In May and again in August, the UCDA, working with DesRosiers Automotive Consultants, surveyed Members about the effects of COVID-19 on their businesses. The earlier survey found that business had all but dried up for most Members during the April shutdown.

The most recent survey, conducted from August 4-11 and covering the months of May, June and July, received responses from close to 600 Members. It showed a much improved situation compared with the state of the industry in April.

While only 13.9% of responding Members were open for their regular hours in April, by July 48.3% were open regular hours. While this still left more than half the stores at less than regular hours, it was a huge step forward from the Spring. Complete closures of Member stores fell from 42.1% in April to just 5.0% in July.

Many Members have seen steadily improving sales in recent months. In July, as consumers released pent-up demand, nearly 40% of surveyed Members indicated sales volume growth compared to the previous year. However, 21.1% indicated a sales decrease of 1-25%, 23.4% indicated a decrease of 26-50%, and 15.9% indicated a decrease of 51-100%.

Comparatively in April, 99.1% of Members indicated that their sales volumes had dropped with the majority (54.8%) indicating a decrease of 76-100%.

For the year overall, close to 80% of responding Members expect the market to be down from 2019, with the largest segment, 32.4%, expecting total sales to decrease between 1% and 25% in 2020.

With regard to used vehicle prices, the majority of respondents (68.6%) saw price increases of varying degrees in July. A shortage of vehicles traded in during the Spring months has led to supply – demand mismatches in the market pushing prices higher.

This is also reflected in vehicle sourcing patterns for Members in July, with the great majority of respondents indicating challenges in sourcing some or all vehicles. Indeed, just 9.5% of respondents noted no difficulty whatsoever in sourcing vehicles.

From information received from Members since the survey was completed, August continued the trend from July. Sourcing inventory has continued to be a concern for most Members, despite a steadily increasing volume of vehicles going through the auctions.

Demand has remained steady, so prices have stayed high or have risen further on popular models. This has been exacerbated by the continued high demand at auctions from U.S. dealers, who are prepared to pay well over typical Canadian retail prices for used pick-ups and some SUVs.

OMVIC Renewal Form – Export Question

Not that long ago, OMVIC forms … applications, renewals, transfers … were all on paper. OMVIC has moved much of this online, as many dealers have with their own forms and contracts.

Generally, this makes life easier. However, it also creates its own unique challenges. For example, we rely, more than ever, on Members to tell us what they find confusing or difficult about some of the online forms they encounter from OMVIC. In many cases, we have not seen the form, because we do not have account access like dealers do.

One form that dealers will encounter regularly is the “dealership renewal request” form. This is how dealers renew their dealer registration with OMVIC annually online. We recently learned that a new category had been added to the form for the transaction fee which asked about vehicles sold for “export”.

Many dealers export vehicles out of Canada, and in particular to the U.S., so this number, for some dealers, can be large. If the $10 fee applied to every such sale that number would be large too! What is important, and what the form may not have made as clear as it could have, is that the number you report for this purpose should not include sales to “dealers”.

This is how the form was worded:

We asked OMVIC to clarify that the form only expected numbers to be reported on sales to non-dealers, not the actual total number of sales to all buyers.

The other concern, in light of this possible confusion, is how dealers who may have “over-reported” could ask OMVIC to reassess the transaction fees they may have been charged in error.

On the first issue, OMVIC has responded to the concern by amending the form to ask the question in a way that should cause less confusion. The new question emphasizes that the number of sales being asked for are sales to nondealers.

They have also updated their FAQ’s on the subject https://tinyurl.com/y6k6zytw

This is how the form is now worded:

As to the second issue, how do you correct reporting errors or seek adjustments to transaction fees charged in error? OMVIC advises dealers to contact OMVIC’s registration department, so OMVIC can get more information and check details. Your can reach OMVIC at:

registration@omvic.ca or call 1-800-943-6002 x3941.

Person In Charge

Uneasy lies the head that wears a crown.
– History of Henry IV, Part II, Act III, Scene 1

Every dealership has one. The man or woman on whose shoulders falls the responsibility for the day-to-day operations of the dealership.

In some dealerships, it’s easy to identify that person. If you are a sole proprietor for example, it’s probably you! In larger dealerships it becomes less and less obvious who that person might be or, more importantly, who that person should be.

Whether you are a business manager, sales manager, general manager or the “owner” of a dealership, it does not necessarily mean that you are the right person to be the “person in charge”.

This matters for two reasons:

1. A “person in charge” is a term of art used in the Motor Vehicle Dealers Act. Under the Act, it is a condition of registration or renewal that each dealer appoints and identifies to OMVIC at least one “person in charge”.
2. When dealers run afoul of the rules and regulations, and OMVIC takes the dealership to Discipline, they often levy fines and impose other requirements against the dealership (i.e. corporation) AND the person in charge.

So ask yourself, who is the “person in charge” at your dealership. This may not mean the same thing as who is the “owner” or “principal” of the operation. Who is the main manager, there all the time, watching and supervising dayto-day affairs?

The answer may surprise you and … it does matter … so be careful who you choose to designate for that role. It carries some potentially severe burdens with it.

If you are unsure who your person in charge is, contact OMVIC. You can also make changes on-line or by use of this form: https://tinyurl.com/yy2qt7on

Temporary Layoff Relief

We last reported on this issue in a Dealer Alert on June 1st.

The Ontario Government has extended the temporary layoff relief for employers, the effect of which is to help ensure a layoff does not automatically become a termination by the passage of time, as would normally be the case. This was set to expire on September 4, 2020.

Under the normal rules in the Employment Standards Act (ESA), a temporary layoff would have been deemed a termination after:

• 13 weeks, if no payments or benefits are continued;
• 35 weeks, if certain payments or benefits are continued; or
• for such longer period that an employee retains recall rights under any applicable collective agreement.

The Ontario Government has extended the amendment of a Regulation under the ESA to allow employers to place employees on Infectious Disease Emergency Leave. This will ensure businesses aren’t forced to terminate employees after their ESA temporary layoff periods have expired.

Workers will remain employed with legal protections and be eligible for federal emergency income support programs while employers will be protected from costly claims for severance or damages.

The extension will now last until at least January 2, 2021.

Consumer Protection Act, 2002 (CPA)

The CPA governs the way businesses relate to their customers, and describes illegal and unfair business practices known as “false, misleading or deceptive” representations and “unconscionable” consumer representations.

Consumers have up to one year to cancel a contract if they have been subjected to an “unfair practice”. This cancellation may be subject to reasonable compensation to the business.

Businesses are expected to disclose information that would be important to the customer in making the final purchase decision, whether or not the customer asks for the information. 

So what are unfair practices? An extreme example would be selling a used car, but telling the buyer it’s a new car. Or telling a consumer a 4×4 was never used “off-road”, when in fact, it was used in the forests of Northern Ontario by the logging industry. It boils down to keeping important “material” facts about what you are selling from the buyer either by outright lies, exaggeration or half-truths.

There are other examples in the CPA of such misrepresentations, such as:

• describing benefits or qualities the goods do not possess
• suggestions that the supplier of the goods has sponsorship, approval, status, affiliation or connections the supplier does not have
• goods are of a standard, quality, grade, style or model that they are not
• saying the goods are available for a reason that does not exist or when the person making the representation knows or ought to know they will not be
• saying a price advantage exists, when it doesn’t
• misrepresenting the authority of the person dealing with the consumer to negotiate the final terms of the purchase
• making false or misleading representations that the proposed transaction carries with it certain rights, remedies or obligations
• misrepresenting the purpose or intent of any communication with a consumer

They all amount to the same message: “say what you mean and mean what you say”.

An “unfair practice” can also arise in cases where:
(a) a consumer can’t protect their interests because of disability, ignorance, illiteracy, etc.;
(b) the price grossly exceeds the price at which similar goods or services are readily available;
(c) the consumer is unable to receive a substantial benefit from the subject-matter of the representation;
(d) the consumer clearly can’t afford the deal;
(e) the consumer transaction is excessively one-sided in favour of someone other than the consumer;
(f) the terms of the transaction are so adverse to the consumer as to be unfair;
(g) a statement of opinion is misleading and the consumer is likely to rely on it to his or her detriment; or
(h) there is undue pressure.

For dealers, this means all information in contracts must be clear, comprehensible and prominent. If sales or lease contracts are missing required information, a consumer could cancel the transaction.

It also means dealers and their employees must be truthful … always!

Even ignorance about a vehicle’s defects or previous use may not be a defence. The CPA refers to things a business knows or ought to know. The CPA assumes that businesses have more resources and experience then consumers in determining the facts about what they sell.

For example, if a customer asks if a vehicle has been in an accident, and you know it has been, you must tell the customer. On the other hand, if you don’t know, don’t say “not to my knowledge”, but instead research and appraise the vehicle, as best you can, so you can answer the question with confidence.

Businesses and their employees found guilty of knowingly violating the CPA may also be liable to substantial fines and even imprisonment, in addition to the civil damages that could be obtained by the consumer in a lawsuit.

As Ontario and the industry gradually re-opened, the UCDA started sending our on-road member ambassadors back on the road to visit members.

Visits to members started in Eastern Ontario and then in some rural areas of the Province where COVID-19 was not wide-spread. Gradually, as the Province has gone to Stages 2 and 3 of the recovery, members are being visited in the larger cities as well.

Our ambassadors have shared a few stories of the PPE measures being taken by some members they have visited. Some have come up with very laudable and creative ways of safely operating during the COVID-19 pandemic.

Here are a few:

At one dealership there was a table set up with a sign that asked visitors to use the hand sanitizer and to wait to be served. At the side of this barricaded area, there was a salesperson who asked what he could do for me. He went and found the person I was looking for and I was able to enter.

On the seats in the waiting area, there was signage that said the seats were sanitized for your safety. On that sign, it said flip over the sign once you get off the chair. The backside of the sign said the seat needed to be sanitized. I thought that was a great idea!!

Another dealership had a similar barricade at the front entrance, along with a promotional cardboard tower that said it was a sanitization station. A bottle of sanitizer fit inside a box in the tower. There were masks on a table as well as gloves for customers to use. At this dealership the staff wore masks and they also had desks with plexi-glass barriers between sales staff and consumers.

Unfortunately, not all members visited were taking the same precautions.

Another dealer had no sanitizer and no one was wearing a mask. The door was wide open, possibly to bring in fresh air, but anyone could walk in unannounced. Our rep was told that most customer visits take place outside and staff don’t wear masks so that customers feel at ease with staff who “look well”.

At one store, our rep, who was wearing a mask, was greeted by someone who wasn’t and seemed unsure how to react. He went to get a manager who said that there was no need for masks. No one wore them there. There was no sign of sanitizer or any PPE.

Many municipalities now have mandatory mask wearing by-laws in force for publicly accessible indoor areas. That includes dealerships. Public health authorities, various levels of government, OMVIC and the UCDA have all issued guidelines and recommendations to help businesses, and in particular dealers, operate safely during the pandemic.

We urge members to review PPE protocols and think out of the box where necessary to ensure that all that can be done is being done to prevent the transmission of COVID-19 to your staff and to customers and other visitors.

Extended Warranty Update

We have added two new warranty providers to our list.

In addition to those already listed, the new additions have satisfied the UCDA that their warranties are fully insured by a licensed Ontario insurer:

Veritas Global Protection Services, Inc. 1-888-222-3020
Central Administrative Service Corporation, Inc. 1-888-222-3020

Each of the companies listed below have provided the UCDA with a copy of its insurance agreement, along with a written undertaking by the insurer to notify the UCDA in the event that the coverage is cancelled or changes are made.

The UCDA asks the recognized warranty companies to have insurers provide annual 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:

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.

Exporting Concerns

Few issues attract more calls from dealers than sales where the buyer wants to buy a vehicle and pay no tax because they plan to “export” the vehicle out of Canada.

Because of this, we have written in the pages of Front Line repeatedly warning members against the practice of exempting “export buyers” from paying HST. There are several good reasons to avoid this:

1. You are underwriting the buyer’s exemption; if he or she is entitled to recover tax let them ask the HST office for it back;
2. You can’t give delivery to the buyer in Canada. Delivering it to a “shipper” is not good enough. You need solid and correct paperwork, which few dealers are getting.
3. In many cases “export buyers” are actually curbsiders in the business of exporting vehicles overseas.

Often, the “Export Buyer” will offer a bill of lading. Well, a bill of lading is not something a shipper in Mississauga can give you. It is only issued when the vehicle is loaded on a ship in Halifax, Montreal or Vancouver.

Also, we have heard of Canada Revenue Agency auditors asking dealers for proof from Nigeria, Dubai, Kazakhstan or wherever the vehicle went, that the vehicle arrived and was “registered” there, what form such proof would take … WHO KNOWS?

Our advice, charge HST on every sale no matter who or where the buyer is.

If you decide to proceed and not collect HST, be sure to handle the export yourself and use a trusted shipper who is working for you and who will help ensure you are in compliance. You must follow the export rules to the letter.

The rules being cited by the CRA can be found at:
https://tinyurl.com/t7foyoz

OMVIC Mystery Shoppers on the Road Again

OMVIC has announced they will conduct mystery shop visits at dealerships in Durham Region to monitor all-in-price advertising compliance in the coming weeks.

OMVIC says they are doing this ‘secret shopper’ initiative because of ongoing all-in price advertising violations by some dealers whose actions have resulted in consumer harm. Non-compliance is also unfair to those dealers that follow the law.

Reminder: Only HST and licensing fees can be added to the price and the ad must prominently indicate they are not included.

New U.S. Duties on NonAmerican made vehicles

Despite the implementation of the Canada-United States -Mexico free trade agreement on July 1, the United States Government has imposed duties on the import of many nonAmerican made vehicles, on the grounds of national security.

Dutiable Entry Foreign-made vehicles imported into the U.S., whether new or used, either for personal use or for sale, are now generally dutiable. Many, but not all, Canadian-made vehicles are exempt from these duties. Mexican-made vehicles are generally subject to these rates.

Autos are subject to a duty of between 2.5% and 2.8% of the declared price paid for the vehicle. Trucks, including pick-ups, many of which are made in Mexico, are subject to a duty of 25% of the declared purchase price. Vehicles made in Mexico have a VIN beginning with a “3”. If the manufacturer’s label shows the letters “TRU” as the vehicle type, it is considered to be a truck.

For more information contact U.S. Customs and Border Protection (CBP) at 202-325-8000. CBP does not have a toll free number for use outside of the U.S.

NAPA’s Third Quarter Promotion Is “The Golden Ticket”

Have you been participating in the NAPA promotions? It’s simple to do. You just need to be a UCDA member and be registered for the program free of charge. Purchase from your local NAPA store, and if you reach the minimum qualifying amount, you’re automatically entered into the draw.

We would like to congratulate the previous 2020 winners:

• Q1 Winner 401 AutoRV Canada – Visa Gift Card
• Q2 Winners Mark Wilson’s Better Used Cars and Precision Tune Brooklin – each win an IPad with AutoServe1

The COVID-19 pandemic devastated the Canadian and world economies this Spring.

The used vehicle industry in Ontario was no exception. It was almost completely shut down in April, after the Ontario government announced that dealers would no longer be considered an essential service and had to stop on-site sales (though service and repair centres were allowed to remain open).

While in theory, remote sales were permitted (sales made to buyers away from a dealer’s business location), test drives were prohibited by OMVIC. Not surprisingly, few buyers were willing to purchase a used vehicle untested. To make things worse, while bills of sale could be signed on-line, documentation relating to bank financing often could not, making financed deals almost impossible to close.

It quickly became clear that virtual or on-line sales do not work well in the motor vehicle industry, especially the used vehicle industry. Consumers want to see cars close up, sit in them,  touch them and above all, drive them, prior to making their purchase decision. They’re more than happy to find vehicles on-line … but they’re not buying on-line.

After dealers were allowed to re-open by appointment on May 4, business quickly picked up. A couple of weeks after that, dealers with outside storefront entrances could open to walkin customers. Business was certainly not back to normal, but the easing of the restrictions on how and where dealers could sell, made a huge difference to many Members. It likely saved more than a few from closing permanently.

There was clearly pent up consumer demand from the month or so that dealers were shuttered. Buyers have been coming back.

Now the problem is starting to be supply. With the physical auctions shut down, online auctions simply can’t handle the volume of vehicles waiting to be wholesaled and many Members have seen their inventory shrink. Retail prices are now starting to rebound due to these supply issues.

At the UCDA, we closed our office on March 16. Staff have been working from home since then and while it has not been business as usual, we have been able to maintain all of the services and benefit programs that Members rely on, including vehicle searches and bill of sale and other paper form orders. Plans are in the works to re-open the office in July.

Throughout the pandemic, the UCDA has been here for Members, providing regular Dealer Alert updates on government programs to assist businesses and employees and outline proper protocols to help Members carry on business and protect staff and customers during the pandemic.

Tragically, in the midst of the worst of the pandemic, unrelated to COVID-19, the UCDA lost a long-time staff member. Ruth Fleming, who had worked in the Member Services and Legal Services Departments since 1992, passed away suddenly over the Easter Weekend.

Many Members who register liens through the UCDA knew Ruth well and regularly chatted with her. Her passing was a devastating blow to Ruth’s family and friends here at the UCDA. She is sorely missed and when the office re-opens, it won’t be the same without her.

What does the future hold? We don’t know. Will auctions be able to ensure physical distancing and be able to re-open anytime soon? Will dealers be comfortable attending auctions in person? Will there be a second wave of COVID-19 in the Fall?

No one knows the answers to these questions, but if everyone remains diligent in maintaining a safe and clean environment for staff and customers, we’ll hopefully be able to return to some sense of normalcy soon. Don’t let up on using proper protocols relating to physical distancing, wearing masks and frequently sanitizing vehicles and office space. These protocols will continue to be necessary well into the foreseeable future.

https://tinyurl.com/ybh7maaj

Rest assured, the UCDA will continue to be here to help Members carry on through whatever may happen next.

The Elderly Buyer

It’s a fact of life that, as baby boomers grow older, dealers will encounter more and more elderly customers.

While customers in their 70’s, 80’s and 90’s bring a wealth of experience to vehicle buying and ownership, have the security to afford what they want and the “know how” to find it, these customers can also bring unique challenges for dealers.

We often receive calls from members who are being criticized, usually by the extended family of such customers, over deals they have made.

Some complaints relate to issues of “capacity”. For example, the family feel the elderly customer was not able to make the “right” decision, has made a “bad” deal or picked the “wrong” vehicle. In many cases it may just be that the adult children, and other family members, are unhappy that their aged relative is “spending their inheritance”!

How are dealers supposed to treat elderly customers?

With respect! They have contributed their entire lives to our society and economy and have the right to make purchasing decisions like any adult.

How are dealers supposed to respond to the family?

With caution. Remember, they are not your customer, the buyer is. Because of privacy concerns, there is little you may be able to even discuss or disclose to the family, unless the buyer gives you permission, preferably in writing, to do so.

On the other hand, in some cases, the family may be able to produce legal documents, court orders or “powers of attorney” that have some bearing on the issue of your customer’s mental “capacity”. If that is the case, make a copy of the documentation and call the UCDA Legal Department before proceeding.

What issues do dealers need to be alert to?

Be sensitive to any customer who seems confused, distracted or suffering from some disability that appears to affect their ability to understand the ‘to and fro’ of the negotiating process. This is good advice at all times, but especially so when dealing with the elderly consumer.

Be sure about the status of your customer’s driver’s licence and / or insurance. The MTO will suspend the licence of anyone unable to drive safely due to age related or other impairments (in particular for drivers over 80 years of age).

The Ontario Consumer Protection Act, 2002, contains specific warnings to businesses to be alert to consumers who are vulnerable and to avoid unfair or “unconscionable” sales. Such deals must be cancelled and all money refunded. Failure to do so could lead to claims for damages and / or fines.

Keep in mind that for many seniors a motor vehicle is both the symbol of, and the means to, an independent life. It guarantees their mobility and access to travel. All your customers have the right to shop and make purchasing decisions in peace, free from interference by anyone.

If you are ever concerned about any of the issues raised in this article, call the UCDA Legal Department (416) 231- 2600 or 1 (800) 268-2598 before you proceed.

Tricky Customer

Sometimes you just have to laugh. This story came to us by way of a reporter who deals with both sides of the dealer / repairer / consumer divide and shows that sometimes, the customer is not always as forthcoming as they should be when they have an issue: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.

A man claims that a transmission shop, which charged him thousands of dollars for tranny work, did a poor job. He drove “up North” and the transmission failed again. The transmission shop had the truck towed back to the shop to see what was up. They found that the transmission was burned out after only 120 kilometres!

Naturally, the transmission shop felt the customer must have had some kind of mishap. The customer of course denied that, so the transmission shop reluctantly agreed to again rebuild the transmission under warranty, but wanted to charge him for the tow from up North.

The customer asked the reporter to help him get the transmission shop to pay for his tow bill as well. The bill was high, so the reporter dug deeper and called the tow company to find out why.

The tow company told the reporter that they had to use two tow trucks to tow the truck, with a twenty six foot boat, attached out of a muddy field!

Not only did the transmission shop not pay the tow bill, they asked the customer to remove the vehicle from their shop as they would not be rebuilding the transmission under warranty after all!

In-House Dealer Registration

We first reported on this issue in November of 2018, as the bill to allow this was before the Ontario legislature. The idea was not a new one, we’d seen a pilot project way back in 2011 along the same lines, but this time felt different. It felt like this Government was truly motivated to proceed with dealer in-house registration and licencing of motor vehicles.

A lot of water has gone under the bridge since then, and much progress too, and then along came COVID-19, which has disrupted the best laid plans of everyone.

Strong progress has been made toward a workable pilot for a Digital Dealer registration office within dealerships. Several UCDA Members were asked to participate, as this will be open to both new and used vehicle dealers, but the planned rollout for a pilot in the Spring has now been delayed.

We will let you know more when we have updates on this, but the Government assures us they remain “committed to adopting digital practices and technologies to deliver simpler, faster, better services to the people and businesses in Ontario.”

A Deal Is A Deal

At one time or another, we have all encountered the buyer who wishes they had made a different buying decision. Some Members are faced with buyer’s remorse complaints from their own customers, or customers of other dealers who come to them with their tales of woe. Often, what it comes down to, is the customer thinks they did not make the “best” deal they could have or think they could have found a better price after the fact and they are not happy.

But does that mean their deal is not binding or legal?

A recent small claims court decision seems to suggest a “bad” deal is still a legal and binding one.

In a case from last summer, a consumer was involved in a Consumer Proposal (a type of bankruptcy process) and was rather desperate for a vehicle. The court suggests that may be why they acted in haste and did not read the lease they signed for 6 months or demand a test drive first.

The court heard they were vulnerable due to their circumstances and claimed difficulty with English, which may be why they agreed to a deal that was perhaps not the best in terms of the lease rate, costs, fees and vehicle condition … but they did make that agreement.

The court said: “As bad as the agreement is however the Plaintiffs agreed to it … [t]he Plaintiffs could have protected themselves, but chose not to.”

People make bad decisions some times, but as adults they are able to enter into such contracts and courts are not going to interfere unless the dealer fails to deliver on what was promised or the vehicle is not as described, which was not the case here.

As the court said, buyer’s remorse “does not justify setting the lease aside or finding against the Defendants. The Court cannot prevent people from entering into bad deals.”

You can read the whole case here:

https://tinyurl.com/ycefhu26

Scams – Stay Alert

COVID-19 has crippled most businesses … but not the business of the scammer.

One of our Members recently had this experience:

A customer came in, expressed interest in a newer used luxury car, said he would go to the bank and came back with a bank draft.

The Member was smart and went to the branch that drew the draft, spoke to the teller who actually wrote it and only then deposited it to their own bank account and delivered the car. Even so, the bank draft was no good. It was bought with fraudulent funds. In the time it took the bank to discover this, the car was long gone.

However, because the Member did their due diligence by visiting the issuing bank, their own bank didn’t make them give up the funds; the issuing bank had to take the loss.

The lesson here … be wary if you do not know the buyer. If they do little in the way of negotiation and they’re quick to come up with a bank draft for a large sum, you should ask yourself some basic questions.

Like certified cheques, bank drafts can be fake. Wire transfers, if done directly from bank to bank, are safer.

Be skeptical. Question bad grammar in emails, sight unseen purchases, large cash purchases with no haggle, rushed transactions and any situation that is out of the ordinary.

Make certain all your staff understand the dangers that lurk out there and protect your dealership from becoming a victim.

Return To Work

Some Members have contacted us with a perplexing problem. As dealers ramp services back up, they are calling employees back from COVID-19 layoffs only to find some do not want to return. Such employees cite COVID fears that may be legitimate, others may be less so, but what does the law say about all of this?

We do not claim any particular expertise in the highly specialized practice of Employment Law (which like Criminal Law is not an area one should “dabble” in), but these links may provide some guidance. The legal consensus would seem to suggest the law is on the employer’s side here, which is not something you hear every day in this complex area of law.

https://tinyurl.com/ya6fm7lf

Q: Can my employees refuse to return to work from a temporary layoff because they earn more on CERB?
A: No, they cannot. If your employees refuse to return to a safe work place when you recall them from a layoff, you can deem them to have resigned and will owe them no severance pay. This would mean that they had voluntarily quit their employment, making them ineligible for the CERB.
https://tinyurl.com/y9dh3sus

Q: How do we handle employees who refuse to come back to work?
A: It’s the employer’s right to have the employee attend at the workplace and that’s particularly so if the employee previously was reporting to a job site and working at the job site.
https://tinyurl.com/y9uk7z66

Q. My workplace has re-opened, but I don’t think it’s safe to return yet. Do I have to?
A. The law is on the employer’s side here, even in a pandemic. If work is available, you are expected to be there, … failure to attend for your regularly scheduled work hours [will be seen as] basically abandoning your job.

Having said this, do NOT get your legal advice from the internet, especially in a highly delicate area like Employment Law. This article is simply meant to frame the issue for you, but the devil is always in the details. Each employee and circumstance is different. So, before you take a formal position with any employee on their refusal to return, get advice from a qualified employment lawyer.

Live By The Sword

A GTA paralegal has learned the hard way that being overly aggressive in a lawsuit can come back to bite you.

Scarborough Mitsubishi performed a Spring Maintenance package for Arnold Miguel at his request, but overcharged him by some $127.97.

When Mr. Miguel pointed out the overcharge error, the store offered to refund the overcharge, but Mr. Miguel decided to sue the store instead in small claims court.

In his lawsuit he alleged the store made “false, misleading and deceptive representations” contrary to the Consumer Protection Act and sought not only a full refund for the repair, but also “punitive” damages of $24,000. Punitive damages are reserved for cases where a court feels a party’s conduct warrants a punishment to make clear certain behaviour should be censored, prevented or deterred.

The court awarded Mr. Miguel the $127.97 he was overcharged (the sum the dealer had earlier offered him anyway) and ordered him to pay court costs for the ill-advised punitive damages claim to Scarborough Mitsubishi in the sum of $2,000.

The court found the store had made a simple and innocent error. The Spring promotion was intended to start on April 1, 2017, but the employee who posted the promotion had done so on March 31, 2017 because he was going to be off work for a couple of days.

The charging code required to bill for the maintenance package was not yet available. He was overcharged, but the court accepted the testimony of the store’s employees that this was an error.

Mr. Miguel doubled down on this turn of events and appealed. Unfortunately for him, the court found his appeal was procedurally flawed, as it was filed too late and on its merits could not succeed in any event, as the trial decision at the small claims court was correct.

The court ordered him to pay Scarborough Mitsubishi court costs for the appeal of another $3,500.

So a $127.97 overcharge dispute, that should have been easily resolved, ended up costing Mr. Miguel $5,372.03!

https://tinyurl.com/yb2j5ru2

The Ontario government will not be giving OMVIC the ability to use Administrative Monetary Penalties (AMPS) against dealers. That’s the word from officials with the Ministry of Government and Consumer Services, following our front page report in last month’s Front Line.

We have been told by the Ministry that “the proposed changes would not give any authority to OMVIC to issue AMPs”. The proposals contained in Bill 159 to establish the use of AMPs in enforcing the Consumer Protection Act (CPA), will be restricted to the Consumer Services Operations Division of the Ministry. No other regulatory bodies will be given the power to issue AMPs.

This assurance follows our Front Line story, several UCDA meetings with Ministry officials and a formal submission to the Ontario legislature’s Standing Committee on Justice Policy. The committee held public consultations and review of the proposals contained in Bill 159, a bill to amend the CPA.

While it’s welcome news for members that OMVIC will not be able to issue AMPs, this doesn’t mean that AMPs would not be used against dealers by Ministry compliance officers. Whether AMPs charges are laid by OMVIC investigators or by Ministry compliance officers, our concerns about what this could mean for members still exist.

As we wrote in the last Front Line, our concerns stem from what AMPs are and how they work. Generally, the process for laying charges under provincially administered legislation, like the CPA or the Motor Vehicle Dealers Act, begins by issuing a summons to the accused to appear in court. An AMP is more like a speeding ticket.

An accused does not automatically get their day in court. An AMP means a fine is issued and the accused is presumed guilty and expected to pay the penalty. An accused can appeal to court, but because AMP offences are considered to be “strict liability” offences, the only defence available is to deny having committed the illegal act.

It doesn’t matter whether there was any intent to commit the offence or if the accused used reasonable due diligence to avoid committing the offence. In short, the due process that is usually afforded an accused is gone.

AMPs have been used for many years to deal with offences, such as environmental spills, which can cause serious and often irreparable harm. However, their use in regulated consumer-oriented industries is quite new. The UCDA’s position on the use of AMPs against MVDA registrants is that they are not necessary, since OMVIC has multiple enforcement options when violations occur.

The details of how AMPs will work and what types of offences they may relate to, will be set out in regulations that are expected to be drafted in March. The UCDA will be participating in a comprehensive review of whatever these draft regulations might say.

The UCDA is monitoring this very closely and will engage in consultation with the Ministry about the draft regulations, to seek clarification on how, if at all, our members will be affected and to ensure that what comes out of amendments to the CPA, is fair to members.

We’re pleased and relieved to have received clarification about AMPs from the Ministry, but the UCDA will continue to be watchful, to ensure that the rights of members are not compromised.

More to come!

Extended Warranty Update

We have added another extended warranty provider to our recognized list at: https://tinyurl.com/w29crcg

Guarantee VC / GVC Premium Warranty Company
1-800-268-3284

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

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.

Who Should Receive a LightDuty Vehicle Inspection Report?

It’s already been five years since the Ministry of Transportation modernized the requirements for safety inspections. While there were early concerns about the time needed and the extra cost of more onerous inspection requirements and paperwork, the industry quickly became accustomed to the changes and it is now the new normal.

A significant change to the legislation brought in by the new standards was the requirement for the technician performing a safety inspection on a light-duty vehicle to complete an inspection report and provide it to the customer. This has always caused some confusion and we still receive inquiries from time to time about it.

The inspection report is meant to provide the “customer”, for whom the inspection is being performed, with information on the thickness of brake rotors and pads, in the case of disc brakes and the condition of brake shoe lining and drums, in the case of drum brake systems. Tire tread depth and condition is also required to be recorded on the report. As well, “tell tales” (warning light indicators) also need to be made note of by the inspector on the report.

The confusion about the report stems from the requirement to provide the completed form to the “customer”. Dealers, of course, think of their customer as any client purchasing or leasing a vehicle from the dealer. If the dealer has its own service department, clients for whom service is performed are also the dealer’s customers. So when a dealer does a safety on a vehicle as part of the sale, the report should be given to the dealer’s customer who is
purchasing the vehicle.

But, if a dealer sends its vehicles out to a third party service centre to perform repairs and service work, the dealer is the customer, as far as the service facility is concerned. Same for a garage which is a licensed Motor Vehicle Inspection Station (MVIS). If a dealer sends its inventory to an MVIS facility for safety certification, the station likely doesn’t know, or care, who the dealer’s customer is. As far as the station is concerned, the dealer is the customer. So the station will provide the inspection report to the dealer.

In this case, does the dealer need to pass the report on to its customer who is buying the vehicle?

Well, that’s a good question. The legal answer is “No, they do not need to”.

The rules about safety inspections, including the need to supply a customer with an inspection report, apply to MVIS stations. Unless the selling dealer is the MVIS station that issued the safety, the rule does not apply to the dealer.

Having said that, should a dealer supply a copy of the report received from an outside station to its customer when selling the vehicle? That’s entirely up to the individual dealer, but being fully transparent will likely go a long way towards earning the customer’s confidence and trust about the vehicle’s condition.

Curbsider New Year

A new decade begins with new convictions.

OMVIC got the New Year started with Ontario courts accepting some hefty curbsider guilty pleas; all on January 17th, 2020.

In Paris, Ontario, Robert Mcglogan a.k.a. “Kelly” pleaded guilty to one count of curbsiding under the Motor Vehicle Dealers Act, 2002 and was given a fine of $5,000.

In Kitchener, Robert Klein pleaded to one count of curbsiding and received a fine of $2,500.

Finally, in Cambridge, a company called Motorhead Classic Cars Ltd. o/a Motorhead Classics, made more noise than the old metal-rock band of the same name, when they pleaded guilty to one count of curbsiding and were handed a fine of $10,000!

Competition Bureau Priorities for 2020 and Beyond

Everyone likes to make ‘to do’ lists when a new year dawns, especially when a new decade dawns. When the Deputy Commissioner of the Deceptive Marketing Practices Directorate at the Canadian Competition Bureau shares her list, it’s hard not to take notice.

In recent remarks, Deputy Commissioner Josephine Palumbo identified four enforcement priorities for her office going forward into 2020:

(a) influencer marketing;
(b) false online consumer reviews;
(c) dishonest information about data privacy; and
(d) dishonest price claims.

For our members, in this digital age of online marketing, probably the two that could most affect members are false online consumer reviews and dishonest price claims.

These two issues speak for themselves, so we don’t need to go into a whole lot of legal mumbo jumbo for dealers to understand. First, it is not a super idea to post fake reviews
to try and make your dealership (or your products) look better in rankings on Google, Yelp, car listing sites and so on. Second, dishonest price claims are a very bad idea.

1. Astroturfing – This is the posting of reviews that speak highly of your dealership, but which are actually posted by your employees or friends of the dealership, not by “real” customers. Creating a falsely positive image of your business is not just silly, it can cost you big bucks. In 2015, this kind of practice cost Bell Canada over one million dollars in fines to resolve the Bureau’s concerns.
2. Dishonest price claims – Ads that suggest your vehicles are somehow magically lower priced than your competition are risky. Why? Because the Bureau might come calling and expect you to actually be prepared to prove that! As reported in earlier Front Lines, this kind of deceptive pricing cost the Hudson’s Bay Company over $4.5 million in penalties and costs.

As Ms. Palumbo said in her remarks on January 22:

“It is also important for advertisers operating within this fast-paced economy to know and adhere to the rules of fair competition, as set out by the Competition Act.

Because strong, vigorous competition benefits Canadians.

It means better choices, better prices and fairer business practices, and it means a stronger economy where everyone can prosper and thrive.”

The Luxury of Time

The Federal Government plans to introduce a 10% luxury goods sales tax (excise tax) on purchases of personal automobiles, boats, and aircraft valued at $100,000 or more (indexed to inflation). Commercial use of automobiles, boats and aircraft will likely be exempt.

As we have not yet seen the 2020 budget, we don’t know many details, such as when it will be implemented, how it will affect sales already made, and whether it will also apply to leases.

What we do know is that the Liberal Government is a minority government and this proposal likely faces some pretty stiff opposition, so stay tuned.

Defamation

Members know the power of social media, both good and bad. While often on the receiving end of negative consequences, businesses are not the only ones who can find this medium cuts both ways.

A woman has learned the hard way that you can’t say anything you want about a business in an email.

A disgruntled woman whose parents had sued a furniture store over a dining room table and won a small award in small claims court, sent emails to family, friends and colleagues calling the company “untrustworthy” and “deceitful”.

The company considered the emails to be defamatory and sued her. It WON!

Because the woman showed malice (she admitted her motivation was “revenge”), refused to apologize and encouraged others to republish the email, the court awarded the company $15,000 in damages and $25,000 in court costs!

https://tinyurl.com/yx3e23rs

In another, more recent, case a disgruntled bride was so dissatisfied with her wedding planner that she mounted an online campaign. The wedding planner was convinced that this drove its customers away, and effectively put her out of business.

She sued the bride and WON $115,000 in damages!

The judge said: “This case is an example of the dangers of using the internet to publish information without proper regard for its accuracy.”

https://tinyurl.com/tawucys

Every case is unique and Members shouldn’t expect to be able to sue over any negative comment made by an unhappy customer. However, these cases show that, in the right circumstances, a business can successfully take action for unjustified defamatory comments that may damage its reputation.

No, this has nothing to do with your electricity bill!

Way back in the Fall of 2013, Ontario’s then Liberal government made a lot of noise about bringing in something called Administrative Monetary Penalties (AMPs) as a means of fining businesses, including motor vehicle dealers, for violating various laws.

Back then, the UCDA filed a submission with the Ministry of Consumer Services expressing our serious concerns about the proposal. So did other business organizations.

The government backed away and the proposal did not go anywhere …. or so we thought.

Now, more than six years later, the Conservative government is resurrecting the AMP idea as part of Bill 159, introducing amendments to the Consumer Protection Act (CPA).

The government is proposing to add AMPs as a tool that could be used, not only by the government, but also by regulators, including OMVIC, as an option to enforce compliance with the law.

We are once again concerned for our Members.

Why?

Well, we are concerned because of what an AMP is. Unlike laying a charge for violating the Motor Vehicle Dealers Act, or CPA, and issuing a summons to the accused dealer to appear in court, an AMP is a conviction on the spot.

Even if you appeal an AMP and get your day in court, you are denied the defence of due diligence available to most accused. You are issued the fine, presumed guilty and you are expected to pay it. The usual due process is gone.

The 2013 proposal was very specific about what kind of charges an AMP could be used for and how much an AMP fine could be (up to $20,000). The current proposal is very vague and difficult to get a handle on at this early stage, with the details to be left to regulations that would be brought in later.

We do know AMP fines could be as high as $50,000!

We don’t know who would keep the money from an AMP fine (the government or OMVIC).

We don’t know what type of offences the government would allow AMPs to be used for.

We don’t want to wait around to find out, so the UCDA has made a written submission to the Standing Committee on Justice Policy, which is reviewing Bill 159, expressing our concerns and asking, at least, for restrictions on how AMPs could be used and in what circumstances they could be used.

OMVIC currently has more than enough tools in its arsenal to deal with contraventions by both dealer and salesperson registrants.

OMVIC can lay charges against registrants in Provincial Offences Court.

Through a Notice of Complaint, OMVIC can initiate a Discipline Hearing, with penalties as high as $25,000.

In appropriate situations, OMVIC can Propose to Revoke a dealer’s or salesperson’s licence.

Does OMVIC really need more power to do its job?

We’ll keep you posted.

Extended Warranty Update

We have added additional warranty providers to our list, which we updated in our last newsletter. They have satisfied the UCDA that their warranties are fully insured by a licensed Ontario insurer:

Assurant Vehicle Protection Services 1-800-387-0119 (formerly Coast to Coast)
People’s Choice Warranty Ltd. 1-888-284-2356

Each of the companies listed below have provided the UCDA with a copy of its insurance agreement, along with a written undertaking by the insurer to notify the UCDA in the event that the coverage is cancelled or changes are made. The UCDA asks the recognized warranty companies to have insurers provide annual 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:

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.

Out-of-Province Buyers And Tax

As surprising as this might sound, despite the fact these tax rules have been in place for years now, dealers keep getting tripped up on sales to out of province buyers. Even large financial organizations, who fund a lot of these deals, don’t seem to have a standard protocol to make it easy for dealers and consumers.

Suppose you have a buyer from Quebec. In most cases, Ontario dealers are not registered with the Quebec Government to collect Quebec tax (some Members close to the border who do a lot of business with Quebec buyers are registered to collect and remit Quebec Sales Tax [QST]).

That means the consumer will have to pay the QST, which is 9.975%, at the Quebec licence office when they register the vehicle. Don’t forget that part. We get calls from consumers who were not told that and they are very upset when they get home to find out!

So what does the Ontario dealer actually have to collect and remit to the Federal Government (because all dealers are required to collect Federal tax)? The answer is simple.

If the vehicle is delivered in Ontario, charge 13% (HST). If the dealer ships the vehicle to the buyer in Quebec, charge 5% (GST). A Quebec consumer who takes delivery in Ontario, pays 13% and drives back home, can apply for a rebate from the Federal Government to get the 8% Ontario portion of the 13% HST back, so long as they have proof of the tax they have paid.

But, we still see deals where a dealer sells a vehicle to a consumer who takes delivery in Ontario and charges 5% federal tax and 9.975% QST on the bill of sale, messing things up considerably.

The dealer has not collected enough Federal tax. They have no way of sending the QST to the Quebec government, their paperwork is all wrong and the purchaser will be asked for the QST when registering the vehicle in Quebec. As we say, a mess.

We spoke with one lender about their process and as you might expect, they leave this pretty much up to the dealer. The dealer requests the loan advancement, including the tax that they determine needs to be collected to get the deal done. If the dealer chooses to send the customer with a cheque including the QST, that is entirely up to them.

All advancements are made to the dealer, so it is only through the dealer that the customer will get the money they need to pay the QST on a financed deal, or it will have to come out of the customer’s own pocket. Dealer’s need to keep this in mind and make sure the buyer understands, as well.

Of course, dealers get buyers from all Provinces and different issues arise depending on the tax regime in any given Province.

For a summary of all these rules and GST and HST rates in all Canadian jurisdictions, please visit our website at:

https://tinyurl.com/r8d4drz

The Resignation Boomerang

Our legal department recently received an interesting call from a Member. Apparently, one of the Member’s employees, a service technician, exercised a fantasy many of us have had at least once in our working lives and told the boss to ‘take this job and shove it, I ain’t workin’ here no more …’.

Unlike in the old Johnny Paycheck song, however, the fellow was back the next day. Having cooled off, he decided the place wasn’t so bad after all and he changed his mind about quitting.

Trouble was, the Member kind of liked his first answer!

As we’ve mentioned in Front Line before, employment law is littered with all kinds of land mines for unsuspecting employers. We urge any Member confronted with these sticky questions to consult the experts, a lawyer specializing in employment law preferably, as our legal folks here are no experts in this area. Like criminal law, it is a delicate area in which to give advice.

Having said that, there are some interesting takeaways from past court decisions.

The decision to leave one’s job is a big deal. Courts will expect the intention to be crystal clear, so no one can doubt the person really meant to quit. Employers should try to get such a decision from the employee in writing; a temper tantrum and storming out may not be enough.

Even in a simple case, the decision can be pulled back by the employee unless and until the employer has made its intention to accept the resignation crystal clear. It should be in writing, such as a confirmation letter, email or text. Further evidence would include the hiring of a replacement.

Consider this Court of Appeal case, Kerr v. Valley Volkswagen, 2015 NSCA 7 (CanLII) in Nova Scotia. Mr. Kerr worked as a parts manager at the dealership and told his supervisor that he wanted a raise or he would quit, because he had another dealer who would pay him what he wanted.

Mr. Kerr was told if his performance improved in three weeks, he could earn the raise. His performance did not improve and his ultimatum was not withdrawn. After the three weeks, the dealer formally accepted his resignation. Mr. Kerr tried to revoke his ultimatum at that point, but it was too late.

The court found that a reasonable person would agree that Mr. Kerr had intended to quit.

We can’t think of anyone more reasonable than a UCDA Member!

Over 250 Charges Laid Following Investigation

The following comes from globalnews.ca.

Police have laid more than 250 charges following an eightweek investigation into tow truck companies.

Durham Regional Police launched Project Bondar, which focused on several tow truck companies in the Greater Toronto Area. It was all sparked after a series of complaints from drivers following an accident.

“They were told they had to pay a very high fee in order to get their vehicles back,” says Const. George Tudos with Durham Regional Police.

That fee sometimes reached thousands of dollars, according to a Global News investigation. Tudos says the issue was the car was being held for ransom as well.

“A lot of times the companies would not return them unless those monies were paid,” Tudos explained.

Global News spoke to a customer whose car was being held for more than $4,000. It was later released after our investigation.

Through Project Bondar, more than 30 vehicles have been recovered — including two luxury cars, a Ferrari 488 and a BMW M4, among a number of vehicles police believe may have been stolen.

“Both of these vehicles were in the process of being taken apart,” Tudos said.

“We had eight tow trucks, two of which were engulfed in flames.”

The team executed warrants in Brampton, Scarborough, Etobicoke, Ajax, Clarington, Pickering and Whitby. As a result, a range of charges were laid.

“There were a lot of contraventions against the Highway Traffic Act and Consumer Protection Act,” Tudos said.

Police say they also met with tow truck drivers to educate them on best practices as well. Investigators say they also want drivers to be mindful of who they allow to tow their car.

“Make sure you’re aware of what your insurance company covers,” Tudos said.

“Make sure the tow company removing your vehicle is a legitimate one.”

This comes just weeks after Toronto police investigated a number of tow truck fires in Toronto and York Region. Three vehicles were set ablaze within 30 minutes of each other, and police believe accelerant was used in two of those cases.

It appeared that tow truck drivers were competing for business, according to Mark Graves with the Provincial Towing Association of Ontario.

Graves told Global News in December it appears there was “a significant amount of escalation” recently, adding several companies seem to be challenging each other for work.

It’s not clear if Project Bondar is connected with this, but Const. Tudos says they are working with other police agencies.

If you have any information that could help, contact Durham Regional Police or Crimestoppers.

The UCDA was founded by a small group of dealers in 1984, including our first Executive Director, Bob Beattie.

Thanks to their tireless efforts along with the generous assistance of Homer Stephens and his wife Ruth HartStephens, who actively promoted the benefits of joining the fledgling association at the Toronto Auto Auction, membership soon numbered in the hundreds. The momentum has continued without slowing ever since and this summer UCDA membership soared past 5,000 members!

On November 26, UCDA directors and staff were on hand as Manheim Toronto hosted a celebration of the UCDA’s 35th anniversary. Dealers at the auction were treated to a delicious lunch and anniversary cake for dessert.

Following the sale, a special draw was held for a 65 inch LG television. Dealers that bought or sold a vehicle on the UCDA lane that day were eligible to win. Robinson Buick GMC Ltd. was the lucky winner !

A few photos of the celebration.

Read Your Bill of Sale

Yes really; read the whole thing, front and back.

It’s a legal contract. It describes the rights and obligations of the buyer and seller (you). We have all become a little numb to standard form contracts. They are slid in front of us when we rent a car, do a home renovation or buy a cell phone. And let’s not forget the 15 plus page micro-print contracts displayed to us when we buy, book or reserve things on-line that literally no one reads.

We want you to break that habit when it comes to your standard form bills of sale and leases. They all have clauses designed to protect you and some that are important for you to follow in relation to your customer.

For example, we have mentioned many times how often we get calls from consumers and dealers over deposit disputes. When a buyer wants to back out of a deal, they will sometimes call us weeks after the deal was cancelled. Not only did they not get a refund of their deposit (which is what they really wanted), but they also did not receive a letter from the dealer explaining what the process is.

If you read the terms on your contract, you will see that it contains a clause requiring that you send a notice and follow certain steps with respect to a deposit. On UCDA forms, it is clause 4 on used and new vehicle bills of sale, and clause 17 on UCDA lease agreements.

It can be more than embarrassing to a dealer who ends up in front of OMVIC or a court over a deposit dispute if the dealer has failed to follow the requirements of their own contract! More than embarrassing … it can be fatal to the dealer’s case.

In another example, we took a call in October from a dealer on a new car sale. He was waiting on a new build since April. The delay was upsetting the customer, for sure, but also causing the dealer concern. The valuable trade-in appraised back in April was now, months later, depreciated and, the dealer was feeling trapped in a deal that was swiftly looking sour to him.

He wasn’t trapped. In fact, this situation was anticipated in the contract. He didn’t even know it. He was told to flip over his UCDA New Vehicle Bill of Sale and read clause 5 which provides:

5. DELIVERY (NEW VEHICLES): If the vehicle being purchased is a new vehicle which the dealer is ordering from the manufacturer and the dealer is unable to deliver the vehicle to you within ninety (90) days of the date of this agreement, the dealer will notify you in writing. The dealer or you may then cancel this agreement, in writing. This agreement will automatically be cancelled five (5) days following receipt of notice of delay unless a  new delivery date is agreed to in writing. Further delays in the delivery date will result in automatic cancellation of this agreement. The dealer will return your deposit if this agreement is cancelled as a result of this clause and no further obligations will be owing.

Contracts in use in our industry are not overly complex. UCDA forms are designed to be as clearly worded and concise as possible, but you have to read and understand them to enjoy the full benefit of the protections and guidance they provide to both you and your customers.

Extended Warranty Update

The UCDA regularly updates the list of extended warranty companies that have satisfied the UCDA that their warranties are fully insured by a licensed Ontario insurer.

Each of the companies listed below have provided the UCDA with a copy of its insurance agreement, and a written undertaking by the insurer to notify the UCDA in the event that the coverage is cancelled or changes are made. The UCDA asks the recognized warranty companies to have insurers provide annual 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, updated as of November 1, 2019, that have met our requirements for insurance recognition.

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.

MVDA Regulations

The Motor Vehicle Dealers Act, 2002 prohibits dealers from offering third party warranties to their customers unless:

• The warranty is insured by a licensed Ontario insurer; or
• The warranty company has posted a $500,000 irrevocable letter of credit to the Motor Vehicle Dealers Compensation Fund

OMVIC also lists the companies it recognizes in each category on its website:

https://tinyurl.com/yaczkjaz

The UCDA considers full insurance coverage to be the best form of protection to adequately shield consumers and dealers in the event that a warranty provider fails to honour its obligations. A letter of credit can quickly be used up, which could then potentially leave the dealer that sold a failed warranty on the hook for consumer claims.

Contact James Hamilton at j.hamilton@ucda.org if you’d like more information.

Insurance Rates

The UCDA’s Insurance Program is celebrating 25 years of providing Members with a quality, stable and affordable service.

Over this time, our program has performed better than most rate groups and hasn’t seen significant rate increases. On the contrary, members get rebates for being claims free.

But things are changing. Over the past ten years, cars and trucks have become high tech marvels and high performance luxury machines. In the old days, a simple fender bender or bumper “bump” was a nothing claim, but today that claim can be in the thousands of dollars. There is no such thing as a “nothing claim” today.

Another term dealers need to understand is “frequency”. The more often “you come to the well”, the bigger the insurance risk you are. Even if you didn’t cause the accident, the more times you are involved in one, the more problematic you become for the insurer.

“No Fault” is Not “No Cost”

Probably the most misused and misunderstood term in the insurance world is “No Fault”. If you are involved in an accident and it is determined by the police that you didn’t cause it, it doesn’t mean that there won’t be a claim against your policy. Your policy pays to fix your car and if you are hurt, the cost to your policy could be hundreds of thousands of dollars.

Add that to the accident benefits and bodily injury legal battles and we have an insurance industry crying the blues. According to them “they are in crisis”.

The Facility Fund

This is another insurance term dealers need to understand. Under Ontario law the insurance industry must offer you insurance. In their wisdom, the industry developed the “Facility Fund”. This is where high frequency claimers, whether at fault or not, get their insurance, when no one else will insure them.

It is not the place you want to end up. The annual premium of a recent past member went from$7,500 a year to $97,000 a year in facility, due to frequent at fault and not at fault accidents!

This year, many insurance companies have dropped dealers, taxi/ride-share, and trucking programs entirely due to significant losses.

The UCDA will continue our efforts to work with our partners to get the best deal possible for Members. We have a proven track record and you have proven to be a good risk over the years. We will keep you advised.

Having an accident or any loss incident is why you have insurance. However, today you need to make claims wisely, because more than ever, you need insurance to stay in business.

Exporting Concerns

We have written in the pages of Front Line repeatedly warning members against the practice of exempting “export buyers” from paying HST. There are several good reasons to avoid this:

1. You are underwriting the buyer’s exemption. Canada Revenue Agency, not dealers, should be deciding whether HST paid by a purchaser is refundable.
2. It is difficult to export vehicles properly. You can’t give delivery to the buyer in Canada and giving it to a “shipper” is not enough. You need solid and correct paperwork to back it up; paperwork few dealers receive and which may be hard to get, time consuming to collect and complex to organize.
3. In many cases “export buyers” are actually curbsiders in the business of exporting vehicles overseas without being registered with OMVIC.

Think a “bill of lading” is good enough? Think again.

First of all, a bill of lading is not something a shipper in Mississauga can give you. It is issued only when the vehicle is loaded on a ship in Halifax, Montreal, Vancouver, or from whatever port it is being shipped. 

Also, we have heard of Canada Revenue Agency auditors asking dealers for proof of entry from countries such as Nigeria, Dubai, Kazakhstan and others. It must show that the vehicle actually arrived and was “registered” there. What form such proof would take … WHO KNOWS?

Care to guess how “easy” it will be to get this paperwork from some of these places with different degrees of social order not to mention cultures, language and practices?

Our advice (unless selling to a Status Indian and following correct procedures); charge HST on every sale no matter where the buyer says the vehicle is going.

If you decide to proceed and not collect and remit HST, be sure to handle the export yourself and use a trusted shipper who is working for you and who will help ensure you are in compliance. Learn the rules and FOLLOW THEM to the letter.

The rules being cited by the CRA can be found at https://tinyurl.com/t7foyoz.

Small Claims … Getting Bigger

The Ontario Government has announced that, effective January 1, 2020, the limit for lawsuits in Small Claims Court will increase from $25,000 to $35,000.

This is the first increase in ten years (when it was increased in 2010 from $10,000 to $25,000) and should reduce the strain on caseloads at the higher court levels. It will also make it easier for parties to sue for higher sums of money without needing to retain a lawyer.

Holiday Hours

Dealers must be closed on Christmas Day, Wednesday December 25 and New Year’s Day, Wednesday 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, Thursday December 26, should they wish to be. However, members must 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.

Dealers have some options when it comes to Boxing Day. For example, they may choose to be open on Thursday, December 26th and be closed on Christmas Eve, Tuesday, December 24th.

Another option would be to be open with partial staff on both December 24th and 26th, as long as all staff get three paid days off for all the required holidays. Dealers can come up with different variants on this, as long as all staff end up with three paid days off for Christmas, Boxing Day and New Year’s Day. Staff must agree to the days.

The UCDA office will be closed from Christmas Day until Monday, December 30. The office will also be closed on Wednesday, January 1st.

The UCDA search facility office will be open as indicated below:

The UCDA and OMVIC are delighted to announce the long-awaited launch of the new Motor Vehicle Dealers Act Key Elements Course. This program was designed to benefit dealers, managers and salespeople who have not yet taken an OMVIC Certification Course (those registered before 1999). It is also for those who have taken the Certification Course prior to the new MVDA being introduced in 2010.

This is a significant expansion of the current education program. With classes held in major cities across Ontario, most UCDA members will not have to drive more than one to two hours to get to a course.

The Key Elements Course will help dealers and salespeople comply with current regulations and legislation governing the wholesale and retail automotive industry. This includes the Motor Vehicle Dealers Act, the Consumer Protection Act and the Sale of Goods Act.

Individuals who successfully pass the MVDA Key Elements Course and maintain registration with OMVIC are entitled to use the OMVIC designation “C.A.L.E. — Certified in Automotive Law and Ethics.”

Class Options…

We’re giving students the option of taking just the 1-Day, Key Elements portion or, taking the class as part of the UCDA’s three-day, comprehensive Dealership Manager Professional Certification Program*:

Option 1:

As part of the UCDA’s management course, students can take the 1-day, Key Elements portion; a multiple choice test is taken in-class at the end of the course day.

Option 2:

Students may take the 3-Day Dealership Manager Professional Certification Program, with the Key Elements Course incorporated on day two. Testing will take place in class, immediately following the Key Elements session.

For those apprehensive about writing a test … don’t worry … the results do NOT in any way affect your OMVIC license! The test is for your benefit, to help ensure you are better informed.

Courses begin in January, 2020. Reserve your spot today!

*Dealership Manager Professional Certification Program

The Dealership Manager Program provides best business practices, processes, strategies and tools to succeed in the areas of leadership and managing people, managing the daily operations of a dealership, marketing and managing the Used Vehicle Department. The program is designed to provide dealers and managers with professional, integrity based management training that also protects both consumers and dealerships through legal compliance.

Insurance Pink Slip May Now Be Displayed On Cell Phone

The Ontario Government has announced, effective September 5, that drivers may now display proof of insurance on their cell phone instead of by way of a paper pink slip, if they wish.

There are a number of conditions to this, of course. Chief among them is not all insurance companies may offer this feature. It’s not clear how this may affect travel outside of Ontario. There is also concern that at some future point, insurers may stop offering paper slips entirely, or charge the insured extra fees for issuing paper slips.

Dealers might wish to check with their insurer as to whether this has any effect on them. The UCDA’s garage insurance program through Baird MacGregor, will continue to issue pink slips to insured members and will not be charging extra fees to do so.

https://tinyurl.com/yy9gsvzu

Possible Changes Coming To The Consumer Protection Act (CPA)

Several pieces of legislation have a direct and immediate effect on the day-to-day business of motor vehicle dealers.

One is obviously the Motor Vehicle Dealers Act, others include the Sale of Goods Act and the Consumer Protection Act. The CPA is wide-ranging consumer protection legislation covering everything from repairs, to door-to-door sales to unfair or unconscionable business practices.

So, when the Ontario Government proposes changes to the CPA, dealers need to be aware.

One right the CPA presently gives consumers who can prove they are victims of false, misleading or deceptive business practice is to fully cancel the contract within one year of the date of the agreement.

In a consultation paper released in this summer, the Government proposes changing this to one year from the time the consumer discovers they have been the victim of an unfair practice. This could extend the right of rescission (as it is known) far beyond one year from the date of the sale.

The UCDA has been in touch with the Ministry and made our concerns known. It’s still unclear at this point, if the proposals would be restricted to in-home sales, or be extended more generally into the marketplace … including to sales made by motor vehicle dealers.

Among other proposed amendments that may cause dealers further concerns are:

• expanding the mandate and authority of those charged with enforcing the Act (including OMVIC) to ensure they have the powers necessary to compel businesses to comply with the Act;
• requiring businesses to ensure that, upon cancellation by a consumer of a service contract that is subject to the Act, all related agreements consumers were subject to (such as financing arrangements or registered security interests relating to the primary contract) are also fully terminated; and
• amending the Act to allow for Administrative Monetary Penalties (AMPs), (basically fines imposed through receiving a “ticket”, rather than through the order of a judge) to be imposed on parties that contravene the provisions of the Act.

It remains to be seen whether any of these changes will actually be implemented and if they are, what if, any powers will be extended to organizations like OMVIC. The UCDA will monitor developments closely.

Social Media … Live by the Sword, Die by the Sword!

Businesses have come to rely, perhaps too much, on good reviews on Google, Yelp, and so on. Dealers are no different.

Have you ever taken the time to go on to other dealers’ sites and read the reviews that are posted there? It can be entertaining … even educational.

Of course, there are the suspicious looking ones that praise the business to the heavens, but appear never to have left another review about anyone, anywhere. There are the strange ones posted by angry people (what the internet world might call ‘trolls’), which tend to say more about the person posting them, than the business they’re attacking.

Then there are the legitimate posts that either praise a dealer or offer criticism. The best of them explain what their concern is and often, in those cases, you will see the dealer offer their side of the story and perhaps even a solution where appropriate.

We have, however, noticed a disturbing trend lately.

Apparently, some dealers have decided it is an appropriate use of their time to post negative comments on other dealers’ review sites!

As was noted earlier, since negative posts often say more about the party posting than about the business they are commenting on, we would urge dealers to avoid this at all costs.

In one instance we are aware of, a dealer posted a review on another dealer’s website that they felt this dealer was “fake”, that they “lied”, “falsified information” and are a “horrible business”.

Aside from the fact this can get the dealer leaving such a post sued for libel, as the dealer who received this review is considering, it is unseemly and must stop.

If the dealer who posted this review were a member of the UCDA, which thankfully they are not, they would be subject to expulsion from UCDA membership for a violation of our Code of Ethics, key components of which are:

• To promote and convey a positive image on behalf of all dealers and support efforts to improve the industry’s products and services; and
• To promote the benefits of industry products and services, without being unfairly critical of those offered by other dealers.

Social media is a powerful tool. It can provide an excellent forum for dialogue, but when misused it can be a dangerous sword that can cut both ways.

Certification Course Classes

We have 5 OMVIC certification classes currently scheduled through the end of October at the Wye Management Training Facility in Vaughan (unless otherwise noted).

The classes are taught by UCDA trainers.

For more information and to register, please contact Michelle, at education@ucda.org or Val, at v.maclean@ucda.org .

UCDA at Habitat for Humanity Automotive Industry Build Day

The weather couldn’t have been nicer on September 18, as UCDA Executive Director, Warren Barnard, armed with a hammer and tool belt, joined other volunteers from several automotive industry organizations to kick off the first-ever Canadian Automotive Industry Build for Habitat for Humanity Canada.

A t t e n d i n g the ceremony with the UCDA were team members from Cox A u t o m o t i v e C a n a d a , as well as partners from Canadian B l a c k B o o k , CARFAX Canada and Hyundai Canada.

Other sponsors included Desjardins, the Bank of Montreal, Scotiabank and TD Canada Trust.

Together, these sponsors presented a cheque for $100,000 to Habitat. The UCDA and Manheim Canada donated money raised at the 2018 and 2019 Ruth HartStephens and Bob Beattie Golf Tournaments.

The Canadian Automotive Industry Build allows the automotive industry to help build stronger communities by assisting families to achieve strength, stability and self-reliance. On average, Habitat generates $175,000 of benefits to society for every home built.

• In 2018, 238 families began building strength, stability and independence through affordable homeownership.
• Since 1985, 3,619 Canadian families have partnered with Habitat Canada to get access to a decent and affordable home.
• In 2018, Habitat’s affordable homeownership program generated almost $42 million in societal benefits to the community.
• In Canada, Habitat’s affordable homeownership program has added $68 million to the affordable housing portfolio in 2018 alone!

Habitat homes are sold at fair-market value, with an interest free mortgage, to selected families who may not be eligible for a conventional mortgage, and who are also expected to contribute up to 500 volunteer hours to Habitat.

Canadian Automotive Industry Build volunteers will be at the Mississauga build site, along with other volunteers and Habitat c o n s t r u c t i o n staff, through to the end of October. On October 4, six U C D A s t a f f members will join volunteers from Manheim C a n a d a t o continue the construction of the two homes on the site. The homes should be ready to be occupied sometime in 2020.

For more information about Habitat for Humanity, please visit: https://habitat.ca/

This month the UCDA achieved a milestone. We reached 5,000 members!

When the UCDA’s first Executive Director, Bob Beattie, and 7 other used car dealers got together at a restaurant in 1984 to discuss how they could unite the used car industry in the face of proposed changes to rules governing used vehicle sales, they could not have foreseen what their creation would grow to become in the future.

The UCDA became the first non-profit organization in Canada established to represent the needs of dealers who sell used vehicles. The early years focused on lobbying efforts with government, aimed at making government aware of the concerns of an industry that was often ignored, or worse, sneered upon. It was for good reason that the Association’s mission statement was and remains, “To enhance the image of the industry”.

The UCDA grew rapidly. The single most important factor in our early growth was the introduction of a phone-in lien search for members, to by-pass what was at the time a very cumbersome government phone service.

The early lien search has surpassed everyone’s wildest dreams, having now grown into the largest online vehicle information search portal in Canada, www.ucdasearches.com.

Member services have always been the priority of the UCDA. The better the services … the more likely a member will renew year after year. Keeping members was a favourite mantra of Bob Beattie.

In the 1990s, used car dealers needed an insurance program and today Baird MacGregor Insurance Brokers remains the UCDA’s only insurance brokerage. Today more than 1,600 members enjoy rate stability and a unique annual claims free rebate.

A few years later, we added our NAPA parts program, which each year provides more than a million dollars in rebates to members. Throw in an affordable health plan and a credit card merchant discount program and the value of a $200 annual membership is pretty clear.

The auto industry has changed a lot in the past 35 years. We have seen industry self management (OMVIC), and completely overhauled regulation with the Motor Vehicle Dealers Act, 2002.

The industry has seen mandatory disclosure requirements, mandatory education requirements, and some of the strictest advertising regulations in Canada.

Through it all, the UCDA has played a significant role in the development of Ontario’s auto industry. And we’ll be here as the industry undergoes even more significant changes in today’s digital world.

With this in mind, you and all members now have exclusive access to list vehicles for sale on your vehicle listing site: ontariocars.ca

We would not be where we are without the strong support of members … and now there are 5,000 of you.

Congratulations and “Thank You” from all of us at the UCDA!

The Uber of Insurance Relief Should Give Lessors a Lyft

Since the disruptors of the people moving business entered the scene, lessors have wondered about their exposure for lessor’s liability on vehicles used by drivers for companies like Uber and Lyft.

Leasing companies enjoy a cap on liability exposure of a maximum $1,000,000 for any loss or damage from personal injury resulting from the use of one of their leased vehicles.

It was an open question whether such a cap applied to leased vehicles used for ridesharing services.

That question was answered when the provincial government’s Bill 107 (Getting Ontario Moving Act, 2019) received Royal Assent on June 6.

The Act extends the liability cap as long as the parties are “dealing with each other at arm’s length”.

This is a huge relief for commercial auto lessors whose leased vehicles could be used by ridesharing companies.

What Employers Need To Know 2019

It can be really hard for today’s employers to keep track of all the expectations placed upon them by the provincial government.

Courtesy of Littler LLP (Labour & Employment Law Solutions,) we have a neat summary, all in one place, of the high points.

Covering expectations, training, posters, handouts, representative and committee requirements (depending on number of employees) … it’s all here.

The publication, can be found at:

https://tinyurl.com/y62fzskw

It covers Employment Standards, Workplace Safety, Violence and Harassment, Disability and Accessibility, Pay Equity, Hazardous Materials (WHMIS) and Smoke Free postings.

It is all current as of 2019, which is useful as the ground keeps shifting for Ontario’s Employers.

Ford Thief

From the wacky news files comes this story reported on by media out of Detroit.

While theft is no laughing matter, and this story would not have as much impact if this guy was stealing tires and so forth off of say Hondas or Chryslers, but this was a Ford and his name is:

Henry Ford!

He is presently a fugitive at large.

Says deputy chief Aaron Garcia: “So Henry Ford, he’s stealing GPS units out of vehicles, he’s stealing tires, he’s robbing these cars, … it’s almost like a disgrace to the Ford Motor Company.”

Meanwhile, if you see Henry Ford jacking a Ford, there is a reward for his capture:

https://tinyurl.com/yxc522kg

Consumers Vote “No” On Data Sharing

While we can’t speak to the science behind it, or the questions, or how they were asked, it is interesting what consumers say when they are asked about data.

83% say no to selling their data.

The short answer seems to be, when they are asked, consumers don’t want their personal data monetized or shared with third parties.

Dealers, Manufacturers, Advertisers, Web Sites and other stakeholders would be wise to pay attention.

Based on a survey of 1,403 current car shoppers by Autolist, 83% think no one should be allowed to sell their data.

70% think they should control (and own) the data that their own vehicle creates.

53% feel that laws are not properly addressing vehicle data, privacy or were not aware of the issue at all.

https://tinyurl.com/y6hbrwm6

Odometer Bonus

Most dealers know about the famous cancellation law in the Motor Vehicle Dealers Act. It allows a consumer the right to cancel … no questions asked, no deductions, no appeal … within 90 days of delivery of a purchased or leased vehicle, if the dealer fails to declare or properly describe on the contract, any of the listed items which relate to odometer, rental, police or emergency vehicle, branding, make, model or model year.

Most dealers understand that if they make a mistake on the bill of sale and record an odometer reading that is lower than the true reading, the customer has the right to cancel.

But, what if the reading you record on the odometer section of your contract states the reading is HIGHER than the true reading on the vehicle? In other words, your customer gets an odometer bonus!

This is an interesting question, because we all know (or we assume) the general intent of the law is to prevent consumers having vehicles forced on them that have higher kms (or miles) than is declared on the bill of sale. But what does the law actually say?

Section 50 of the General Regulations to the MVDA contains the 90 day cancellation rights available to any consumer (ie. non-dealer) on purchase or lease.

With respect to the odometer:

https://tinyurl.com/y3x4qaa4

Cancellation of contracts for non-disclosure

50. (1) For the purposes of section 30 (2) of the Act, if a registered motor vehicle dealer entered into a contract under which another person, who was not a registered motor vehicle dealer, purchased or leased a motor vehicle from the dealer, the person may cancel the contract if,

(a) the dealer has not accurately disclosed, in the contract, the information required under any of paragraphs 3, 7, 17 and 23 of section 42;

(4) A disclosure of a distance required under paragraph 3 or 4 of section 42 shall be deemed to be accurate if it is within the lesser of 5 per cent or 1,000 kilometres of the correct distance required to be disclosed. O. Reg. 333/08, s. 50 (4).

(5) A person may not cancel a contract under subsection (1) more than 90 days after actually
receiving the motor vehicle. O. Reg. 333/08, s. 50 (5).

The Section makes no distinction between errors that are lower than the true reading or higher, it focuses simply on accuracy and the requirement to declare on the contract the “correct distance”.

Despite what might seem logical, even if your customer gets an “odometer bonus” by taking delivery of a vehicle with lower actual kilometers than the contract promised them, they may still exercise the right to cancel.

Identity Theft … Fake Buyers … Dealer Charge Backs

Who’s Job is it to Verify that the Customer Information is Accurate?

The auto industry wants instant approval for car loans and the lenders want efficient data handling and processing. So, we now have instant “Auto Approve”. Problem solved … except when it all goes wrong!

Lenders Say… “It’s Your Job”

The lenders say that the dealer stands “in the shoes of the lender” so verification is your job. The dealer sees the customer and receives their information.

The lender gets the dealer’s paper work weeks after the deal is funded and trusts the dealer has done their “due diligence”. The contract between the lender and the dealer contains a “total recourse” clause and thus the demand for their losses.

Dealers Say … “We Are Not The Police For The Lenders, We Are Not Trained To Spot Identity Theft”

What is reasonable “due diligence” by the dealer? What should you have to do with the customer to satisfy the lenders that you are complying with the contract you signed with them? Unfortunately, the contracts don’t spell out what “your job” is.

• How many pieces of ID do you get?
• Do you phone the employer to confirm employment details and salary?
• Do you call landlords to confirm how long the customer has lived there or get proof of home ownership?

There is a real disconnect here, and the UCDA would like to hear from you …Who’s Job is Verification?

Please send your response to r.pierce@ucda.org.

Telus Is Coming …

Soon, the UCDA and Telus will be announcing a new member service. For the first time a leading phone company will be offering special UCDA rates for business mobile phone and tablet plans and line charges. These new rates are very attractive … details coming soon.

The 4th Annual Ruth Hart-Stephens & Bob Beattie Golf Tournament was another huge success this year! We’d like to send a big thank you to our participating UCDA Members, Sponsors and UCDA staff who are always there bright and early to make sure registration runs smoothly. A very special thank you also goes out to Shannon Newman of Cox Automotive for her tremendous organizational skills and to the staff from Cox Automotive and Manheim who were there to assist her.

UCDA Member Service providers generously stepped up to sponsor our tournament, so much so that every sponsorship available was completely sold out! Desjardins was once again our Title Sponsor, NAPA was our power cart sponsor and donated their player spots as a Manheim Auction draw prize. Baird MacGregor Insurance Brokers were once again the sponsor of the Post Golf Reception, where drinks and hors d’oeuvres were enjoyed by all.

So, a big thank you to all of our new and returning sponsors – we couldn’t have done it without you:

The primary focus of this fundraiser is always the Bob Beattie and Ruth Hart-Stephens Scholarship Awards at the Automotive Business School of Canada. The successful applicants will receive their scholarships in September.

Anti-Spam Update

2019 has seen a number of Canadian dealers receive citations from the CRTC under Telemarketing Rules (Part 3, Section 3, https://tinyurl.com/y5d2lw6q) for breaches of the National “do not call registry” system. A citation identifies alleged violations and sets out the specific corrective action to be taken within a certain time frame. The names of individuals and organizations that receive citations are published on the CRTC’s website: https://tinyurl.com/y3se28wz

This should serve as a timely reminder about rules restricting how businesses may contact consumers to promote their products.

The CRTC also polices anti-spam communications, and it’s not just businesses that need to be concerned. It is also the officers and directors of the companies behind those communications.

In April, the first decision by the CRTC came down levelling a fine of $100,000 against an individual for off-side communications by a corporation he owned or controlled (the maximum fine is one million dollars).

The CRTC issued the fine, under the Canadian AntiSpam Legislation (CASL), against Brian Conley, the president and chief executive officer (CEO) of a group of businesses known as the “nCrowd” companies.

The business activities of these companies involved promoting the products and services of merchants on various websites, including by the sale of electronic vouchers for these products and services.

In this case, the companies sending the messages quickly dissolved or otherwise ended, so the CRTC decided that any enforcement actions directed towards these companies would have no deterrent effect. As a result, the CRTC pursued the corporate directors through vicarious liability in order to encourage future compliance with CASL.

The CRTC investigation lead to Decision 2019-111, which found that between September 25, 2014, and May 1, 2015, nCrowd, Inc. sent Commercial Electronic Messages (CEMs), or caused or permitted any of its subsidiaries to send CEMs, to electronic addresses without consent, and without a functioning unsubscribe mechanism, contrary to CASL. The CRTC found that Brian Conley acquiesced in these violations, while he was the president and CEO of the nCrowd companies.

https://tinyurl.com/y6pduocr

A dealer-focused Preparedness Guide has been designed for more information on anti-spam laws:

https://tinyurl.com/y9zjq9s6

This document is used with the kind permission of SCI MarketView, NortonRose and Canadian Auto Dealer. More information on all of this available from SCI at https://tinyurl.com/ya85zefd or call 888.919.8084.

The CRTC is tasked with enforcing CASL and also has a useful website with more information at https://tinyurl.com/obb5tr7.

Why Keep It Secret?

As our readers know, the number one reason consumers call us for mediation help is to request cancellation of their purchase. Unfortunately, customers often change their minds after signing the “sales final” bill of sale or lease agreement and then want help getting their deposit back from the dealer.

As members also know, UCDA bills of sale and leases are designed to address this with clauses and protections for both dealers and consumers contained within the contract.

For example on the front of all UCDA New and Used Vehicle Bills of Sale the words “SALES FINAL” are written. On the back, is Clause #4, ACCEPTANCE BY PURCHASER, a blueprint for how to proceed with deposits in these cases. On the UCDA lease, the Clause is #17.

More and more often, we are finding that customers who call us do not actually have a copy of their contract in their hands. Why? It seems some dealers will not provide a copy of the signed contract until the day of delivery which may not come for days or even weeks after it is signed. This is not a good practice and does not help the dealer.

When we try to help the customer read the various provisions that apply to their question, they have nothing to refer to and we have to suggest they call the dealer to get a copy of the front and back of their contract. Not only is this a nuisance, but it can also jeopardize the deal.

Without a contract dealers have no legal protection, so why wouldn’t a dealer want the customer to have that important bill of sale or lease from the moment the deal is struck?

There’s another good reason.

It’s the law! The Motor Vehicle Dealers Act requires that the purchaser or lessee be given a copy of the contract “immediately after signing it”.

Why risk having a customer or a court challenge the legality of a binding contract where you did everything right except the easy part – sliding a piece of paper across the table to the customer?

How Secure is Your DMS?

A story reported on by U.S. media, concerns a DMS (Dealer Management Service) provider out of Ohio who failed to properly protect consumer data stored by 130 or so dealers using their platform.

The result was a catastrophe in terms of a privacy breach, allowing upwards of 12.5 million consumers’ personal information to be accessed by hackers in 2016.

Needless to say the fallout for the company since has been severe, but what about the dealers … and their customers? Only time will tell where, when or if that data might land.

Meanwhile the DMS has settled issues with the Federal Trade Commission.

What safeguards does your DMS have in place? How secure is your DMS?

If you don’t know the answers to these questions … ask your DMS.

https://tinyurl.com/yxgxlzf3

Misleading Advertising And The Competition Tribunal

Our readers may recall we previously reported on a Competition Tribunal case against the Hudson’s Bay Department Store (HBC).

It was alleged that HBC engaged in deceptive marketing by offering sleep sets at grossly inflated prices (prices so high no one ever, or hardly ever, will buy them at that price point) then drastically lowering the price to actually sell them at a more normal market price, while claiming huge resulting savings in their advertising to consumers.

It was also alleged that HBC falsely advertised “clearance” or “end of line” sleep sets, implying in the minds of the public that these are inventory priced to move while, during these periods, HBC continued to order new sleep sets to meet the demand.

As is not uncommon in such matters, the whole affair has been settled by way of a “consent agreement” in which HBC does not admit the allegations, but agrees to a series of corporate improvements and fines.

HBC will update its advertising practices and pay a fine of $4 million, plus $500,000 in costs, to the Competition

Bureau! This took over two years to resolve and you can only imagine the legal bills for both sides had to have been massive.

You can read the whole decision here: https://tinyurl.com/y47cgulf

The take away message for dealers?

Take these allegations and substitute cars or trucks for “sleep sets”.

If dealers did the things alleged here, they could face similar action by the Competition Bureau. When you think about it, you can see why it matters.

How could there ever be a level playing field between vendors or confidence in the public perception of any industry that engaged in false advertising such as was alleged in this case?

Indeed that is why OMVIC’s Standards of Business Practice, https://tinyurl.com/y6y4mrrz, which have been in place now for almost two decades, specifically contains sections to prevent:

1. Misleading price advertising; and

2. Language that falsely suggests inventory “must go”, “fire sale” pricing, “last chance” and that kind of thing … if untrue.

Some of this is common sense really, but it bears repeating, and keep in mind, it’s not just OMVIC that’s watching!

Appraisals – Clarification

In our last issue we mentioned that dealers are able to appraise used vehicles for tax value on private transactions. 

The Ontario Government will accept a dealer’s appraisal of value to apply provincial sales tax at a licence office when private sellers and buyers are doing a deal.

As a point of clarification, and as the form itself makes clear, this service can only be performed by General (Retail) dealers, not, for example, Wholesale dealers.

Thank you to the alert readers who pointed this out to us.

https://tinyurl.com/y9knrbts

An “Other” Identification Card

We have written many times about the “Certificate of Indian Status” card, issued by the Government of Canada, which is the only form of identification acceptable to exempt a Status Indian from taxes on a vehicle sale or lease. This is what the card looks like https://tinyurl.com/y3yjaj6f

Métis and other such Aboriginal ID, membership or association cards are not issued by the Government of Canada and do not exempt the holder from paying HST.

Recently, a new card has come to our attention. It is not being offered by a First Nations person, or a Métis, Inuit or other Indigenous person, but rather a card whose origins might be best described as quasi-religious in origin.

On at least two occasions, the holder of this card has tried to convince dealers that this card entitles them to a tax exemption on the purchase of a vehicle. It doesn’t, for the same reasons other cards that are not a Certificate of Status Indian Card issued by the Canadian Government do not qualify.

The card styles itself as “Allodial American National Identification” and as you can see, it is quite ornate, colourful and full of information, none of which has any relevance at all to the tax payable. We have removed the picture, name and address of the user of this card.

Be aware, if a dealer does not properly collect and remit HST on the sale of a motor vehicle, CRA may look to the dealer to recover it.

Repair / Tow Truck SCAM

When we discuss what we can write about for the next issue of Front Line, scams are fertile ground, because they come in endless varieties, are often fascinating in their silly complexity and they never, ever, go away.

Why is that? Sadly, because they work for the scammer. They work at least often enough to make it worthwhile for themselves, anyway.

We last wrote about the old repair / tow truck scam in 2013 and enough of our members have, or are, repair facilities that a recent email received by one of our members bears talking about.

The story goes like this …

A hearing disabled man from Manitoba needs his car fixed. He asks for a quote for a complete brake job and explains he has just moved to Ontario, but the vehicle is still in Manitoba (which is convenient because the dealer can’t run the VIN to see if it is even in this guy’s name). All of this by email, of course, due to his disability.

Anyway, he gets the quote and now things get interesting. You see, he is going in for surgery (for his hearing disability). He needs a huge favour, he has to pay by credit card (read fake or stolen). He plans to pay you $4,000. You are to take the $1,000 from that for your repair quote and send $3,000 by interac e-transfer (or cash, or wire transfer, it doesn’t matter really) to the tow truck company.

If you agree, he will helpfully provide all the contact details and the only real money in this whole fantasy will be what you send the “tow truck company”. You will, of course, never see the vehicle because there isn’t one and you will never, ever, see your money again.

The sad story used by the so-called “customer” can vary, but the idea is the same. He or she are in a tough spot and need a favour from you. Please, before you send thousands of dollars to people you don’t know … just don’t do it. If you’re in any doubt, call the UCDA for advice.

The numbers are in for Ontariocars.ca and they show a dramatic improvement over the first four months of this year compared with the same period in 2018. The number of Users, Leads and Pageviews are all way up. Organic traffic has shown a huge improvement; a direct result of the UCDA’s ongoing digital marketing and Search Engine Optimization (SEO) campaigns.

If you’re not listing on the site now, you may not know how easy it is. Ontariocars.ca offers syndication from most major listing sites, DMS systems and aggregators.

In addition, the Ontariocars app, available at no charge for both iOS and Android operating systems, allows you to upload vehicles to the site in minutes.

Step By Step

1. Download the Ontariocars app to your android or iPhone
2. Add a vehicle
3. Scan the VIN with your phone
4. Add listing price, mileage and other details
5. Add photos
6. Review and list your vehicle

Click below to see just how easy it is:

https://www.ucda.org/ontariocars.aspx

The mobile and desktop apps are perfect for smaller dealers who may not have enough vehicles or the proper listing package with other sites to syndicate.

Once your vehicles are on Ontariocars.ca, you can manage your inventory and track leads as they come in.

Listing your vehicles on Ontariocars.ca is Free.

There are no curbsiders or private sellers to taint and compete against your listings.

And the site is generating free leads for UCDA members with listed inventory.

Watch for more features coming to the site soon!

Email support@ontariocars.ca for more information and to get started.

Canadian Tire Gas+ Contest

During May, 30 lucky visitors to Ontariocars.ca will win free gas from Canadian Tire. Each day, site visitors will be asked to find Otto, the Ontariocars icon.

Each visitor who finds Otto will be eligible to win $100 in gas from Canadian Tire Gas+.

One winner will be drawn each day until May 30th. All the daily winners will be entered into a random draw at the end of the month for Free Gas for a Year.

Up to $2,500 worth!

Appraisals

Dealers may know that they can appraise used vehicles for value on private transactions. The Ontario Government will accept a dealer’s appraised value to apply provincial sales tax at a licence office when private sellers and buyers are doing a deal.

The required form can be obtained at a Driver and Vehicle Licence Office and can also be found here:

https://tinyurl.com/y9knrbts

Be aware, that the Government expects your honest opinion. If you artificially report low valuations or otherwise act improperly, the Ministry of Finance may take issue with you.

Recently, we have heard of dealers being asked to conduct appraisals based on photographs. Members should obviously refuse to provide this service without seeing the vehicle. You need to inspect the vehicle as if you were taking it in on trade and provide your best good faith estimate about the wholesale value.

The Form states that anyone who knowingly makes a false or misleading statement is guilty of an offence under the Ontario Retail Sales Tax Act. For the sake of your reputation and the small fee you’re probably receiving for the service (a fine would likely be higher), doing any less than your best is not worth it!

OMVIC Nabs Curbsider Advertising On Kijiji

In a press release in late March, OMVIC described sales made to unsuspecting consumers by one Szymon Kozlowski, “acting as a dealer without reigstration”, otherwise known as a curbsider. OMVIC successfully prosecuted him.

OMVIC said he used Kijiji to advertise vehicles he bought from private citizens during a two-year period from 2016 to 2017.

He also, apparently, tampered with some of the vehicles’ odometers and, in one case, sold a 2008 Toyota with 56,753 kms on the odometer to an innocent consumer. In truth, it had actually traveled well over 300,000 kms.

The court viewed this behaviour seriously, sentencing Kozlowski to 30 days in jail, even though it was his first offence.

Kijiji is not the only site where these miscreants lurk. Curbsiders can be found on most any listing site that allows private ads. You won’t find any on Ontariocars.ca.

This is why we promote our vehicle listing site, as a dealer-only advertising site.

At Ontariocars.ca UCDA members can display their vehicles to consumers without these distractions. Guaranteed!

OMVIC reported that Kozlowski was convicted on four counts of curbsiding (Motor Vehicle Dealers Act) and four counts of committing an unfair business practice (Consumer Protection Act). After his sentencing in Mississauga Provincial Court, he was taken into custody to begin serving a 30-day jail sentence. He was also placed on probation for two years.

You can read the full press release here:

https://tinyurl.com/y3apydgd

Personal Liens

More often than not, when a customer wants to buy a vehicle, they need financing to pay for it. Sometimes, as part of that financing, the customer wants to borrow more money to pay off household debts or other loan obligations, such as lines of credit or credit card debts.

Some dealers are adding these loans to the price of a vehicle and funding it as any other vehicle sale. For example, a vehicle is being sold for $35,000, but the customer wants to take away $5,000 to pay off debts, so the purchase price of the vehicle is shown as $40,000 on the bill of sale. When the funds arrive from the bank, the customer is given a cheque from the dealer for $5,000.

This has become known as a “personal lien”, probably because it is similar to what happens when a vehicle is taken in trade with a lien on it that needs to be paid out as part of the financing.

But, in reality, that’s not what it is. When you take a trade-in with a lien, part of the loan is advanced to clear the lien and part of the loan is advanced to pay for the vehicle you are selling. It’s not added on top of the sale price of the vehicle you are selling.

The “personal lien” practice increases the sale price beyond what might be considered a fair value for the vehicle, and in the case of a new vehicle, certainly beyond MSRP.

Is it legal?

When we are asked this question we tell dealers it is not legal unless the customer and the bank agree to it. What we mean by this, is you cannot assume the customer and the bank understand what is being done just because they “say” they understand. As the months and years pass by, people have a tendency to “forget” such understandings when it is convenient for them to do so.

If the customer or the lender become disenchanted with the deal they agreed to, then they may start questioning why the vehicle was so grossly in excess of fair market value, why so much HST was paid on the sale and why the vehicle is worth so much less today than what is actually owed (negative equity).

Our advice if you are doing a deal like this (and we don’t recommend you do), is to spell out on the bill of sale exactly what is being done and why, so everyone is clear what is being agreed to and what is being financed by the bank.

Most contract disputes happen because of what is left unsaid in agreements. Try to avoid that fatal error.

Cautious About Leasing

Regular readers of Front Line will know that we have written plenty about leasing in the past. Often our articles are cautionary, not because we don’t like leasing, but because many dealers don’t fully consider the downsides and other pitfalls involved.

Leasing is an amazing way to put metal on the road for people who can’t afford to buy a car outright, or don’t qualify for purchase financing. Some simply don’t want to own a car for years and years. There will always be a place for leasing in our market, because it is very popular with Canadians.

As noted, however, dealers who lease need to think about many things: lessor’s insurance, liens, liability, end of lease safety hassles, and so on. Now, we can add insurance settlements to the list.

A dealer puts a vehicle on the road as an “in-house finance”, at the end of which the customer becomes the “owner”. Sounds like a “sale” right? Well the dealer kept the vehicle in their name “like a lease”, even though the contract is really a lease to own or conditional finance sale agreement.

So what?

Well, in our example, after making two payments the customer writes off the vehicle.

If it’s a sale, the customer would be treated as the owner and receive a settlement from the insurance company that reflects what it would cost the consumer to replace the vehicle. In other words, they would get the retail replacement value. If it’s a lease, that vehicle is owned by the dealer and the settlement will reflect a wholesale replacement value.

In a case recently brought to our attention, the difference meant thousands of dollars; all because the vehicle was in the name of the dealer. It would have been better for our dealer in this instance to put the vehicle in the customer’s name and secure his financing by registering a lien.

Leasing is great, as long as dealers go into that business model with their eyes wide open to both the benefits and the downsides.

A Timely Reminder

We have received enough calls and complaints on the subject of auto loan insurance to put out a reminder about marketing these products.

When we say auto loan insurance, we are referring to a grab bag of insurance-like products such as life, disability, replacement value, GAP and other similar products related to a consumer loan or lease of a motor vehicle. They are all, in one way or another, designed to offer full or partial payment of the balance owing on a vehicle loan in the event of an unforeseen event like loss of a job, accident or a total loss situation.

There is no doubt these products are good profit centres for dealers. Financial institutions like them too, for the extra security they bring to the loan, especially in the case of nearprime or sub-prime consumers.

The push by dealers and the pull by lenders has resulted in the need for this reminder … it is illegal to describe these products as “required” or “mandatory” on any deal. For example, it’s illegal to tell a customer their loan will not be approved unless they agree to also purchase one of these auto loan insurance products.

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

It’s not illegal to explain the very real benefits of these products to consumers, but there is a line between upselling and insisting … make sure you know where that line is and don’t cross it!

Annual General Meeting

The UCDA Annual General Meeting will take place at 4:00 p.m., Thursday June 13, 2019 in the Bennett Room at the Holiday Inn, Toronto International Airport, 970 Dixon Road in Toronto.

When The Energizer Bunny Stops Marching

In February, the UCDA received our first consumer complaint about a hybrid vehicle’s battery reaching the end of its useful life.

The consumer, a 21 year old woman, bought the best used car she could afford, a 2008 Honda Civic Hybrid last summer for $7,550.

By November, she started to experience strange problems with it. The radio wouldn’t work, the windows stopped functioning properly and her power steering was malfunctioning more often than not. Her concerns went from being merely aggravating to alarming pretty quickly, as the vehicle started to look and feel unsafe to her.

The problem? Her Integrated Motor Assist (“IMA”) battery was dying. Right on schedule it seems based on the 10 year life span predicted for IMAs. The real problem, of course, is
these nickel metal hydride batteries don’t come cheap, and that’s never news a used car buyer wants to hear.

The cost to replace an IMA battery is in the thousands, not hundreds, of dollars. The customer could not afford this and wanted out of the vehicle entirely. Not exactly a “green choice” but one she may have to confront.

Since the dealer she bought the hybrid from offered no assistance, she made a complaint to OMVIC and is hoping they will be able to persuade the dealer that sold her the vehicle last summer to help her out. Honda Canada has already been contacted and has not had much to say beyond telling her the unit is out of warranty.

This is not a surprise. We expected an increase in problems like this when hybrids first came on to the scene. The concern is, of course, not restricted to Honda vehicles.

Most manufacturers offer hybrid and electric vehicles and they are now common in the used vehicle marketplace. There will be more instances like this and our industry needs to be prepared.

Does a dealer selling a used hybrid or electric vehicle that is likely reaching the end of useful working battery life, need to anticipate this and either address it by refurbishing it or by warning the buyer in writing of what is likely soon to come? Hybrid and electric trade-ins need to be appraised with this in mind … same when bidding at auction.

We aren’t aware of any case law in Ontario offering guidance as of the writing of this article … but stay tuned … it’s likely to come soon.

Life After Death

Data and Your Vehicle

Have you noticed how much vehicles today know about you? Bluetooth enabled, bristling with tech and computer power, these vehicles know your email addresses, calendar, contacts, where you drive, how often you drive there, how many people you carry, how fast you drive, GPS locators, even video in some cases, and countless other data pieces as well.

We often joke that the car knows more about you than you do. But it stops being funny when you realize these vehicles don’t unlearn any of this after you stop being the owner, or even after the vehicle gets sent to the scrapyard.

Although the CNBC report linked below focuses on Tesla (because it has as much tech as any car on the road today), it can apply to any modern vehicle:

https://tinyurl.com/y2kv6emz

All this data is stored on computers in the vehicle. Anyone who knows anything about computers knows they can be “hacked”. Sometimes hackers do it for kicks, sometimes they are after useable data. The point is, you don’t know what kind of hacker is poking around your once-upon-a-time best friend.

The best advice? It takes a tech to know a tech, maybe we should start asking questions of manufacturers about how to “wipe” this data from the vehicle’s system prior to sale or scrap.

We certainly need to start thinking about this because plenty of other folks with potentially bad intentions sure are.

Certification Course Classes

We have several OMVIC certification classes coming up.

For more information and to register, please contact Michelle, at education@ucda.org or Val, at v.maclean@ucda.org