November 2013
Consumer Line
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CONSUMER PROTECTION

Pre-purchase Vehicle Inspections


Buying a car can be a huge financial commitment and no one wants to find themselves with buyer’s remorse or unexpected repairs. This is why it’s vital consumers do their ‘due diligence’ before purchasing their next used vehicle, whether they buy it privately or even from an OMVIC-registered dealer (especially if the vehicle’s manufacturer’s warranty has run out). This should include having the vehicle inspected by a trusted mechanic. Pre-purchase vehicle inspections are one of the most effective ways of ensuring consumers don’t pay too much for a vehicle or get stuck with a vehicle that requires repairs. Mechanics can often spot a vehicle that’s been involved in a collision or has been poorly maintained; they may even spot repairs the vehicle requires that even the seller is unaware of.

Pre-purchase Vehicle InspectionsDon’t know where to find a ‘good’ mechanic? Member-based organizations such as the Automobile Protection Association (APA) and Car Help Canada offer vehicle-related services including lists of pre-screened reputable mechanics/repair shops/appraisers. Like OMVIC, these consumer protection groups encourage consumers to request a pre-purchase inspection of a vehicle they are considering for purchase. The APA and Car Help Canada also provide other services to car buyers including pricing information and referrals to pre-screened recommended dealerships (new and used).

To contact one of these consumer protection groups, please visit their websites below:

Automobile Protection Association: www.apa.ca
Car Help Canada: www.carhelpcanada.com


HAVE YOU HEARD?

OMVIC’s Website Gets a Facelift!


Consumers may have noticed major improvements to OMVIC’s websites (omvic.on.ca and buywithconfidence.ca). Updated and redesigned, the websites offer quick and easy access to important consumer protection information. OMVIC invites you to explore the new websites and learn more about your rights as a car buying consumer in Ontario. www.omvic.on.ca is the gateway to both sites.

OMVIC's New Website


INDUSTRY NEWS

Blinded by the ‘Diamond’ – One Consumer’s Tragic Experience


In 2008 John Wright (we’ve changed his name to protect his privacy) climbed aboard an Ontario Northland bus en route from Timmins to Toronto; he only bought a one-way ticket. The 39 year-old welder from Moonbeam ON was headed to the ‘Big Smoke’ to buy a truck – a two-year old Ford King Ranch pick-up he’d found advertised privately in the AutoTrader. He couldn’t know this truck-buying sojourn would ultimately cost him his home and marriage.

“When I got to Toronto the seller picked me up at the subway station to take me to see the truck” explained John. “He couldn’t have been nicer”. The seller told John the truck was having some repairs done under warranty and took him to a local Ford dealer to see it. The King Ranch was beautiful, but parked next to it was a 2007 Ford F350 Harley Davidson pick-up. “Now that, was my dream truck” said John, so imagine his surprise when the seller explained that both the trucks were his, and both were for sale. John couldn’t believe his luck.

After a test drive John called his bank to ensure there wasn’t a lien registered against the truck and paid the seller $35,500. “I thought I covered my bases. This truck was a gleaming diamond and it was a beautiful day.” Indeed, John believed it was his lucky day, but the shine from his diamond had blinded him to an important warning – this top-of-the-line truck with only 54,000kms was priced thousands below market value.

Within months of getting back to Moonbeam, John’s truck needed $10,000 in repairs – all covered by Ford warranty. Months later, out of the blue, John got a call from the seller warning that he would be hearing from the police. “He was vague about why they would be calling but he told me not to believe them and that they were full of shit”. The next day John heard from an investigator with OMVIC, Ontario’s regulator of vehicle sales, who alleged the seller was a curbsider – an illegal unregistered car dealer. “The investigator explained the seller was buying late model high mileage trucks from Western Canada, bringing them to Ontario, and rolling back the odometers. It turned out my truck actually had over 180,000kms when I bought it”. John was devastated. He called the seller and was met with denials and profanity; but his troubles were just starting.

With the true mileage known Ford cancelled the warranty on the truck and the high mileage was catching up with it. “The turbo went and four injectors” explained John. “That cost $12,000 – I maxed out my credit cards. Then the transfer case went – another $6000.” Eventually John was forced to sell the truck. He gave full disclosure to the buyer which meant he only got $16,500 for the truck; but he still owed $28,000 on it; that meant another loss of $11,500 which led to the mortgaging of his house. John broke down as he explained the toll this financial crisis took on his family. “The emotional and financial problems this created for my marriage of 13 years was too much – I lost my wife. I lost my home. I lost it all”.

“Every now and then someone asks me what’s the big deal with curbsiding” stated Terry O’Keefe, OMVIC Manager of Communications. “Well, John’s case demonstrates what the big deal is. Curbsiders misrepresent themselves and often misrepresent the vehicles they sell. Whether it’s undisclosed accident damage or rolled back odometers, they rip people off, put families in danger, and sometimes, wreak havoc on people’s lives”. Further, because curbsiders are considered private sellers, there’s no compensation for their victims, only consumers who purchase from a registered dealer can file a claim with Ontario’s Motor Vehicle Dealers Compensation Fund.

OMVIC investigated the seller of John’s truck; he was a known curbsider with over 40 previous convictions for curbsiding, convictions which saw the curbsider and his company jointly fined nearly $400,000 (they have filed an appeal). Recently, OMVIC charged the seller again for allegedly trading in another 30+ vehicles (this included John’s purchase). The seller has also been charged by police for alleged odometer tampering. All of these charges are still before the courts.

“This man has ruined my life” explained John as he fought back tears. “It’s amazing how many lives he’s affecting – this is huge dollars”. It is ‘huge dollars’. Historically curbsiders dealt in older inexpensive vehicles; and while many still do, more and more are selling newer high-end vehicles – many bought from salvage auctions. To avoid becoming a curbsider’s victim consumers have to learn to spot their tell-tale signs. According to O’Keefe, “Curbsiders’ vehicles are often priced below market value and commonly the seller hasn’t owned the vehicle for long, or, it’s not even registered in their name”.

Buying a vehicle privately has inherent risks, even for experienced car buyers; John Wright had purchased numerous vehicles privately before falling victim. This is why it’s vitally important car buyers understand that their rights and protections depends entirely upon whom they buy from. Consumers who buy from a dealer are protected by OMVIC, the Compensation Fund and Ontario’s consumer protection laws. Consumers who buy privately however, are on their own: no consumer protection law applies to private sales and as John found, curbsiders are lying in wait in the private classifieds ready to pounce on their next unwary prey.


EXTRAS
- Auto Talk
Definitions

The following definitions are provided to help consumers better understand terms that are commonly used in the auto industry:

Lease: Similar to a long-term rental agreement. The leasing company (lessor) maintains the title (ownership) of the vehicle and the person leasing the vehicle (lessee) owns the plates attached. Customers can lease a new or used vehicle.

Lease Term: This is the length of the lease which is usually measured in months (e.g. 24, 36 or 48).

Annual Percentage Rate (APR): The yearly interest due on a loan which includes interest and other fees. All these costs are expressed as a percentage of the total cost of borrowing.

Residual Value: The estimated value of a vehicle at the end of a lease term, stipulated in the agreement.

Excess Wear and Tear Fees: The charge levied at the end of a lease agreement if the returned vehicle has damage (or requires repairs) above and beyond what the original agreement allowed for. These costs can result from: missing parts (in some cases even owner’s manuals/books), dents, paint damage, cracked or chipped glass, mechanical damage, holes, tears or burns to upholstery. It is wise for consumers returning a vehicle at lease end to document the condition of the vehicle by taking photographs and obtaining a condition report from their own appraiser or mechanic. This may be of assistance if the lessor claims excess wear and tear the consumer believes is unwarranted.

Excess Kilometer Charge: If the number of kilometers driven is higher than originally agreed upon in the lease contract, the customer will be asked to cover the cost of the extra kilometers driven. This charge is pre-determined in the agreement (e.g. 15 cents/km). This charge can be many 100s or 1000s of dollars if the lessee has far exceeded the kilometer allowance. It’s important consumers consider their expected annual mileage when negotiating a lease.

Learn more about buying and leasing vehicles with these tips OMVIC’s website. Check out the next edition of OMVIC’s Consumer Line to learn more about terms related to vehicle financing.


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OMVIC is the self-management organization of the motor vehicle dealer industry and administers the Motor Vehicle Dealers Act -- a public protection statute -- on behalf of the Ministry of Consumer Services. OMVIC's mandate is to maintain a fair and informed marketplace by ensuring registration of motor vehicle dealers and salespeople, regularly inspecting all of Ontario's 8,800 dealerships, maintaining a complaint line for consumers and conducting investigations. OMVIC also administers the Motor Vehicle Dealers Compensation Fund.