Regulatory, Licensing

Car dealers, salespeople must comply with strict regulations

By AdvocateDaily.com Staff

The Ontario car sales industry is heavily regulated and subject to oversight by its regulatory body, which conducts periodic inspections to ensure consumers are protected, says Toronto licensing and compliance lawyer Anar Dewshi.

“Responsibilities on the dealership are onerous,” explains Dewshi, principal of Dewshi Law Practice, who often represents car dealers. “They’re not dissimilar to the law society requirements I have to follow as a lawyer.”

Dealers must ensure that all of their salespeople are properly licensed, as their premises are subject to inspection and their books can be reviewed. If they fail to comply with the rules, they incur severe penalties or even criminal charges, she tells AdvocateDaily.com.

The Ontario Motor Vehicle Industry Council (OMVIC) oversees the province’s car sales industry and has the authority to enforce the legislation to ensure compliance and to prosecute those who don’t follow the guidelines.

A dealer’s responsibilities include ensuring their sales force undergo the regulatory scrutiny, which includes a credit check, a criminal history review, as well as a course on legislation. A licence to sell can be refused on the basis of integrity and honesty, Dewshi points out.

Dealerships require a licence from OMVIC to hire members for its sales team.

“If you’re a salesperson who doesn’t have a licence, basically what you’re seen as is ‘curbsiding,’ and that’s a quasi-criminal charge under the Provincial Offences Act," Dewshi says.

The dealer can have a licence that complies with OMVIC regulations, but if a salesperson doesn’t, the organization may face serious repercussions, including jail time, probation and fines.

The financials of a dealership are also subject to review by officials to ensure legislative compliance.

“They want to see how you’re managing your books and records,” says Dewshi.

That includes proper disclosure to ensure the client is getting the goods they are promised. For instance, if a car has been involved in an accident and has sustained more than $3,000 in damage, the seller is required to communicate that information to potential buyers.

How the car has been used is also of interest to the purchaser. A seller must also disclose if the vehicle has been used for some kind of high-frequency service, such as a taxi or a rental car, which can be subject to greater wear and tear.

And pricing and warranty information must be clearly stated.

“When it’s all-in, it has to be all-in,” says Dewshi, although a caveat, such as ‘plus HST’ is acceptable.

Because of the onerous responsibilities, Dewshi put together an overview of the infractions to ensure her clients are aware of their responsibilities as well as the penalties should they fail to meet them.

She has found that the bill of sales and disclosure can be problematic for dealerships.

“That’s where dealers get dinged because they’ve only told the customers verbally, not in writing. It’s in their best interests to write it down.”

A dealership that fails to comply can be made to rectify the situation or may face disciplinary action. That can result in its licence being revoked or denied.

She warns in the initial application process, full disclosure is key.

“If you don’t provide all the information that’s required or you miss information, they can perceive that as you’re not being honest or acting with integrity,” she says.

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