Compensation claims feared for used cars

Posted on February 16th, 2018 by Rob Marshall

Compensation claims feared for used cars

Which used car would you buy? One promoted as having one private owner, or another one advertised as a former member of a business fleet, even if it were driven by one driver? The Advertising Standards Authority (ASA) reckons that this question makes a difference to second-hand car purchasing decisions and its recent ruling is causing ructions among traders.

Judgement details

Last October, the ASA ruled that the Glyn Hopkin Group should disclose vehicles’ fleet pasts in its used car advertisements. This followed complaints about a pair of Alfa Romeo Giuliettas (an example of the model is pictured) being offered for sale, the sales claims for which did not reveal details of their former lives as business vehicles, which the ASA ruled as misleading.

During the case, FCA UK (The British arm of Fiat Chrysler Automobiles – the holding company for Alfa Romeo) provided evidence to the ASA that the cars in question were used by its contractors and were not pool cars with multiple drivers.

The Society of Motor Manufacturers and Traders also commented that the Office of Fair Trading’s (OFT) guidance for second hand car dealers applies specifically to former-fleet vehicles that might have had multiple users.

Yet, this seemed to be insufficient for the ASA, which concluded that, “because (the advertisements) had omitted material information regarding the cars having been used previously for business purposes, while part of a fleet” that “they were misleading”.

The ASA also disclosed: “We told Glyn Hopkin and Fiat Chrysler Automobiles UK to ensure that their future ads did not mislead by omitting information and that they had to show that their vehicles were used previously for business purposes, while part of a fleet.”

Implications

Speaking to the automotive press, legal experts from the law firm, Harcus Sinclair, admitted that the conclusion resulted in it receiving 200 complaints within a week from individuals, who claimed that they had been mis-sold a used car. The legal experts clarified that customers, who felt that they had not been aware of a car’s past, could be eligible for refunds of between 25% and 100%, because the vendor could be seen as violating the Consumer Protection from Unfair Trading Regulations 2008.

With most new cars sales being to the business sector, it is logical that the majority of second-hand vehicles had corporate owners as their first registered keepers. With dealers unlikely to be able to defend themselves against an historic claim, and with compensation firms hungry for new work as PPI claims dwindle, it will be interesting to see if the used car trade will be next in line for widespread litigation claims.