion engine vehicles.
The ministry is consulting on how the MVDA and its regulations could be amended to include language on motor vehicle parts that are distinct to an EV. For example, adding the terms “electric motor,” or, alternatively, “propulsion system components” to account for the development of alternative forms of motor vehicles (e.g., hydrogen-powered motor vehicles). The ministry will also consider whether certain disclosure requirements (and their associated thresholds) are appropriate for transactions involving an EV while the ministry continues to monitor growth of the EV sector.
What do you think? 1. What terms should be added to the MVDA to capture the EV market, or other alternative forms of motor vehicles? Changes are needed here. In addition to the proposals listed, is the disclosure of features, functions and capacity subject to paid subscription. Self-driving, “ludicrous mode”, heated seats and the like may not be available on resale and dealers and consumers need to know this in determining a fair price. Language needs to be expanded to take into account different modes of propulsion. UCDA MEMBER SURVEY 99.05% AGREE WITH THE UCDA 2. Are there any provisions in the MVDA that you think should be amended to include EV language (e.g., the MVDA uses “engine” in the contract disclosure requirements for motor vehicles sales, leases, and vehicle trade-in, but does not take into account an “electric motor”)? Please specify. Yes, language needs to be expanded to take into account different modes of propulsion. 3. Is the proposed increase to the threshold for the value of repairs required for disclosure from greater than $3,000 to greater than $5,000 appropriate when considering transactions involving an EV? Please explain. EVs are more costly to repair. Old style steel stamped parts are easier and cheaper to fix, they can be “bent back” in shape while aluminum, for example, tends to break or shatter rather than dent. Front-end damage is more extensive in EVs as there is no engine block to absorb impact. Repairs are, on average, much more costly, a fact not lost on insurers. 4. Are there any unique features of an EV that would warrant a distinct disclosure requirement for transactions involving new or used EVs (e.g., battery degradation on a used EV)? Please explain. Battery life is a key disclosure on used EV sales. |
Seeking Information from Consumers: Unfair Selling Tactics
The ministry is seeking information on unfair selling tactics experienced by consumers. Some examples of unfair selling tactics brought to the ministry’s attention include, but are not limited to, drip pricing, forced financing, and penalties associated with early payment of loans.
The MVDA requires the advertised price of a motor vehicle to include all charges and fees related to the purchase or lease of the motor vehicle, such as freight, pre-delivery inspection/expense, administration fees, and the OMVIC transaction fee (known as all-in pricing). The Competition Bureau of Canada defines drip pricing as the seller offering a product or service at a price that is unattainable, because consumers must also pay additional non-government-imposed charges or fees to buy the product or service.[1] Since 2021, some dealerships have applied “market adjustment fees” on purchases ordered months prior to when the motor vehicle is ready for the consumer to take possession, which entails adding additional fees that the consumer is required to pay in order to take possession of the motor vehicle.
The Consumer Protection Act, 2002 gives a borrower the right to pay the full outstanding balance of a loan at any time without any prepayment charge or penalty. However, news media has highlighted instances of dealerships requiring consumers to enter into a financing agreement that cannot be terminated within a specified time period.
The ministry would appreciate your insight on your recent experiences as a consumer when purchasing a motor vehicle by responding to the questions below.
[1] For more information, please refer to the following resource from the Competition Bureau: https://ised-isde.canada.ca/site/competition-bureau-canada/en/deceptive-marketing-practices/drip-pricing.
What do you think? 1. Please explain your experience in a motor vehicle transaction if you were required by the motor vehicle dealer to enter into a financing agreement in order to complete the purchase. As part of your summary, please include details on: o Whether you completed the transaction after being told you had to enter into a financing agreement; o If you considered prepaying the loan, whether you had challenges doing so without penalty; o Whether you filed a complaint with a provincial ministry or OMVIC; o Whether you chose to go to an alternative motor vehicle dealer; and o Whether you were successful in finding an alternative motor vehicle dealer that did not require you to enter into a financing agreement. 2. Please explain your experience in a motor vehicle transaction if you were charged a market adjustment fee after purchasing the vehicle but prior to taking possession. As part of your summary, please include details on: o Whether you completed the transaction after being told you had to pay the market adjustment fee; o Whether you filed a complaint with a provincial ministry or OMVIC; o Whether you chose to get your deposit back and go to an alternative motor vehicle dealer; and o Whether you were successful in finding an alternative motor vehicle dealer that did not require you to pay a market adjustment fee. 3. Have there been any other unfair selling tactics you experienced that you would like to share with the ministry? Please explain. |
2021 Proposals
Between August 3 and September 17, 2021, the ministry sought feedback on potential changes to the MVDA and its regulations that were primarily focused on reducing burden for the motor vehicle sales sector. Informed by the feedback from the 2021 consultation, the ministry is proposing to move forward with three proposals that have remained unchanged since that consultation. They are:
- Remove the requirement to return registration certificates. This proposal would remove the requirement for all registrants to return their certificate of registration when ceasing to be a registrant.
- Extend the time period for warranty documentation. This proposal would extend the period of time for motor vehicle dealers to provide a warranty seller with required warranty documentation and payments received from seven days to thirty days.
- Remove outdated provisions. This proposal would remove provisions that are related to the transition from the previous version of the MVDA. These provisions are no longer operable.
If approved, the ministry is proposing that these three changes would come into force on July 1, 2024.
Support
UCDA MEMBER SURVEY 99.76% AGREE WITH THE UCDA
Other
Please use the space below to provide other comments or recommendations that the ministry should consider in modernizing the MVDA and its regulations.
Code of Ethics – Wholesale
UCDA MEMBER SURVEY 99.05% AGREE WITH THE UCDA
The issue of appropriate disclosures is a hot button issue, particularly in light of the closures of in-person auctions in Ontario. Many dealers incorrectly assume that they do not need to make disclosures when dealing with another dealer.
Due to the nature of on-line auctions, dealers have no opportunity to physically inspect a vehicle before they decide to purchase it. They rely now, more than ever, on honest and fulsome ‘sale by description’. Because dealers cannot perform due diligence in the same way as they could in the past, they are increasingly relying upon the disclosures that are made to them in the auction listing to inform their decision-making.
If a dealer is sold a vehicle that has been misrepresented, they have a limited window to arbitrate the issue with the auction. Furthermore, not all issues are able to be arbitrated with the auction. If any one issue with a vehicle falls below a certain threshold (i.e. S750.00) the auction may outright refuse to arbitrate the matter—this may be the case even if issues with the vehicle, when collectively considered, fall above the monetary threshold.
This issue presents itself as a key opportunity for the regulator, OMVIC, to step-in through reforms and enforcement.
The UCDA is in favour of a proposal to strengthen wholesale fairness between dealers and at wholesale auctions where many of these transactions are conducted, and where many problems arise.
For example, if a dealer sells a vehicle to a dealer at the auction and the engine light is off, but it comes on after 48 hours, this cannot be arbitrated because the time for auction arbitration is only 48 hours. OMVIC has been reluctant to get involved in disputes between dealers as there is no consumer involved. If the buying dealer takes the selling dealer to court, the auction might bar the dealer from doing future business with the auction, so the dealer is left with no recourse.
If a dealer sells a vehicle to another dealer “as is”, the Regulations must make it clear that existing defects must still be declared. Again, some auctions will not arbitrate any complaint on the sale of “as is” vehicles. If the law was clearer, arbitration rules would need to follow suit.
Here’s an example of the kind of issue that can pop up in a dealer to dealer sale, at auction or otherwise. The law is clear that pollution controls must be functioning on all vehicles sold in Ontario. Yet, this seems to be a controversial proposition in some wholesale transactions, where “as is” is interpreted as meaning, “what you see is what you get”.
>Classes of Motor Vehicle Dealers
>UCDA MEMBER SURVEY 99.05% AGREE WITH THE UCDA
We are proposing the classes of wholesale and export be combined to the mutual benefit of both classes.
Our suggested combination of the wholesale and export class would involve amending O.Reg. 333/08 so that registered Ontario motor vehicle dealers in a wholesale/export class are able to buy vehicles from private sources as well as other dealers and to sell vehicles to private buyers and dealers outside of Ontario.
The present definitions of the current classes of dealers unduly restrict dealers from fully operating their businesses as was clear during the pandemic. The changes being proposed provide an enhanced level of commercial flexibility and viability, especially when public emergencies prevent them from carrying on their normal course of business.
Sections 18 to 25 of Ontario Regulation 333/08 made pursuant to the Motor Vehicle Dealers Act, 2002 (“MVDA”) provides for classes of motor vehicle dealers and the authorized activities for each class of dealer. These include: general dealers, brokers, wholesalers, exporters, outside Ontario dealer, lease finance dealer and fleet lessor.
The UCDA is concerned with the legislative restrictions imposed on the wholesaler and exporter classes:
Wholesalers: Pursuant to section 21 of O.Reg 333/08, a motor vehicle dealer registered as a wholesaler may not act as a motor vehicle dealer, other than:
- to trade in motor vehicles with other registered motor vehicle dealers
- to sell motor vehicles at an auction, among others, to a person who is located in another jurisdiction and registered in that jurisdiction as a person with equivalent status to a registered motor vehicle dealer.
In other words, wholesalers may not trade in motor vehicles with members of the public.
Exporters: Pursuant to section 22 of O.Reg 333/08, a motor vehicle dealer registered as an exporter may not act as a motor vehicle dealer other than to buy motor vehicles for the purpose of export outside of Ontario.
The Need for Amendment of O.Reg 333/0:
Wholesalers were negatively affected by the pandemic, as their usual sources of inventory, such as auctions, were not available. With a lower supply, many new car dealers, another big source of inventory for wholesalers, retained the used inventory they could obtain for sale to the public. The traditional model for sourcing used vehicles no longer worked for many wholesalers. They looked to sourcing vehicles privately, which, under the regulation, they are not permitted to do since that would mean dealing with the public. This situation persists.
Some wholesalers also wished to access the export market which remained relatively strong during the pandemic due to high American dealer demand. Unfortunately, wholesalers are not permitted to sell to dealers outside of Ontario. They can only deal with “registered motor vehicle dealers”, which by definition, means dealers registered in Ontario. The only exception to this is if the wholesaler sells through a wholesale auction, where the purchaser is a dealer from another jurisdiction with equivalent status to the Ontario registered dealer. Otherwise, only general dealers (retailers) and exporters can sell to non-Ontario dealers.
If a wholesaler decided to change its status from wholesaler to exporter, to allow them to sell to dealers outside of Ontario, they would be restricted solely to that market and lose the right to sell to other Ontario registered dealers. Given that a dealer cannot be both an exporter and a wholesaler, their ability to trade in motor vehicles is severely restricted.
OMVIC are also struggling with these restrictions, as pressure from dealers mounts, they have had to come up with work-arounds that are not ideal, as the following example illustrates:
Thank you for reaching out with your question. We’ve received a few similar inquiries and have some challenges with registering under one entity as both a wholesaler and an exporter. The nature of their activities and the business location requirement cause conflict, making registering them under one entity difficult. For instance, wholesalers are not allowed to involve consumers in their trade, whereas exporters can purchase vehicles from individuals for the purpose of export.
Considering these challenges, we suggest that the applicant has two options if they wish to operate as both a wholesaler and an exporter:
- Register under the General Dealer classification but with some restrictions regarding the business premises. If there are any changes in the business plan, they will have to report the Registrar.
- Apply as separate legal entities.
Until there are some legislation changes, this is how we could accommodate our applicants/registrants.
All-In Price Advertising
On April 1, 2024, OMVIC went ahead and implemented deeply unpopular and unnecessary fee increases across the board, ignoring the vigorous opposition to it. At a time when dealers are struggling, in a precarious economic environment, OMVIC went on a hiring spree they expected dealers to fund. Part of these increases, on average over 33%, was to the transaction tax. It went from $10 to $12.50.
When the UCDA first opposed the transaction tax, we said OMVIC did not need the money and the vast surpluses that resulted from it. Millions sat in OMVIC’s bank account, $28 million in 2021 and $24 million in 2022, proving us right.
Dealers lost that fight yet again, but there is a way to reduce the harm.
Presently All-In Pricing is interpreted by OMVIC, based on Regulation 333/08 s. 36, to allow a dealer to advertise a price for a vehicle and add on only HST and licencing fees, as long as the ad is clear about that.
Dealers would like to be able to add the OMVIC transaction tax to the advertised price as well. Dealers should be allowed to clearly state that the OMVIC Transaction Tax of $12.50 is an additional charge to the consumer.
Consumers should be made aware of the charge and it should not fall on the Dealer to include it in their margins.
UCDA MEMBER SURVEY SUGGESTED THIS SOLUTION
Other disclosures
Out-of- province vehicles. One could argue it is irrelevant to a consumer if a vehicle was registered in Quebec or Manitoba 6 years ago (presumably, it would not bother consumers in those provinces either), it might be difficult for a dealer to be aware of this many years later in Ontario. Dealers should not have to declare it.
UCDA MEMBER SURVEY 89.76% AGREE WITH THE UCDA
Rental. With the advent of UBER and LYFT, the whole area of rental / taxi vehicles disclosure needs to be revisited, as well as police cruiser/emergency vehicle disclosure. If someone is required to declare a previous rental not owned by a consumer, why would this not apply to other vehicles used for “hire”? The main reason of course, is that no buyer
would know that use was made unless the seller informs them. The same can often be said for rental vehicles of course, which raises the question whether the need to declare rental vehicles might be removed entirely. It was never accurate to say any of these vehicles are less trustworthy than other used vehicles and, in fact, they are probably maintained by owners better than many privately owned used vehicles, as those owners have a vested interest in preserving retail values.
UCDA MEMBER SURVEY 83.37% AGREE WITH THE UCDA
Remove delivery date requirement: This requirement is more honoured in the breach. Most dealers and consumers conclude deals with that field in a sale agreement left blank as both sides know the vehicle will be made ready in a reasonable time. Sometimes that schedule can vary due to holidays or mechanic availability or schedule, so some flexibility is needed. Rarely do we receive complaints on this score.
UCDA MEMBER SURVEY 98.10% AGREE WITH THE UCDA
Remove replaced panels disclosure: The mere fact that two or more body panels have been replaced, other than bumper panels, is of no interest to a consumer. Previous accident damage is of concern to a consumer and that is already covered. Panels can be replaced due to rust, body-work or other cosmetic reasons and should not be a stand-alone declaration absent any material fact background.
UCDA MEMBER SURVEY 95.96% AGREE WITH THE UCDA
Thank you for your time and we look forward to your response.