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Pendragon to appeal £134,000 fine for failing to disclose ex-rental car history

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Pendragon, one of the biggest dealer groups in the UK, is to appeal a £134,000 fine after a Middlesborough Court ruled that it failed to tell a customer that a used car it sold was an ex-rental vehicle.

Middlesbrough Council’s Trading Standards team took Evans Halshaw parent company Pendragon Motor Group to court after receiving a complaint from a member of the public.

A spokesperson for Pendragon told AM: “We are disappointed with this decision and surprised at the level of fine, particularly after being acquitted of the charge relating to misleading action.

"We are a reputable retailer and consider very carefully our legal obligations. This is a complex area of law and having taken advice, we will be appealing.”

Middlesbrough Council said the size of the fine is down to the fact Pendragon was taken to court for the same reason in 2016.

Teesside Magistrates’ Court heard evidence of a single allegation that Pendragon had failed to disclose important information about the previous ownership of the vehicle which would have affected the consumer’s decision about whether to make a purchase.

District Judge Helen Cousins, who heard the case, concluded that: “It may be a matter for debate as to whether the number of previous owners of a motor vehicle is, in itself, information a consumer ‘needs’.

“However, in a case where an advertisement promoting the positive features of a vehicle which make it attractive to potential purchasers describes the vehicle as ‘one registered keeper’, it seems to me that the average consumer does indeed need to be properly informed about what that phrase means.

“In my view an average consumer would be misled by such a description if applied to an ex-hire company vehicle without further clarification.

“I therefore find that the identity of the one registered keeper as a car rental business is information the average consumer needs.”

"The action we have taken here is a very clear protection of consumer rights," Cllr Julia Rostron

The court was told how in April 2017 the potential customer saw an advertisement for a vehicle said to have one registered keeper. He made further enquiries and paid a refundable fee of £200 for the car to be brought to a dealership nearer to his home.

When he went to see it, he found the condition to be unacceptable but he also discovered that the one registered keeper was in fact Enterprise Leasing Company.

As a result the buyer did not purchase the vehicle and his deposit was returned in full. He then complained to Middlesbrough Council’s Trading Standards.

Pendragon Motor Group Ltd was found guilty following a trial last month. The company was brought back to court on November 21, where a fine of £134,000 was imposed as well as an order to pay £9,360.47 costs.

This is the second time Pendragon has been punished after it was prosecuted by Middlesbrough Council in 2016 for the same reason.

In that case Pendragon was found guilty of two offences and fined £4,000 in total with a victim surcharge of £120 and costs of £2,248.52.

Judith Hedgley, Middlesbrough Council’s head of public protection, said: “The law makes it quite clear, it requires customers to be given enough information about important matters in any purchase to enable them to make an informed decision whether to buy.

“This company has not changed its practices since our first prosecution in 2016 and therefore this outcome should not be a surprise to them.”

Cllr Julia Rostron, Middlesbrough Council’s Executive Member for Adult Social Care and Public Health, said: “The action we have taken here is a very clear protection of consumer rights.

“Consumers should be given all the relevant information when they are purchasing goods so they can make an informed decision - any right-minded person would consider it of importance if ‘one previous owner’ turned out to be a car rental company.

“It is of serious concern that this is the second time we have taken this company to court on the same issue and we hope that the size of this fine and the judge’s comments will drive the message home once and for all hat this behaviour is unacceptable.”

ASA ruling puts microscope on ex-fleet cars

An Advertising Standards Agency ruling in October 2017 said that “vehicles that were ex-fleet (having previously been used for business purposes), including whether the car had been driven by multiple users was material information likely to influence a consumer’s transactional decision” and therefore that because the adverts “had omitted material information regarding the cars having been previously used for business purposes whilst part of a fleet, we concluded that they were misleading.”

At the time, Graham Jones LL.B (Hons.) FIMI, director of legal services, Lawdata, said the ASA ruling itself doesn’t give rise to a claim for compensation. Its effect is limited to requiring the named advertisers to ensure that future adverts “did not mislead by omitting information that they had to show that their vehicles were previously used for business purposes whilst part of a fleet.”

However, he said it highlighted the importance of complying with the Consumer Protection Regulations 2008.

The regulations prohibit both misleading actions and misleading omissions, which are defined as matters which cause “or is likely to cause the average consumer to take a transactional decision he would not have taken otherwise.”

The argument being promoted is that an average consumer would be less inclined to purchase an ex-fleet car due to concerns about increased levels of wear and tear or previous maintenance, and therefore the information should be disclosed.

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  • barber - 22/11/2018 13:24

    This punishment is absolutely ridiculous. I have no affiliation to the company so I am impartial in my opinion. The original complainant put down a deposit which he had returned to him after viewing the car. Surely that's the end of the story. Obviously whoever was responsible for prepping the car needs a talking to but that's about it. The customer hasn't lost anything other than some time going to look at a car, something which happens every day. The previous ownership shouldn't make a penny difference to the selling price, and I'm sure if the car had been prepared properly there wouldn't even be a cause for concern. With ex rental cars, they tend to be under a year old so they have two years warranty left, they tend to have their service done at the dealership if it hasn't already and finally, you don't always know if it has been driven by 50 people or it could have been a staff car. As long as the car is checked correctly and any faults rectified, what is the real problem? How many one old lady driver cars have had new clutches? I hope they win their appeal, maybe cite the 1000's of customers who have bought ex rental cars without issue.

  • Noel Leavy - 22/11/2018 14:00

    Barber :- The rules have been clear for years this has been going on since forever and the industry still doesn't learn. Retailers are fully aware of the consequences of doing this. Regardless of reconditioning and preparation rental cars have a stigma which surrounds them from the buying public. What's not clear in the report is how many were being sold by Pendragon under similar circumstances. With regards to service history and warranty as you have stated, that is a different issue. Manufactures also take a different view when a dealer presents a manufacturer with a warranty claim on an ex-rental vehicle. Its easy if you have one declare it to the customer and the customer can make a decision based on condition and more importantly selling price. An ex-rental vehicle is worth less than a one owner retail car and should be priced to sell.

  • barber - 22/11/2018 14:35

    Sorry but I disagree with you on all your points bar one. Yes, let the potential customer know the history of the car, but that isn't to give the customer the starting point for a negotiation. Why should the car be worth less as an ex rental? For example, if a car is 10 months old with 10000 miles, it is worth £xxx. If it was a pre reg or an ex rental, that doesn't automatically subtract a value from it. Some customers may not want it, so leave it, but don't take value away because of ownership. Besides which, a selling price is subjective to the market, the customer at the time and the skill or lack of skill of the salesman. As regards any warranty claims, in over 15 years of buying for stock and selling ex rental amongst other sources, I have never had a manufacturer reject a warranty claim based on previous ownership. I've had them myself for my wife and family and never had a problem. Yes there is a stigma attached to them but, again, it's normally subjective rather than based on experience. In fact I can only think of one issue with an ex rental car which had problems and as a dealer in conjunction with the manufacturer, the car was bought back and replaced. I have had more brand new cars needing replacing. This is only my opinion based on experience, as I'm sure yours is too.