Carcraft, the used car supermarket chain with 11 sites, has been criticised by the Office of Fair Trading for its sales and aftersales operations.
And the OFT has said the motor retail sector should note its action against Carcraft as a signal of its continued interest in the used car market.
The OFT got involved after some customers complained that their vehicles suffered significant problems shortly after they bought them from Carcraft.
It found that the advertised 120-point pre-sale inspection was not always completed.
Carcraft, which also owns webuyanycar.com which came in for separate criticism earlier this year, has promised to change its business practices.
Its spokesman said: "We had already made changes to many of our products and services in order to assist customers, a fact the OFT acknowledges."
The OFT found Carcraft did not repair or replace some cars which were unsatisfactory, and misled customers about the scope of its aftersales guarantee.
Its other concerns included a failure to make clear the terms of motor finance to customers, such as the level of repayments, not making clear to some customers that the aftersales guarantee came with a charge, rather than being free, and allowing some customers to drive vehicles off its premises without valid road tax.
"Car buyers often choose to purchase from a large dealer in expectation of peace of mind," said Cavendish Elithorn of the OFT.
"Carcraft promised customers that it aimed to help them 'find the perfect car with confidence', but we do not think its practices ensured that it always lived up to expectations or met its legal obligations.
"The industry should take note of our action against Carcraft."
Last year, the OFT warned used car dealers they must comply with the law or face enforcement action, after years of high levels of complaints related to used car transactions.