As we first reported in the January issue of Front Line, the Ontario government has now announced that new vehicle registration and plating can be done online at a selected group of new vehicle dealers who are testing the digital process. While the timing is not yet known, this will eventually expand to used vehicles and used car dealers who meet yet to be announced security and privacy criteria.

The government officially announced its new “Digital Dealership Registration” (DDR) program on March 22 in London. Twenty new car dealers are participating in the initial testing in various parts of the Province. Dealers using DDR will not need to go to Service Ontario offices to register new vehicles, obtain new vehicle permits or plates for customers.

Used vehicles are not yet part of the program.

Once fully implemented, the new DDR process will allow over 7,000 Ontario dealers access to an online program that will eliminate duplicative paperwork and time consuming trips to Service Ontario offices. Eligible dealers will be able to provide registration and licence plates directly to customers, reducing the administrative burden and saving dealers and customers money and time.

DDR will eventually help move online up to 4.8 million dealership registration transactions annually including the registration of used vehicles, vehicle transfers, and vehicle permit replacements, without having to make a trip to a licence office.

In addition to making vehicle registrations faster and more efficient, the government says DDR will also facilitate more accurate and error free registrations while protecting the security and privacy of personal data. This is a major step in the government’s plan to provide secure digital solutions to the people and businesses of Ontario.

“Our government is reducing red tape for car dealerships by eliminating repetitive paperwork and trips to the registration office,” said Nina Tangri, Associate Minister of Small Business and Red Tape Reduction. “With the introduction of Digital Dealership Registration, businesses will save time and money and customers will be able to enjoy their new vehicle sooner.”

Other than the initial group participating in the testing, the government is not yet inviting interested dealers to apply to join DDR. They have also not announced what specific security and privacy requirements will be necessary for a dealer to be eligible to join DDR, or if the government will provide assistance with the cost of meeting those requirements.

Service Ontario offices are not disappearing. They will remain open and will continue to process vehicle registrations, transfers and issue licence plates for both the public and dealers.

Members who would like to be part of the DDR program should continue to watch for further announcements in Front Line and UCDA Dealer Alerts.

Quebec Purchases

As most dealers know it is crucial to get the permit when buying a vehicle, especially one from another Province. Recently a member was up a creek after buying a car from Quebec from a private seller who had lost their Quebec permit.

Because it was registered as “Sold” on their system, Quebec would not or could not issue a replacement “lost” permit, so we reached out to Service Ontario and this is what they said:

• If the trade was with another dealer, they may have the Preuve d’Enregistrement form which is issued as proof of registration by motor vehicle dealers in Quebec and may be accepted instead (this document is issued by a certified Quebec dealer and replaces the original Quebec vehicle registration).
• If the trade-in was from a customer or if the dealer doesn’t have the document above, they can get written confirmation from the Registrar of the previous jurisdiction. The SAAQ (the Quebec Ministry) could write a letter confirming the vehicle information on file but is not a permit. It’s important to note that if the SAAQ would be faxing this, it has to be sent directly to the Service Ontario office that is facilitating the transaction.

Expired Indian Status Cards

In a concession to the ravages of COVID on every aspect of our economy for the last two years, Indigenous Services Canada was advising merchants that they could accept expired Certificate of Indian Status Cards for tax exempt purchases by Status Indians.

As many dealers already know, this card is crucial to establishing Indian Status for the purpose of exempting a Status Indian purchaser from paying HST on the sale of a motor vehicle (they only pay 5% if delivered at the dealership and no tax if the vehicle is delivered by the dealer to a reserve).

This concession ends as of May 1, 2022. After this date, expired cards are no longer to be accepted for this purpose. Members should charge the applicable tax if the Status Indian Card has expired

https://tinyurl.com/yckrt529

For more information on the subject of sales to Status Indians generally, please feel free to visit the UCDA website at:

https://tinyurl.com/2zav7hye

Free OMVIC Key Elements Course Taught By The UCDA

OMVIC Key Elements Course webinars, taught by UCDA instructors, are still free for dealers and salespeople who have not taken the OMVIC Certification Course since January 1, 2010, or who have never taken the Course at all.

If that describes you, or members of your sales staff, don’t miss out on this unique opportunity to improve your knowledge and become Certified in Automotive Law and Ethics (C.A.L.E.) FREE of Charge.

The half-day webinar is taught by one of the UCDA’s three dynamic instructors.

This is a limited time offer. It won’t last forever!

And there’s more! If you qualify (and of course pass the exam) you’ll also receive a refund from OMVIC for one year of your previously paid dealer or salesperson registration fees.

So what are you waiting for?

If you haven’t taken the OMVIC Certification Course since January 1, 2010, or if you’ve never taken it at all, contact Michelle at education@ucda.org and register for a webinar TODAY before they fill up.

You’ll be glad that you did!

Two Tier Pricing

Continuing on the theme of strange industry developments resulting from the inventory crunch that we have written about lately, comes two-tier pricing.

This is the practice some dealers have adopted to advertise a vehicle for sale at one price for cash purchasers and another price, usually lower, for finance customers. Indeed, some dealers advertise cars for sale for finance only with no cash purchase option.

Why dealers do this may have a good deal to do with the fact financed deals attract incentives that are more lucrative than a straight cash sale and, with so few vehicles, dealers are looking for a bigger bang for their buck … but is it “legal”?

We asked OMVIC about this practice near the end of last year as we were getting calls from both dealers and consumers (some rather angry) about the practice.

This Is What OMVIC Says …

It is legal. Ultimately, OMVIC’s view is that advertising a finance-only price is an acceptable practice as long as the advertisement includes all the required disclosures in a clear, comprehensible, and prominent manner.

In particular, for those dealers seeking to advertise a price “for finance only”, OMVIC expects that the advertisement will clearly disclose that the price is in fact a “Finance price only”, not to be confused with a cash price.

Clearly identifying what the price represents will reduce misrepresentation and help consumers better understand what the price is reflective of.

New Vehicle Luxury Tax Update

The new luxury car tax is coming into effect on September 1, 2022, for NEW vehicles costing more than $100,000.

The final form this tax will take is still not fully settled, as the Feds have put the proposal out for public comment again, but we are in the home stretch now. If you’d to like read about the tax please find the link here:

https://tinyurl.com/msze3j2n

To submit comments, the Department of Finance, Canada, invites emails to fin.luxury-luxe.fin@fin.gc.ca.

By way of a reminder, as written in previous Front Lines, the tax DOES NOT APPLY TO USED VEHICLES.

Safety

On occasion, consumers will call the UCDA with concerns about paperwork. Sometimes, they complain, they were not given a copy of their bill of sale or safety.

We think most dealers know the buyer is required to receive a copy of the bill of sale, but it may be that some dealers do not know that the law also requires, on the sale of a certified vehicle, that the buyer has to be given a copy of the Safety Standards Certificate.

This is what the Motor Vehicle Dealers Act says:

https://tinyurl.com/bdamrjju

Contracts for sales of used motor vehicles

40. (2) A registered motor vehicle dealer shall ensure that any contract that the dealer enters into to sell a used motor vehicle to a purchaser who is not another registered motor vehicle dealer includes, in a clear, comprehensible and prominent manner, the following:

4. If a current safety standards certificate under the Highway Traffic Act has been issued for the vehicle, that certificate … (the bold is our emphasis)

Please make sure on every such sale both the contract and the Safety are provided to the consumer. If you need to make a copy of the Safety for your file, photocopies will do.

Free Plate Renewals

The Ontario Government recently announced a series of sweeping measures to save Ontarians money on plate renewals. Naturally, most of the press reports focused on the advantages to consumers who will get refunds for fees already paid and be relieved, going forward, from having to pay to renew their plates.

Many dealers asked about the effect on business, because media reports were sparse on details there.

The answer is while businesses will not be receiving refunds for renewal fees already paid, they will not have to pay plate renewal fees, for regular white plates, dealer plates and service plates, as of March 13, 2022. For example, on a dealer plate, this represents a savings of $175.

The MTO Says …

“For vehicles registered to companies or businesses, refunds would not be provided and unpaid renewal fees for the period of March 2020 to March 2022 would be required to be paid starting as of October 1, 2022.

If approved, beginning March 13, 2022, renewal fees and the requirement to display a validation sticker will also be eliminated for vehicles that are owned by a company or business. The government is proposing to extend validation for passenger vehicles, light-duty trucks, motorcycles and mopeds owned by companies or businesses until September 30, 2022, to provide more time to pay outstanding fees.”

Estate Sales

With an increasingly aging population, the sad reality is that more people are passing away. Even funeral homes are seeing the surge in numbers (obviously Covid is not helping). As a result, dealers are being asked by bereaved families to buy vehicles once owned by the deceased.

There are pitfalls to this, of course. The first and most important one is, “Who has the legal authority to sell a vehicle to a dealer when the owner has died?”.

When a person dies, their assets can be dealt with in any number of ways. If a vehicle was owned jointly, say by a husband and wife, and the husband dies, all the widow has to do is go to a Service Ontario licence office and have the vehicle registered to her name (they will need proof of death like a death certificate).

If the deceased had a Will, then you need to see that and a death certificate. It is best to wait until the Will has been formally ‘probated’ which means a court has approved the Will as genuine and effective. The “Executor” under the Will or “Administrator with a Will” is the person who can sign the contract and legally sell the vehicle to you. Keep a copy of the documents in your file.

If the person died without a Will, then the family will need to obtain a Court Order appointing someone as the “Administrator without a Will” who can act to sell Estate assets, like vehicles, to folks like you. Obviously you will need to see that Court Order. Again, we suggest you keep a copy in your file.

In any case, it is not advisable to make payment to individuals in such a case. Payment should be made to “The Estate of the Deceased”. It is the job of the Executor or Administrator to then take the funds and distribute them to beneficiaries in accordance with the Will or other legal entitlements.

A dealer is not in a position to make those assessments, which is why you should never make payments to individual family members, spouses, children and so on. If you make wrong decisions, you could be faced with angry beneficiaries, or worse, lawsuits.

Continuing our partnership with DesRosiers Automotive Consultants (DAC), the UCDA once again reached out to Members to take the pulse of the industry in Ontario.

Close to 450 UCDA Members responded to our survey with both independent dealers and the used vehicle arms of new vehicle dealers offering their perspective on the state of the market moving into 2022.

While demand for used vehicles soared in 2021 as a result of the semiconductor driven shortage of new vehicles, supply constraints did not allow the market to grow to its potential. New vehicle dealers saw a moderate growth in sales per store from 294 in 2020 to 319 units for 2021.

Independent used vehicle dealers had a harder time sourcing used vehicles and saw little growth in 2021, with sales per store rising to only 200 units from 197 in 2020. Interestingly, for 2022, opinions were split with independent used vehicle dealers expecting an increase and franchised new vehicle dealers expecting a moderate drop.

The market situation with booming demand but limited supply obviously led to dramatic price increases. Passenger cars—which have been falling in popularity for years—saw a comparatively mild increase in used prices – although still remarkable in any normal year.

Dealer sentiment showed that passenger car prices saw increases most often in the 11-20% range among new vehicle dealers, and 20+% for independents. For SUVs the pace of inflation was notably greater with close to 47.7% of independents citing increases of over twenty percent for SUVs. Pickups—which were hit hard by the semiconductor shortage and saw significant new vehicle supply issues—saw the most dramatic price increases.

Over half of franchised new vehicle dealers and over sixty percent of independents cited pickup price increases in the twenty plus percent range. “The difficulties in the new vehicle market clearly spilled into the used vehicle market in a dramatic way” commented Andrew King, Managing Partner at DAC “Used vehicle dealers saw prices skyrocket by way of burgeoning demand and limited supply.”

Sad Curbsider

Media reports of a young Ontario man who lost big trying to flip a vehicle for quick profit, missed the point that this activity could be considered curbsiding. If you buy and sell just to make a profit, this is a business activity that requires OMVIC registration.

Reading the stories, it does not sound like this fellow ever intended to insure, plate and drive this vehicle. While it’s sad to see what happened to him, there is a real risk to venturing online with valuable luxury vehicles for sale. Ask any registered motor vehicle dealer!

The 21-year-old (identified as Marco) advertised his uninsured 2017 Mercedes Benz GLE63s for sale on AutoTrader.ca.

Two males, pretending to be potential buyers, contacted him to meet them at a parking lot, where they relieved him of his vehicle in under 10 minutes.

“He was in the car revving the engine, with one foot out the door and I was by the door just holding it open,” Marco told CTV News Toronto. “Then my phone rang and when it did I backed away from the car. He slammed the door, locks it, and tries to drive off.

I’m out of $65,000, which was everything that I had for my young age of 21 and some money I borrowed from my mother as well.”

York Regional Police have received the report, but these stories rarely end well.

https://tinyurl.com/2p82384k

https://tinyurl.com/33x3zwjk

Curbsider – Part 2

In another curbsider story, we are reminded that these stories really are the best advertisement to promote purchasing from a dealer!

If consumers don’t already know what a minefield buying privately can be, along comes this story to illustrate it. Dangerous people lurk in the online vehicle-buying world, and looking to make a quick buck includes selling vehicles without declaring past accident history, liens, use, out of province and … odometer inaccuracy.

In this case, the odometer had been “rolled-back” or replaced at some point.

Of course the buyer was told this 2013 Chevy Silverado had 187,000 kms so handing over $11,000 made sense to him. It was only later that he looked at the UVIP and a Carfax that the history showed 455,000 kms in the truck’s past odometer readings.

As usual, the buyer probably does not even know who he handed his money to. The vehicle was not in his name, and if he got a last name or address, that would be surprising. Certainly, a deal started on Facebook and finished in a parking lot sounds just as sketchy as you might imagine. 

https://tinyurl.com/2p893wn8

Loaner Cars And Risk

Courts weigh in from time to time on the issue of loaner cars.

The UCDA has designed a Rental Agreement to try to help navigate the waters for dealers who wish to provide loaner cars to customers whose vehicles are not ready for delivery, or who may be having service work. The agreement can help avoid losses caused by accident or other liabilities while the customer is driving these vehicles. The Agreement, like the law, continues to evolve.

The UCDA Rental Agreement is on page 3 so you can see what it says.

However, a recent court case has thrown some cold water on a dealer’s ability to recover from the customer (or their insurer) in cases where the accident was not the driver’s “fault”.

In Owasco Canadian Car & Camper Rental Ltd. v. Fitzgerald et al., the court focused on Section 263(5)(a.1) of the Ontario Insurance Act which reads:

“(An insured’s) right of action under an agreement … in respect of damages to the insured’s automobile” is limited “to the extent that the person is at fault or negligent in respect of those damages”.

The court goes on to say:

I am satisfied that if s. 263(5)(a.1) does properly apply in this case, it has the effect of entirely extinguishing Owasco’s ability to sue Mr. Fitzgerald under the rental agreement for the damage to the rental car that is at issue in this case. This conclusion necessarily follows from the subsection’s plain wording and from the agreed facts in this case:

… Owasco has “no right of action” against Mr. Fitzgerald under the contract “except to the extent that [he] is at fault or negligent” in respect of the damages to the rental car;
v) Since it is a stipulated fact that Mr. Fitzgerald is entirely blameless for the accident that caused damage to the rental car, Owasco is left with no right of action against him under the rental agreement in respect of this damage.

The court finds the section clearly applies in this case, and the dealer lost the appeal. They will have to absorb the losses caused by the accident to their vehicle.

The whole case can be found here:

https://tinyurl.com/34ppparx

Extended Warranty Update

Every couple of years or so, we reach out to extended warranty companies on our list to confirm their products are still underwritten by Ontario Insurance Companies.

In Ontario, dealers can only sell warranties to consumers that are insured or registered with a secured line of credit posted with OMVIC.

The UCDA considers insured products to be the gold standard for consumer and dealer protection, and therefore we recommend our members only sell those products.

For many years, we have invited companies that wish to participate in our list, maintained for our Members, to demonstrate their insurance is proper and in good standing. Those that choose to do so, appear on our list, which we publish in Front Line and online at our extended warranty update https://tinyurl.com/bdf9k949.

Each of the companies listed below have provided the UCDA with a copy of their insurance agreement, along with a written undertaking from the insurer to notify the UCDA in the event the coverage is cancelled or changes are made. The UCDA asks the recognized warranty companies to have insurers provide updates to us, confirming that insurance remains in place.

Verified Insured Warranty Companies

After receiving updates from insurers, here is the current alphabetical list of warranty companies that have met our requirements for insurance recognition:

• Assurant Vehicle Protection Services                                       1-800-387-0119
• Canada General Warranty Inc.                                                       1-866-320-8975
• Central Administrative Services Company, INC                  1-800-222-3020
• Cornerstone United Warranty (XtraRide and AutoXtra) 1-800-774-9992
• Coverage One Warranty                                                                     1-866-988-1642
• First Canadian Protection Plans                                                    1-800-381-2580
• Global Warranty                                                                                      1-800-265-1519
• Guarantee VC/GVC Premium Warranty Co.                         1-800-268-3284
• Lubrico Warranty                                                                                   1-800-668-3331
• Nationwide Auto Warranty                                                             1-888-674-8549
• People’s Choice Warranty Ltd.                                                      1-888-284-2356
• Sym-Tech i-Select Plus                                                                       1-800-363-5796 (press 2)
• Veritas Global Protection Services, INC                                 1-800-222-3020

The UCDA does not endorse any specific warranty company or product, but strongly recommends that Members only offer warranties that are insured by a licensed Ontario insurer.

Salvage Auctions And Liens

Lien searches are useful. Whenever you buy a vehicle, and we do mean whenever, run one. At an average cost of less than $12, it’s the best insurance money can buy. Many dealers are shocked to learn that some auctions don’t do lien searches so, if you don’t do a search, no one else does.

Some of our Members are regular buyers at “salvage” auctions. Some of the bigger players in this area are Copart and Impact Auto Auctions.

For years we have noted that when an insurance company “writes off” a total loss vehicle and sells it at one of these sales, there are often undischarged liens. Many will get discharged once the insured pays the loan with the insurance proceeds. But there have been instances where, for a number of reasons, the loan does not get paid off, or does not get paid off in full, or no one even realizes there is a lien on the unit.

For dealers, this can be a nightmare. These vehicles are usually purchased in pretty rough, non-drivable condition, and it takes a great deal of time and money to make them roadworthy for resale.

Dealers have experienced instances where they invest the time, labour and money in repairs only to find there is a lien registered and they cannot sell the vehicle. Even worse are cases where the dealer does sell it and their customer finds the lien and expects a refund because they cannot sell it, or they have the vehicle repossessed by the lien holder. We have seen, and dealt with, all these scenarios many times.

Of course, everyone blames the dealer for not doing a lien search, although no one has an answer as to what happens if the dealer finds one! We can tell you the solution is time consuming and difficult with minimal co-operation from auctions, insurers and banks.

The dealer, meanwhile, is left to deal with a very angry consumer and no one to help. Naturally, if the dealer is a Member, they turn to the UCDA for help.

Impact Auto Auctions, for example, advise us that their policy on liens is that the buyer is responsible to run a lien search to “confirm that no Lien exists prior to repairing, rebuilding and/ or reselling a Vehicle”.

Copart’s policy is that they expect buyers to report any liens found within 90 days after delivery. They will then assist by enlisting the seller to secure lien discharge as soon as possible. If the lien cannot be removed in a timely manner, the sale would be reversed and the buyer refunded the purchase price, but not the cost of any repairs performed.

We want to see our Members protected. Given the aggravation that liens can pose months and even years after these sales, it’s hard to imagine a better investment than a lien search as part of your buying process.

National Bank has been present in the retail financing market for over 20 years. Their continued growth in the automotive segment is a testament to the partnerships they have established with auto dealers across Ontario and the country.

This new agreement between the UCDA and National Bank will allow UCDA Members to benefit from exclusive promotional offers.

If you are not signed up with National Bank as your financing partner and are thinking of doing so, now is the time!

We encourage you to sign up so you can start taking advantage of the National Bank Financing Program. Accreditation criteria apply (see below). As a UCDA Member, you will enjoy:

• exceptional support and strong ground presence from your local National Bank Business Development Manager.
• industry-leading auto-adjudication system allowing you to get around-the-clock credit decisions in minutes, 7 days a week.
• additional support through the Bank’s Operations Centre where Customer Service Agents and Credit Analysts are available to discuss your clients’ financing needs.
• easy paperwork … the simplest loan documents in the industry.
• Quick & Easy Funding allowing you to have access to your funds within hours.

If you already deal with National Bank for your financing needs, you will now gain access to exclusive, promotional offers. To sign up or to find out how this new business relationship between the UCDA and National Bank will benefit your dealership, you can contact UCDA Member Services at 1-800-268-2598 or email: memberservices@ucda.org. You can also contact your local National Bank representative or reach out to National Bank by submitting your request through Dealertrack. A National Bank representative will get back to you within 24 hours. The complete list of the National Bank’s business development team can be found by clicking on the link below.

https://tinyurl.com/tbyurxm

Program Criteria:

The National Bank program is available for new and used car dealerships. For new car dealerships, the dealership is subject to due diligence that includes, but is not limited to, a satisfactory review of the information provided and referenced on the accreditation application form. Any reliable published information about the dealership is also considered.

For used car dealerships, in addition to the above, the dealership is subject to a satisfactory review of the UCDA Member’s financial situation & operations.

This includes, but is not limited to, a review of the dealership’s most recent financial statements and a review of their client-escalation process. As a guideline, used car dealerships should be in business for a minimum of 5 years and meet a minimum threshold of $1 million in annual sales.

Note:

• National Bank does not offer sub-prime financing.
• National Bank’s program is for retail customers and does
  not provide loans to businesses.

On The Horns Of A Dilemma

“May you live in interesting times.”

Commonly considered an ancient Chinese curse of sorts, can anyone question that the saying certainly applies these days?

It’s not news to dealers that the squeeze is on when it comes to used vehicle inventory. It’s a global problem and not one that will be easily solved in the short term, although there is hope inventories will expand in 2022.

As with any supply/demand pressure, it creates hardships, but also opportunities. In response, dealers are having to look to sources for vehicles they did not traditionally consider.

For example, some dealers are finding leasing companies are not as willing as they once were to wholesale off-lease vehicles, preferring, given current market conditions, to keep the vehicles in their own inventory for re-lease or sale at retail prices.

One way dealers have found to get around this, so to speak, is to have the consumer exercise their lease buyout right (if the lease allows one) and then have the customer sell the vehicle to them. The downside, of course, is that the consumer has to pay HST to buyout the lease, and
there is no way to recover this.

Having stated the obvious, this is an example of an opportunity in the face of a dilemma.

While it’s true the HST has to be paid, the consumer is also getting top dollar for the vehicle when they sell it … so the profit may exceed the HST on the table. In addition, the consumer who has exercised the right to purchase the lease, now has an asset they can trade against a new lease or purchase from you and thereby can reduce the HST payable in that way.

No one denies times are hard right now, but if you look around you will find some dealers are still thriving in this market … maybe they know something about how to navigate “interesting times”?

Sign Of The Times

In another story, developing as the result of the present inventory crunch, we are getting calls from some dealers complaining that other dealers will not sell them vehicles.

Of course, no dealer is obliged to sell anyone a vehicle, but lately, it seems some dealers will not sell to other dealers, for any price. However, some of these same dealers are willing to sell to the dealer owner as an individual.

Why this should be is beyond us, but it poses a problem.

Can a private individual buy a vehicle, then sell it to their own dealership, so it can sell the vehicle retail?

Unfortunately, the answer is “No”.

That would make that person a curbsider. It is illegal to buy and flip cars for business without a dealer licence. That is why you need a licence in the first place. Don’t get on the wrong side of OMVIC and the law here.

The UCDA doesn’t recommend that Members refuse to sell to other dealers. However, if you run into this problem when looking for inventory, it’s best to simply move on and try to find a better source.

Nominees

No, we are not running an election here!

In this context, we are talking about dealers using an ordinary citizen to secretly act for the dealer in the purchase of a motor vehicle.

The role of the nominee is secret because, to the dealer they approach to buy the vehicle, they are just what they seem to be … a normal consumer.

In fact, they are just a straw-man (or straw-woman) for the dealer who wants to obtain the vehicle. They will be paid a small fee and flip the vehicle to that dealer.

If the dealer approached the selling dealer directly to buy the vehicle they likely would refuse to sell to them because they do not sell wholesale. They may also be restricted by their franchise owner not to sell wholesale, or for possible export, or for resale, or just because vehicles are hard to come by these days.

A consumer buying vehicles in this manner is really acting as an unregistered dealer or salesperson for the end dealer, and this activity could get a dealership, and the consumer, charged by OMVIC.

We think the practice is wrong and quite likely illegal. And we don’t think it’s victimless either.

While it’s true the selling dealer gets to sell a vehicle, and the consumer gets a small bird-dog or nominee fee, and of course the end dealer gets what they want, this is still not the end of the story.

Aside from concerns about OMVIC, the consumer buying such a vehicle usually agrees right on the contract that they are not buying the unit for resale or export. Again, the selling dealer has to put this on their contract to satisfy the new vehicle manufacturer who holds their franchise.

The fact the consumer has every intention of flipping the vehicle despite agreeing not to do so leaves a very bad taste. The fact that the end dealer lies in the weeds waiting for their vehicle also smacks of dishonesty.

Aside from the unsavory optics of all of this, what happens if the selling dealer discovers the deception and sues the consumer for breach of contract? Is the end dealer going to indemnify the consumer for the cost of defending themselves, or pay any judgement that might arise?

None of this makes our industry look good and the practice should be avoided. If it continues, we would not be surprised to see swift action to stamp it out.

Lost Or Stolen Dealer Plates

Every dealer knows (or can imagine) the sinking feeling when you lose a dealer plate. It’s a real pain in the neck, especially if you lose it while in transit because the bag fell off the back, or someone stole it, and you need someone to come out with another one so you can drive home!

There are other things you need to think about too and since we have had a couple of calls lately on this subject, let’s run through them here:

1. Report the plate lost or stolen to your local licence office. They can replace the plate (for a fee of course) but the unused portion of your validation can still be used. The lost plate will be placed in “inactive” status.
2. Report the lost plate to your local police.
3. Report, preferably in writing, the fact this plate has been lost to the 407 ETR. You can probably guess why this is prudent.
4. Call your insurer. They will appreciate knowing you no longer have that plate and you can give them the new plate number should you choose to replace it at the same time.

If you are using a bag or pouch, make sure it is in good condition. These take quite a beating, and fabric and plastic can only take so much wear and tear. Where possible, take the plate with you or lock it in the trunk if you are leaving the vehicle for a short while, to dissuade thieves.

Ignoring Complaints

Resist the urge to ‘kill the messenger’ and remember, these are used vehicles and problems can arise despite your best efforts. What separates dealers from curbsiders or private sellers is how you respond to those problems when they come up.

Most people (not all, but most) don’t like to complain. If matters have gotten to the point where the customer feels obliged to talk to you about it, it likely warrants a looksee. Ask them to bring the vehicle in so you can discuss the issue. Even if it turns out to be nothing, the customer will be reassured that they made the right decision buying from you because you showed you cared and provided after sale support.

On the other hand, an ignored complaint can be like a small cut; minor at first, but if left to fester, it can become more serious. And we all know customers have many routes available to them to complain if they don’t feel they are being treated fairly.

Turn a negative into a positive at every opportunity.

And, don’t ignore OMVIC!

No one likes to get a call from OMVIC about a complaint, concern or problem. It is like getting a call from the police, or CRA or your doctor with concerning test results … again, some may feel the best first reaction is to not respond. Do not do that.

OMVIC has a job to do. They are contacting you for a reason, and while you can usually reply and swiftly nip things in the bud, if you ignore them, the problem starts to get bigger for both you and OMVIC.

A recent discipline decision shows how costly it can be for a dealer to stick their head in the sand and remain unresponsive when dealing with the regulator. Don’t make a mountain out of what should be a molehill. Face the concern head-on and if you need advice, contact the UCDA legal department:

https://tinyurl.com/dajsmpec

The Ministry of Government and Consumer Services has released a consultation paper for public comment on proposals to amend the Motor Vehicle Dealers Act, 2002 and its regulations. The Act and regulations, which govern the activities of all dealers in Ontario, have been in place with almost no changes since 2010.

But a lot has changed in the industry since then. The digital world has exploded and dealers are very much a part of that now. There’s no question that amendments are overdue, but there will likely be disagreements on some of what the Ministry is throwing out there for public consultation.

For example, there are proposals to lessen the importance of doing business only from a dealer’s registered premises, such as allowing contracts to be signed and test drives to be taken at locations other than a dealership. There are proposals that could make significant changes to “As Is” selling and that could also increase the power of OMVIC to issue fines through something called Administrative Monetary Penalties (AMPs). We’ve written about our opposition to AMPs when they had been previously proposed in 2013 and in the pre-Covid days at the beginning of 2020.

The proposed changes can be found in the Ministry’s public consultation paper.

A few of the changes being explored in the consultation paper include:

• Allowing registrants to conduct business in locations outside of where they are registered to trade.
• Changing disclosures required in a sales contract under certain situations.
• No longer requiring registration certificates to be returned once a registrant leaves the motor vehicle industry.
• Requiring costs for repair, inspections and getting safety standards certificates to be included in the advertised price of “as-is” vehicles.
• Extending the time limit for dealerships to provide warranty sellers with required warranty documents and payments from 7 days to 30 days.
• No longer requiring registrants to list a phone number in certain advertisements.
• Increasing fines for curbsiding, and increasing the number of disciplinary options for addressing registrant noncompliance.
• Removing requirements for wholesalers, exporters and brokers to post their registration certificates and a sign at each place they are registered to trade. Or, to remove this requirement only for wholesalers, exporters and brokers who don’t sell directly to the public.
• Allowing exporters to trade from a home office or to only allow exporters who don’t sell directly to the public to trade from a home office.
• Refreshing the Code of Ethics to bring it in line with specific regulatory requirements.
• Cleaning up the MVDA by removing outdated sections carried over from an older version of the Act.

The UCDA will be preparing a detailed response to the proposals which we will submit to the Ministry and share with Members. Individual dealers and salespersons may also submit their feedback to the Ministry by emailing MVDA@ontario.ca, or by filling in the comment box at the bottom of the consultation paper’s web page.

All submissions must be received by September 17, 2021 at 11:59 pm.

MVIS Changes

Many of our Members have repair facilities, and many perform motor vehicle safety inspections. Many Members who are MVIS stations will have received the notice from MTO announcing a change to “Passenger Transportation Vehicle” (PTV) safety requirements.

The communication was perhaps unfortunate as it has caused some confusion. It refers to vehicles that can carry 10 passengers or less and announces these will need semiannual safety inspections as of July 1, 2021.

What it does not make clear is that it applies ONLY to vehicles transporting people for money i.e. a taxi, or rideshare vehicle.

What is a PTV?

Interestingly, to add to the confusion, many of these vehicles seem to be exempt by the terms explained in the notice. This includes exemptions for taxis, ride-share vehicles (if they are already licensed by their local municipality, as most are). Carpoolers, who only charge for gas, are exempt as well.

Really, when it comes down to it, it’s hard to imagine how many vehicles this will actually apply to. Since the responsibility rests with the vehicle owner, we do not see much exposure for our Members in any event. Vehicle owners should check “vehicle for hire” licensing in their local municipality to be certain they are exempt.

Leases and Safety

Many issues can arise during a lease, but what about at the end of a lease?

The Reluctant Lessee

Members often experience difficulty at the end of a lease, getting the lessee to cooperate in transferring the vehicle out of the dealer’s name and into their name with a safety inspection.

Not to put too fine a point on it … your lessee is avoiding you.

This concerns you because you don’t want them to continue driving around in a vehicle registered in your name.

Your lessee may have other concerns. For example, the vehicle is 3 or 4 years older than when you first leased it out. You have no idea how well it’s been maintained and you sure don’t know what it’s going to take to safety it. Neither does the lessee, but he does know he has a vehicle plated he can drive right now, so why risk it!

What can the lessor do to force the issue? Not much. All the lessor can do is ask the license office to show the status of the vehicle as “SOLD”, but it will remain registered in the dealer’s name.

In most cases the lessor has no permit in the file with the lessee’s signature accepting transfer. Lessors should consider obtaining that at the start of the lease, so they can avoid this problem at the end of the lease. A “true copy” (front and back) of the permits can be given to the lessee while you hold the originals.

A dealer could send a letter by courier or registered mail to the reluctant lessee and advise them that if they do not bring their vehicle back for a safety and accept plate and registration by a certain deadline, the vehicle will be transferred into their name without a safety.

This will cause it to go into their name “UNFIT” and “UNPLATED”. The lessor could then use the signed permit to transfer the registration.

The Frugal Lessee

Dealers have been calling us a good deal lately asking what to do with a consumer who insists that they can use their own safety at lease end. Why? Because they do not want to pay the dealer to do it, and they have probably found a cheaper option at a third party garage.

Understandably, dealers are concerned if they proceed to register and plate the vehicle using someone else’s safety. A dealer might end up liable if safety problems arise on a vehicle they have not inspected.

Believe it or not, many (most?) leases are silent about the nitty gritty of what is supposed to happen at end of lease with respect to safety and who is to pay.

This is what the UCDA Lease Agreement says in the event an option to purchase at lease end is exercised:

  “I will be responsible for the cost of a Safety Standard Certificate … and all repairs needed to obtain it.”

We tell dealers they do not have to agree to accept a third party safety at lease end. Their concerns about liability are real and while it is understandable that consumers will try to save a buck or two, when it comes to safety, you get what you pay for.

Charity

It’s easy to forget, amidst our fight with COVID-19, that other battles are being waged in other health wars.

These battles are quiet, because they involve children, but are no less harrowing.

The UCDA’s Charitable Giving Committee has been making donations, on behalf of UCDA Members, to childhood cancer causes throughout Ontario for several years now.

The organizations tend to be smaller, local, grassroots charities that make a difference to the families and those children who are engaged in life and death struggles with this horrible disease.

We have heard directly from families through the charitable organizations we support about the difference our Member’s contributions have made. Thus far, in 2021, we have made significant donations to 7 such causes including:

• Help a Child Smile in Brantford, serving a wide area
• Childcan in London and area
• Candlelighters in Ottawa and area
• Candlelighters in Simcoe County and area
• Ontario Parents Advocating for Children with Cancer (OPACC), Barrie
• Northern Ontario Families of Children with Cancer (NOFCC)
• Kids Kicking Cancer based in London

The UCDA has, over the years, supported summer camps for kids with cancer; gift baskets in the holiday season that brighten the lives of not just the children fighting cancer, but also their siblings; funded hospital equipment and supplies so a child can be at home when the disease takes an upper hand and the family can be with them, paid for gas cards and hospital parking passes. All of this, all over the Province, because we have UCDA Members all over the Province and cancer knows no borders.

It is hard and emotionally draining work, but so necessary, especially during these hard times, when donations are down across the board.

In the coming issues of Front Line, we’ll share some heartwarming stories about kids with cancer and their families that the UCDA has been able help.

Annual General Meeting

The UCDA Annual General Meeting will take place at 4:00 p.m., Thursday September 23, 2021, at the Hilton Doubletree Hotel, 925 Dixon Road in Toronto. A review of the Association’s performance in 2020 and the election of a slate of Directors will take place.

What You See May Not Be What You Get

The ad said the vehicle had autopilot as an option. However, after buying it, the consumer discovered it did not have the autopilot feature they thought they had paid for.

Tesla has designed a fully-connected vehicle that allows upgrades and options, which can be downloaded directly to the vehicle.

The company wants to control the buying experience and is able to continue to make money long after the original sale.

However, that can create problems in after-market sales, especially if you are buying the used vehicle from a third party.

Apparently, even the dealer felt Tesla had confused matters when they appeared to confirm the feature was included prior to the sale.

In fact, it does not have the option and it will cost $4,000 to obtain it. Naturally, the consumer thinks the dealer should pay that. Also, naturally, the dealer sees things differently and while they did offer to take the vehicle back and give the customer a refund, they will not agree to pay for the option.

Dealers would be well advised to confirm the option actually exists on the vehicle at the time of sale, and advise the consumer, in writing on the contract, that such options are fully within the control of the vehicle maker, not the dealer.

It’s BAAACK – Luxury Vehicle Tax

As we warned about, in Front Line last year, the Federal Government hinted at a Luxury Vehicle Tax to be implemented in an upcoming budget.

Well, the difficult terrain presented by running a minority government, and the even bigger impediment of a pandemic got in the way of all that, but with the unveiling of the latest budget on April 19, the proposed tax is back.

In the first budget Canada has seen in two years, Prime Minister Trudeau and his team plan to introduce a Luxury Tax on new vehicles valued at more than $100,000, and boats worth over $250,000. 

The Luxury Tax is set to come into effect on January 1, 2022.

The tax is calculated at the lesser of:

• 20 per cent of the value above threshold ($100,000 for cars and personal aircraft;  $250,000 for boats) ; or
• 10 per cent of the full value of the luxury car, boat or personal aircraft.

The tax would affect all new passenger vehicles including sports cars, coupes, sedans, station wagons, SUVs, passenger pick-up trucks, and passenger vans and minivans that seat less than 10 people. HST will be calculated on the price of the vehicle including the Luxury Tax. Used vehicles won’t be subject to the tax.

Motorcycles and certain off-road vehicles such as ATVs and snowmobiles, racing cars (used solely for on-track or off-road racing) and RVs are exempt from the Luxury Tax. Also exempt are off-road, construction and farm vehicles; certain commercial vehicles such as some trucks and cargo vans; and public sector vehicles such as buses, police cars, ambulances, and hearses.

With COVID numbers reaching new heights and ICUs in danger of exceeding capacity, now is the time for as many people as possible to get jabbed with a vaccine … any vaccine that is available. Problem is, there isn’t yet enough to go around.

Dealer staff, whether salespeople, managers or repair technicians and advisors, who regularly come into close contact with each other and the general public, are as deserving, and as much in need of vaccine prioritization, as anyone else working in the retail sector.

With that in mind, the UCDA wrote the Minister of Health, the Premier and other ministers and senior staff in April, imploring the government to extend the essential employee list to include dealer staff in the list of workers prioritized to receive the vaccine.

The government has quite rightly given priority to essential workers who cannot work from home, such as people working in grocery stores, pharmacies, Service Ontario and government offices open to the public, restaurants and the LCBO. All are at higher risk because of their contact with the public. However, dealer employees are noticeably absent from this list.

Dealer staff are at risk at least as much as those listed above. Salespeople are in direct contact with the public every day they are working. Even with restrictions on test drives, there is still close contact within vehicles.

Service advisors too, deal face to face with the public. Technicians don’t so much, but they are in contact with vehicles brought in by customers and which must be sanitized before being worked on. The very sanitization process puts those doing the sanitizing at risk of being contaminated. Drivers transporting vehicles between dealers, repair shops and auctions are also at risk and deserve the same consideration for vaccination priority.

As essential workplaces, dealers have been permitted to stay open, with varying levels of restrictions throughout most of the pandemic. And for the most part, dealers have performed admirably throughout the crisis in protecting both staff and customers.

The government has recognized the necessity of the automotive sales and repair industry to the Ontario economy. The individuals working at dealerships have helped keep the industry afloat for the past year.

Further, they’ve enabled individuals and other companies to continue to have access to vehicles, both new and used, that are needed to safely and reliably transport people and goods during this pandemic. It’s time that they be recognized for that and provided with the protection they need and deserve to protect themselves, their families, consumers and co-workers.

To read the UCDA’s letter, click here https://tinyurl.com/22kyzn4s.

On April 13th, the provincial government announced that qualifying employers will soon be allowed to host onsite vaccination clinics under Phase Two of the province’s vaccination plan. The UCDA will provide more details to Members as they become available.

Covid-19 Measures

As COVID-19 marches on, with the light at the end of the tunnel still frustratingly distant, Members continue to ask about various measures put in place to ease the current difficult circumstances.

Service Ontario

Members call to ask if the moratorium on requiring renewal of dealer plate stickers and the like is still in effect.

The answer is “Yes”. Service Ontario wants to reduce in person traffic at license offices.

The Ontario government has extended expiry dates if you need to renew your licence plate sticker, driver’s licence, health card, Ontario photo card or accessible parking permit.

The government is also waiving the requirement to update your driver’s licence photo. Government identification and plate stickers will remain valid even with an expired date until further notice.

Police departments are not supposed to ticket anyone for having an expired sticker.

When you do get a new licence plate sticker for 2021, you will be required to pay for your 2020 sticker. Given this, many may choose to renew online to avoid a bigger financial hit later.

There are many government products and services that have expiry dates, so if there is something you’re not sure about you can phone Service Ontario at 416-326-1234 or toll free at 1-800-267-8097. Be prepared, however for long wait times.

Status Indians

As our members know the crucial piece of ID here is the “Certificate of Indian Status” card for Status Indians seeking tax exemptions on the purchase of a motor vehicle. In normal times, dealers would have to check to ensure the card was not expired. Obviously, these are not normal times. Indigenous Services Canada (ISC) has extended the validity date of status cards until further notice.

Dealers may accept status cards or Temporary Confirmation of Registration Documents (TCRDs), with identification, even if the renewal or expiry date has passed.

For all the rules surrounding such sales please visit:
            https://tinyurl.com/bj2twmu4
            https://www.ucda.org/dealer-faqs/hst/

and to see what the various cards look like:
https://tinyurl.com/xa7tfypx

Consumer Protection Act, 2002

Repairs

“In the real world!”

Its 7:30 a.m. and you arrive at the dealership to unlock the service bay doors and 3 vehicles are parked outside. Your regular customers know the routine … leave your car on the lot, drop the keys through the slot, and we’ll call you when we open.

Mr. Smith wants an oil change, Mrs. Baker is complaining of a “ping” sound in the rear of her vehicle and Mr. Johnson wants to price the installation of his new CD Player.

The Consumer Protection Act, 2002, whose Regulations came into effect on July 30, 2005, requires that consumers be given a written estimate for repairs, unless they decline that and authorize a specific amount that they will pay instead.

But how does this work in the real world, where vehicles are left for service overnight?

Even if your customer is not there at the counter, you can still communicate in writing using fax, e-mail or text, but even this is not always practical.

The answer is to keep excellent paperwork. Your intake form, whatever design it has, must include a portion for telephone authorization, which should include:

1. Whether the customer wants a written estimate and, if not, what price the customer will agree to pay for the repair.
2. When a diagnostic is required, the charge and how it is calculated;
3. The name of the person giving the authorization;
4. The date and time of the authorization;
5. The phone number of the person giving the authorization.

Clearly, in this example, Mr. Johnson wants a written estimate (and you can charge for that as long as you disclose the charge up front). If you go ahead with the install, any such fee would be waived.

Mr. Smith may very well opt not to have a written estimate for an oil change and could easily give authorization over the phone to proceed with that repair for a set price.

Finally, Mrs. Baker cannot have a written estimate (or opt to pay an agreed price) before you know what’s wrong! Her “ping” complaint would need to first be diagnosed and again, you disclose the rate you charge for the time it takes to diagnose a problem. Once diagnosed, authorization could be done over the phone, by fax, text, e-mail or in person, as with any other customer.

These rules are all set out on the sign you have posted (or should have posted) on your wall. For more about that, give us a call!

Tied Selling Is Illegal … And Unethical

We have received enough calls and complaints on the subject of tied selling lately to put out a reminder about marketing optional products with the sale of a vehicle and financing.

When we say optional products, we are referring to a grab bag of insurance-like products, such as life, disability, replacement value, GAP and other such things related to a consumer loan or lease financing of a motor vehicle, as well as extended warranty products and the like.

They are all, in one way or the other, types of ‘insurance’ against future risks. There is nothing wrong with these products in and of themselves. Indeed, they are often good and prudent choices for consumers buying used vehicles. Having said that, they are NOT mandatory and should not be presented as such.

There is no doubt these products are good profit leaders for dealers, and financial institutions also like them for the extra security they bring to the loan, especially in the case of near-prime or sub-prime consumers.

However, we are receiving many consumer complaints lately to the effect that dealer staff say if they do not agree to the product on offer they will lose the financing, lose the rate, lose the deal; or that the sale is not worth it for the dealer without the product. Remember, you have sold/leased the consumer a vehicle and the optional products you offer have no effect on that essential fact.

This practice, known as “tied-selling” is as illegal for the dealer to engage in as it is for the lender to do so. Avoid it at all costs.

It is not illegal to explain the very real benefits of these products to consumers, but there is a line between upselling and insisting (forcing, coercing, intimidating, bullying, choose your word) … make sure you know where that line is and don’t cross it.

If dealers are not careful and this continues to be a problem, some new regulation no one wants to see may be the end result.

Vehicle Recalls

Vehicle recalls can run from the mundane (i.e. windshield wiper motors) to the more serious (i.e. air bags) and involve defects detected by manufacturers who offer free correction in certain cases.

Recall information, based on the make, model and year of a vehicle, is available for Canada and the U.S. at:

Canadian Vehicle Recalls: https://tinyurl.com/7w3j6w8w.
US Vehicle Recalls: https://tinyurl.com/4y9fyp5d.

This may not tell you if a specific vehicle is still subject to any outstanding recalls, but it will tell you if the vehicle has ever had any recalls issued. You can call the manufacturer to confirm whether any listed recall on the VIN has been addressed.

OMVIC

Dealers (and private sellers) can legally sell vehicles with outstanding recalls. It is therefore vital that consumers take steps to educate and protect themselves by searching for recalls and by ensuring they are registered with the vehicle manufacturer for receipt of future recall notices.

UCDA

We recommend, when selling a vehicle with an outstanding recall, that Members make best efforts to have the recall performed prior to sale, but where this is not practical, for example in cases where a repair is not yet available, declare in writing on the bill of sale that 1. there is a recall 2. what it is for and 3. that the purchaser should register their purchase with the manufacturer of their vehicle to ensure they get notice of this and any future recalls in a timely fashion.

But They Are Old Enough To Drive!

Lots of 17 year olds have dreams of vehicle ownership that only you can fulfill … and they often seem to have pockets full of money!

Of course, the teenager has no thoughts of gas prices, insurance and … oh yeah … their parents.

In Ontario, it is perfectly legal to sell a minor a vehicle. A minor is defined in the Age of Majority and Accountability Act as a person not yet having reached the age of 18 years. However, as the name of the Act implies, because the minor cannot be held legally “accountable” for the contracts they sign, if they decide not to complete the purchase, or come back the next day for a refund, you can’t hold them to the legal obligations they have entered into.

That can get complicated … but wait, there’s more!

Don’t forget about mom and dad – don’t assume they will be thrilled when their little boy or girl rolls up in the driveway in their new ride. Aside from the lack of legal protection you
enjoy on such a sale, no dealer wants or needs the fallout that can result when the whole family – mom, dad and (now) chastened teenager are having a full-fledged domestic dispute in your usually calm and professional office.

Always ensure that an adult, such as a parent or guardian, co-signs the bill of sale on the purchase of a vehicle by a minor to avoid legal entanglements … and drama.

We have been receiving a troubling number of calls and emails from Members who, for one reason or another, are unhappy with the way their concerns are being addressed by some on-line auctions.

Increasingly, we are seeing these auctions permit selling dealers to run vehicles under “red light” or “as is declaration,” that have specific problems, like a defective transmission or nonrunning engine, that are not declared. When the buyer protests and seeks arbitration they are, it seems, often told there is no arbitration. In some cases, the failure to declare occurs under a ride and drive, but something expensive like a NAV system is not working, or the vehicle does not “run”.

We have also been asked by a number of Members to seek fuller disclosure of buyer’s fees at auctions. These fees can run as high as 10% or more of the bid value, but they are often not
declared online or at the block. The buyer does not learn what the fee is until after they have bid and it is too late to back out.

At the risk of sounding like a broken record, this is not the legal environment in which modern day motor vehicle dealers operate. The buzzwords today are “FULL DISCLOSURE”. Ontario law requires it, OMVIC enforces it and we hope Ontario auctions, both brick and mortar and online, agree and ensure that it is provided. Without it, dealers cannot pass on the important disclosures they need to give to consumers, much less make informed decisions about buying the unit for the right price in the first place.

Needless to say, as the result of big moves to online auctions by many sellers, especially since the pandemic began, it is even more important that sellers and buyers are not left to guess and wonder.

No auction wants to become a clearing-house for other dealers’ problem vehicles.

All auctions have written rules, and buyers and sellers agree to abide by them in exchange for the chance to buy or sell under the auction’s “roof” or online platform. On occasion, a used car will have defects of one kind or another and the issue is dealt with through the auction’s arbitration process.

If the seller did not make an essential disclosure that the rules (or the MVDA) require, then the seller can be required to take the vehicle back and refund the price paid to the buyer.

While this might sound simple on paper, it is complicated in practice. The auctions derive their rules from a number of sources:

• The Motor Vehicle Dealers Act. Sellers are legally required under the wholesale sections of the MVDA to disclose as many as 21 specific items that may apply to the vehicle. The most common are daily rental, accident damage over $3,000, Out-of-Province and so on. The complete list can be found in Section 5 at https://tinyurl.com/ytd8sc65.
• When you enter the auction you are also agreeing to abide by the auction’s arbitration rules. A copy is available from the auctions. These rules are base on National Auto Auction Association. You need to be aware of the specific disclosure rules and time limits for requesting arbitration.
• Unwritten rules that the auctions have devised to cope with specific concerns and might be best called “policy”.

At the end of the day, the required disclosures are the responsibility of the selling dealer and failure to make disclosure can be enforced by OMVIC. While auctions are exempt from the MVDA, they are expected to ensure that sellers fulfill their disclosure obligations.

This is a complex and difficult area. While we have sympathy for the auctions who have to navigate a minefield of competing concerns; legislation, clients, policy, national arbitrations rules and their own business strategy, we have been hearing about this issue for far too long.

We have, once again, begun a dialogue with the auctions in hopes of trying to help organize a path forward that takes account of everyone’s interests. However, times are too tough for many members to simply stop there.

We would hope that auctions will help create an environment where buyers can have the confidence that they will receive full disclosure of vehicle defects, but if they don’t, we will have to find work-arounds, if need be with OMVIC. We won’t stand idly by if our Members are treated unfairly.

                   In the meantime… Buyer Beware!

UCDA’s Used Vehicle Industry Survey Member Service

Since the UCDA was formed in 1984 one question that has often been asked … and NEVER accurately answered has been … “How many used cars are sold annually in Ontario?”

We have been asked other questions too. “What are the best selling used cars in Windsor, Ottawa, North Bay?” “What is the best selling used truck?” “What is the average gross profit on used cars?” “How much should I be paying my staff to be competitive?” Nobody knows, because nobody has ever asked the used vehicle dealers of Ontario.

Working with Desrosiers Automotive Consultants we hope to be able to help shed some light on these and other questions.

The first of a series of Member surveys has been completed and more than 650 Members responded. That’s a 13% response rate, which is very good by survey industry standards.

Given the last year, do you want to know what the business looks like, and what the future might look like?

Those Members that completed the survey, and requested to continue receiving them, can request a detailed report analyses by Desrosiers detailing the first dedicated survey of the used vehicle business in Ontario. Please contact the UCDA to request a copy.

Here are some of the highlights:

• Members responding to the survey reported an average decline of 15.8% in the number of vehicles sold in 2020, compared with the number in 2019.
• Respondents expected that number to recover significantly in 2021.
• Franchised dealers were most optimistic, expecting sales to be over 10% higher in 2021 than they had been in 2019. Independent dealers, while looking for a significant improvement over 2020, did not expect 2021 to be as good as 2019.
• The average age of used vehicles sold also showed a considerable difference between franchised and independent dealers. Well over 50% of used vehicles sold by franchised dealers in 2020 were between 1 and 3 model years old. Independent dealers’ sales were fairly evenly balanced, with the highest category of 4-7 year old models accounting for just under 40% of units sold.
• One area where the survey results showed stability was in the method of payment used by purchasers in both 2019 and 2020. Less than 40% of vehicles purchased during both years were financed by loans arranged by the dealer or in-house. Almost 60% of purchasers bought with cash or used financing that they arranged themselves, including lines of credit. About 5% of used vehicles in both 2019 and 2020 were leased.

Do I Have To Confirm Insurance?

One UCDA Member would tell you “Yes”!

The Member sold a vehicle in 2018 and the customer gave them what he said was his insurance policy number. It was enough to get the vehicle plated. Unfortunately, when he got in an accident, it turned out the policy number, while valid, was not his.

Now the dealer is among the parties being sued by the accident victim. They wish they had something in the file they could show the judge when this comes to trial. Always get a binder agreement or pink slip faxed or emailed from the insurance company. Don’t hesitate to call the broker to confirm the arrangements (an excellent practice) and the information provided, especially if no written confirmation has yet been received from the insurer.

Watch Your “Cats”

Catalytic Converters (commonly referred to as “cats”) are unassuming and somewhat ugly looking devices that nestle within exhaust systems and clean the pollutants from exhaust gasses quite efficiently.

As dealers know, cats are not cheap to replace and to some criminals they are worth their weight in gold … not so much for what they do, as to what is in them.

Cats contain valuable metals such as platinum, palladium and rhodium. Depending on market conditions, these substances can fetch more cash than gold.

So, needless to say, guard your vehicles against opportunistic thieves looking to steal your “cats”. They are not hard to steal given they are located in an exposed area under the vehicle and can be removed very swiftly if you have the right tools and the know-how.

Indeed, the UCDA, located as we are in an industrial area with some vehicle repair shops nearby, have neighbours who have already fallen victim to these crimes of opportunity, and this on the heels of media reports warning about the very same thing all over Canada:

https://tinyurl.com/tb7rys4u

Chrysler Leaves CAMVAP

Without much fanfare, and in the midst of many other distractions, Fiat Chrysler Automobiles Canada has announced, effective December 31, 2020, their decision to pull out of the Canadian Motor Vehicle Arbitration Plan (“CAMVAP”).

It will be interesting to see if this prompts louder calls from consumer groups for a lemon law in Canada, similar to the approach that exists in the U.S.

CAMVAP is available to consumers who are unhappy with defects in their new or newish car or how their factory warranty is being applied.

Qualified vehicle (generally current and previous 4 model years old under 160,000 kms) owners can engage their vehicle’s manufacturer in binding arbitration through CAMVAP. CAMVAP have the power to order the manufacturer, among other things, to buy-back the car or fix it.

Dealers are required, on the sale of any vehicle, to identify if the maker of the car participates in CAMVAP … now they will need to add Chrysler to the list of those who do not.

https://tinyurl.com/52dzt486

Users of UCDA used sales/lease forms will recognize this question on their forms:

MANUFACTURER PARTICIPATES IN CANADIAN MOTOR VEHICLE ARBITRATION PLAN (CAMVAP) YES __ NO __

CAMVAP STATEMENT ON REVERSE (NOT ALL VEHICLES QUALIFY)

Here are the manufacturers who still participate:

Ford   * GM   * Honda
Hyundai   * Jaguar / Land Rover   * KIA
Mazda   * Mercedes-Benz   * Nissan
Porsche   * Subaru   * Toyota
Volkswagen / Audi   * Volvo

Leaving the ones who don’t:
Chrysler   * Mitsubishi   * BMW
  *exotics (Ferrari, Lamborghini, Maserati, Bentley, etc.)

Cryptocurrency

You may have heard about cryptocurrency. You have no doubt heard about it from your kids, or in the media, or from the “internet”.

You may not understand it. You are not alone.

Without getting too deep into the blow-by-blow explanations, suffice it to say this “new” form of exchange is growing in popularity and assumedly in value amongst those ‘in the know’.

But no form of exchange is any fun if you can’t buy things with it like land, boats, planes or … cars or trucks.

Dealers may be asked more and more about accepting payment with some form of cryptocurrency, the most commonly known version of which is called “bitcoin”.

You may have heard news reporting that a dealer group in Quebec is going to accept cryptocurrency in payment for used and new motor vehicles in that Province.

We had a dealer recently ask us if he is “allowed” to accept such a currency as payment for a car. Our answer was “Yes”!

Turns out, you can accept a truckload of chickens if you want to. If it has value to you, then go for it.

But … and it’s a big but … don’t forget the Canada Revenue Agency.

The CRA do not accept cryptocurrency, so you will need to remit the correct HST to the CRA on the fair value of the vehicle being sold in what we still like to refer to as actual “money”!

Oh, and by the way, the CRA does not accept chickens either!

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Governments at every level are opening their wallets to try and help offset the losses caused to the economy by the COVID-19 virus.

The 2020 Ontario Budget contains many goodies for businesses, some large, some small, and many of which will be of interest to Members.

We have tried to summarize the highlights below:

Electricity Costs

The Province will subsidize up to 16 per cent of electricity costs for industrial users and 14 per cent for commercial users starting Jan, 1, 2021.

Amending Payroll Taxes for Private-Sector Employers

30,000 small businesses with payrolls of less than $1 million will be exempted from paying the Employer Health Tax (EHT).

The EHT exemption (the payroll threshold above which employers are subject to EHT, on an associated basis) had been temporarily increased to $1 million (from $490,000) for 2020. The budget proposes to make the $1 million EHT exemption permanent.

The government is also proposing to increase the payroll threshold for payment of monthly EHT instalments to $1,200,000 (from $600,000), starting 2021.

Amending Business Education Tax (BET)

The province announced it would be levelling the playing field by lowering BET rates on over 94% of all business properties to a rate of 0.88 per cent in 2021 thus creating $450 million in immediate annual savings for Ontario businesses.

Property Tax

The province will provide municipalities with the ability to cut property tax for small businesses and has committed to giving consideration to matching those reductions.

Pending municipal adoption, this could provide small businesses with as much as $385 million in total property tax relief by 2022–23.

This could permit municipalities to:

• adopt a new optional property subclass for small business properties
• reduce property taxes to eligible small business properties

Previously Announced $1,000 Grant

In October the government announced Ontario’s Main Street Recovery Plan. The plan includes: providing $60 million in one-time grants of up to $1,000 for eligible main street small businesses.

The grant is available to help offset the unexpected costs of personal protective equipment (PPE) for businesses with 2 to 9 employees in retail, food and accommodations, and other service sectors.

To help as many businesses as possible, PPE purchases made all the way back until March 17, 2020 can be submitted for reimbursement.

Eligible businesses, whether applying for the Main Street Relief Grant for PPE – or for property tax or energy rebates in affected regions – will be able to do it all through one application on a new online portal.

If you qualify, this is the link where you can apply:
https://tinyurl.com/y37zmaxs.

For a good summary of these and other measures to help business in Ontario please visit https://tinyurl.com/y67bskvh.

Repairs

The Consumer Protection Act requires that repair facilities offer written estimates on all repairs (unless the customer declines and instead authorizes a maximum repair amount which cannot be exceeded).

If the repairer charges a fee for the estimate, and the actual repair is later authorized to proceed, the estimate fee must be waived. The total price cannot exceed the estimate by more than 10%.

Repairers, and dealers with service facilities, need to remember that if a vehicle comes in with a problem that will likely take significant time to diagnose before repairs can even proceed, you are better to bill separately for diagnostic time, rather than charge a fee for an estimate.

You can take verbal authorizations, but in that case you must write down and keep the name of the person giving it. Record the date and time, and if by phone or other means, the phone number or contact by the other means used.

Failure to follow the correct process can mean the repair bill may not have to be paid.

Consult your UCDA Repair Sign, which explains how all this works to your customers.

If you don’t have a Repair Sign visible to the public, as the law requires, please contact the UCDA at 416-231-2600 or 1-800-268-2598 for more information about getting one.

In House Financing

Anytime you allow a vehicle to go out on the road without payment in full there is risk. Many dealers accept that risk and allow customers to finance part or all of their payment over time. We call this “lease to own”, “buy here, pay here” or “in-house financing”.

A lawyer might call it a conditional financing, but whatever you call it, there are things dealers can do to reduce the risk present in all such sales.

Let’s not beat around the bush, the risk is the customer will default, or damage the vehicle, or write it off, or take off with it … and you won’t get paid. You cannot eliminate all the risks, but there are some basic things you can do.

An Ounce of Prevention – Lien Registration

The vehicle should be registered in the consumer’s name to avoid insurance risks and a lien should be registered on the vehicle to secure the dealer’s interest in it.

Insurance

Specify on the contract how much insurance, $1 or $2 million? Collision? Comprehensive?

Ask to be listed not just as a lienholder on the insurance, but also as a co-insured so the insurance company in the event of a claim, is required to treat you just as it would treat the consumer.

Consumer Protection Act

A UCDA Bill of Sale is designed to allow for financing terms to be described, but you probably want to go further and create a payment schedule to set out the payment terms with cost of credit and annual percentage rate clearly described and incorporated into the contract.

A useful website for these calculations is:
https://tinyurl.com/y6sdd2vr

GPS

It can be helpful to use tools to help locate vehicles when and if default happens (and it will from time to time).

You will never be able to eliminate risk, but you can reduce it and if you do, you may find lease to own is an excellent means by which to move more inventory from your lot to the consumer’s driveway.

Vehicle Registration & Bank Loans

When a dealer sells a vehicle to a customer, and assists the customer in finding financing to pay for it, it’s very important that the dealer fully understands the terms of the loan agreement. 

Loan Agreements

Loan agreements contain standard contract language about the customer’s obligations to the lender, to maintain adequate insurance, make timely payments, truthfully disclose income and so forth. These agreements also frequently place obligations upon the dealer.

A common contract clause that dealers encounter relates to the issue of vehicle registration. Some loan contract language requires that the dealer ensure that the lender is protected and that the vehicle is registered into the name of the buyer.

Vehicle Registration

With the high cost of insurance, some buyers will want the vehicle to be registered into the name of someone else, to get a lower rate.

For example, the buyer may want the vehicle to be registered into the name of their mother or grandfather, who may be accepted by the insurance company as the primary driver and quote a rate lower than if the buyer alone was the registered owner.

Others may ask you to put the vehicle in the name of a corporation for some perceived tax advantage.

Resist the impulse to just go ahead and do what the customer asks without clearing it with the lender first. Get any direction to do so from the lender in writing.

Don’t Forget About the Lender

Unfortunately, dealers sometimes forget about the lender. One of the most important aspects of the sale, from the lender’s point of view, is that the vehicle will be registered into the name of the buyer.

The lender will register a lien on the vehicle. If the buyer defaults on the loan agreement, the lender will recover the vehicle and sell it to offset its losses. 

However, if the dealer does not ensure that the vehicle is registered in the name of the buyer, the lender may not be able to act on their security because the loan agreement and the lien registered on the vehicle, each assume that the vehicle is in the buyer’s name.

If the buyer goes into default on the loan and the lender cannot proceed against the vehicle, it may hold the dealer responsible for its loss. The dealer failed to honour the agreement it made to protect the lender’s security in exchange for the loan in the first place.

Read and understand your obligations under loan agreements. If you are ever unsure about what you may be agreeing to, contact the UCDA Legal Department for guidance.

All dealers must be closed on Christmas Day, Friday, December 25 and New Year’s Day, Friday January 1, unless their local municipality has passed a by-law, exempting retail businesses from the requirement to close on these statutory holidays.

Very few municipalities will allow Christmas Day openings, and Members should contact their local municipalities for more information if needed.

All dealers may be open on Boxing Day, Saturday, December 26, should they wish to be. However, please remember that in all cases, staff must be given three days off with pay for Christmas, Boxing Day and New Year’s Day, if not on those days, than on other agreed upon days.

Employees who do not normally work on Saturday, must be given another day off. This could be the following Monday, December 28. Alternatively, it could be Thursday, December 24.

Members can come up with different variants, as long as all staff end up with three paid days off for Christmas, Boxing Day and New Year’s Day.

The UCDA office will be closed on Christmas Day, Monday, December 28 for Boxing Day as well as New Year’s Day.

The UCDA search facility office will be open during the following holiday hours:

We’re always excited to secure a new member service – especially one that we know has your best interests in mind.

Now that Desjardins has wrapped up their credit card processing program altogether, we were tasked to research and find a merchant Point of Sale provider who met our expectations in terms of cost effectiveness, transparency and ease of use.

The UCDA has done just that and has negotiated a very competitive Point of Sale program for processing rates and equipment with Global Payments.

They’ve been in the payments business for over 50 years and are one of Canada’s leading credit card processors.

Global Payments is a leading worldwide provider of payment technology and software solutions. They help UCDA members, like you, simplify the ever-growing complexity of the payment experience so that you can seamlessly accept any form of payment – any time, anywhere, any way.

But they’re more than just payments. With access to emerging technologies and software solutions, you’ll be fully equipped to meet the needs of your customers and keep them coming back.

With Global Payments, You’ll Benefit From:

• Preferred pricing for UCDA members on all credit and debit transaction processing
• Acceptance for all major card brands
• Fleet, commercial and private label card processing
• Gift and loyalty card programs
• Value-added solutions that can help you attract more business, increase revenues and offset your costs
• Satisfaction guaranteed

They also offer both hardwired and cellular mobile devices that are very easily set-up. Members will receive the most current Ingenico terminals, like the Desk5000 countertop terminal or the Move5000 mobile units.

Global Payments may not always have the lowest prices, depending on the types of credit cards that you take, but we are very satisfied that there won’t be any surprises down the line.

In a nutshell, they are committed to delivering world class service and solutions at a competitive price. If you’re interested in signing up, please contact the UCDA office at 416-231-2600 or 1-800-268-2598 and we’ll put you in touch with a local representative!

We are pleased to announce proposals for the most significant regulatory changes to Ontario’s Dealer Plate rules in 16 years. That’s how long its been since the UCDA successfully worked to create the Dealer Plate currently used by dealers.

As in business, in politics timing is everything. We have been seeking the type of reform that has now been proposed for over two decades.

When we re-opened reform discussions with the Ministry of Transportation (MTO) in the spring of 2019, we found that they were serious about reducing barriers to business … what Premier Ford’s government calls “red tape”. All Ontario Ministries have been asked to find ways to reduce regulatory barriers to both business and consumers.

We asked the Trillium Automobile Dealers Association to work with us and together we approached MTO with a list of asks. We had an important meeting in late January with MTO, and other stakeholders such as the police, to explain why these reforms were necessary and why, without them, barriers to effective use of Dealer Plates would remain.

Happily, our submissions took root and in a flurry of announcements just before Thanksgiving, the Ontario Government announced the following proposals:

• Dealer Plate on Light Duty Commercial Vehicles (i.e. pickup trucks) for Private Use “loaded with goods”
  Dealer Plates cannot currently be used on commercial motor vehicles carrying goods for private use. MTO is proposing to amend Regulation 628: Vehicle Permits, to allow the use of a Dealer Plate on a light duty commercial vehicle for private use that is “loaded with goods” for personal use (i.e. pickup trucks displaying a Dealer Plate).
• Allow vehicles equipped with Dealer Plates and a New Vehicle Information Statement to drive on Ontario roads
  The Ontario government is proposing to reduce the burdens on business by clarifying that New Vehicle Information Statements (NVIS) can be used in place of a valid registration permit when a new motor vehicle with a Dealer Plate is driven on the road in Ontario.
  This would reduce the administrative burden and costs for businesses and the courts by eliminating tickets that are incorrectly issued to motor vehicle dealers driving new vehicles with Dealer Plates prior to sale.
• Reduce costs and increase opportunities for businesses by making it easier to buy and sell vehicles at auction
  Ontario proposes to permit people to drive motor vehicles with Dealer Plates without a registration permit when purchased at auction. This would make it easier for dealers to buy and sell vehicles at auction, would create new opportunities for small businesses and reduce the administrative burdens on business and customers.

You can submit your support for the proposal by November 1st at: https://tinyurl.com/yxp96pat

Repair And Run

Maybe it’s the hard times lately, but we are hearing more and more from Members who do repairs about folks running out on their repair bills.

Everyone has heard of the old pathetic tactic of running out on a restaurant bill, “dine and dash”. The latest is “repair and run”. The dealer/repair facility fixes the vehicle, but before they can present the bill, the customer gets in the vehicle and drives away!

Unfortunately, we are also finding many of our members are far too relaxed when taking customer vehicles in for repairs in the first place. Some members do a bit of paperwork, but often get very little information beyond name (sometimes just the first name) plate and VIN. Others complete no paperwork at all!

It’s pretty hard to collect a repair bill when “Jim” from Toronto takes off with his car. You don’t even know where Jim lives, much less his last name!

At a minimum, don’t start a repair without paperwork containing full name, address, VIN, plate, and driver’s licence number. No consumer will be surprised by this. Most large repairers do this all the time.

Better yet, once the repair is done, secure the vehicle and get the customer to review and SIGN the work order or invoice before you let them have access to the vehicle. If they take off, at least then you can slap a repair lien on it and repossess it (which you can’t without a signed acknowledgment of the debt).

Even without a signed invoice, with a name and address, you can send them a letter and if need be, serve a lawsuit to collect the debt in small claims court.

Dressing it up – Dress Codes and Probationary Workers

In Ontario, the Employment Standards Act does not require any specific minimum notice for an employee dismissed in his or her first three months of employment. As a result, many people believe every employee is on “probation” for the first 3 months of their employment and can be fired for any reason, without consequence.

This is incorrect. First, employees are only on “probation” if it is a specified term of their initial employment. This must be made clear at the outset and agreed to. Second, such an employee may be entitled to damages during this period for wrongful dismissal or … a human rights violation.

Damages may be minimal, but who needs the hit to reputation such an action could cause a dealer?

In Alberta, one dealer is learning that lesson the hard way.

The firing of a 20 year old female “probationary” employee appears to have been caused by a perceived violation of the dealer’s dress code for employees. As is often the case in such disputes, the “fog of war” clouds the facts, so all we have to go by is the jousting in the media and input from various “experts”. The firing of a 20 year old female “probationary” employee appears to have been caused by a perceived violation of the dealer’s dress code for employees. As is often the case in such disputes, the “fog of war” clouds the facts, so all we have to go by is the jousting in the media and input from various “experts”.

But given comments from the young woman and the dealer, it would seem some employees took offense to the blouse the woman chose to wear to work. Some apparently felt it was “see-through”, provocative or inappropriate for the workplace. For her part, she says she was wearing the same top when she was hired!

The real problem, as is often the case in such matters, is the employer does not seem to have had a clearly spelled out policy and no written employment guidelines, to which they could point. Such rules should be clear, enforced evenly and fairly and violations punished in proportion to the severity of the violation.

Now the woman is threatening to bring a human rights violation claim against the Edmonton-based dealer and, while the damages will likely be minimal, the legal fees, and negative press, will not be.

https://tinyurl.com/y3bbq5b5

Online Defamation

We have written about the growing body of caselaw developing over the wild and woolly world of social media “complaints” about businesses.

Social media has become very important to dealers and ratings matter to many. Dealers have often noted the small but vocal group of “entitled” consumers who are set off by even minor problems or complaints with their used vehicle and who resort to rantings and ravings on the internet.

The trend seems to suggest that it’s getting harder and harder for businesses to resort to the courts to take action against the more outrageous “critics” out there.

When you start to read the following recent case, you might think it’s a slam-dunk that the business will be successful. The sheer nastiness and personal nature of the online posting certainly seems to “cross the line”. Read on however:

https://tinyurl.com/y38bucmz

This whole silly dispute started over what the customer felt was an inexcusable delay in obtaining the faucet and toilet roll holder she had ordered.

It degenerated into accusations and counter-accusations of assault. The police were called and even though the items arrived the next day and were paid for and picked up, the customer and her mother simply could not leave it alone!

They began posting to social media and, as the judge in the case observed “[t]o say the posts were offensive and virulent fails to do them justice. It was more a personal attack than it was a true review …”.

You might think the lawsuit that the store and the store’s owner brought for defamation would be a slamdunk, right?

Wrong!

Apparently the judge felt there was a “public interest” somewhere in these postings. That finding is important because of what is called anti-SLAPP legislation in Ontario, meant to protect a consumer’s right to free expression from the oppressive threat of litigation by businesses.

The trouble is, the law is supposed to facilitate a balance between the right to speak one’s mind on the internet and the damage done to personal/business reputations by the allegedly defamatory words.

It’s hard to see much balancing done in this case or to see where the “public interest” lies in any of this.

Having said that, until appealed or overruled in another similar case, this reasoning stands and should be a caution to dealers contemplating court as an option to deal with the more outrageous social media ‘warriors’ out there.

Our advice is to ignore this silliness. Trust that most readers will determine such posts say much more about the person posting, than they do about the business being targeted!

If you must respond on social media, state your response without emotion, stick to the facts, be courteous and brief. Depending on how ridiculous the post is, you might invite the poster to contact you to see if things can be worked out.

Do not, under any circumstance, stoop to their level and be rude, offensive or discourteous in any social media reply.

Invariably, that would only make things worse!

Minimum Wage

Minimum wage rates in Ontario increased on October 1, 2020. This increase is tied to the Ontario Consumer Price Index for 2020.

The increase to the general minimum wage was 25 cents, which brings the new rate to $14.25 an hour from $14.00 an hour.

For a chart showing all minimum wages in Ontario, including for students, etc., please see this link:

https://tinyurl.com/y9j4bk2m

James Bond Would Have Paid

A woman in B.C., who owned a valuable “James Bond” edition Aston Martin DB9 made the wrong decision not to pay her repair bill and then doubled-down and tried to sue the dealer and the mechanic who fixed her car!

She bought the vehicle for $200,000 in 2014 and in 2015 she ran it into a rock. Carrying minimal insurance, the $85,000 to $135,000 estimated cost to repair was her responsibility. But, when she was presented the final repair bill, she felt it was too high.

She sued the dealer for selling her the vehicle in the first place, claiming they took advantage of her wealth and poor English skills. She sued the garage for “hiking” the bill and both of them for $300,000 in “pain and suffering”, a term much used and rarely successfully proven in court.

The judge was not having any of it. The court dismissed her claim and ordered her to pay the repair bill of $85,549, pre-judgement interest of $4,078, legal fees and storage fees.

Her legal adventure ended up costing her $328,930.50.

We have to assume she left the courtroom shaken … but not stirred?

https://tinyurl.com/y3tjkufk

Think E-Transfers Are Secure?

Think Again

Pat Foran of CTV News reported on a case of a woman who sold jewelry and accepted payment by e-transfer. The woman thought once the $1,750 was deposited to her account it was final and secure.

Think again. Apparently, 5 months after this transaction, her account was frozen as the TD Bank identified that the funds deposited to her account were “fraudulent”.

Her mistake, according to the bank, was accepting funds from someone she did not know. More specifically, the bank says:

“When sending an Interac e-transfer, it’s important to ensure the recipient’s email address is correct, and the security question and answer is not easily guessable.”

In another case identified in the report, a man thought he was sending $1,000 to his lawyer. Somehow, the funds never made it to his lawyer and were in fact “intercepted” by some unknown third party.

The woman eventually got her $1,750 back in her account, but the man never did.

https://tinyurl.com/y2opm6wp

As dealers use this method of payment more and more these days, please take the bank’s advice to heart and be absolutely sure about the email address you use for sending or receiving funds. And make those security questions difficult enough so that some bad actor cannot easily guess the answer.

It seems e-transfer is only as secure as YOU make it.