A luxury and premium car retailer suffered an estimated £30,000 loss after a London solicitor allegedly exploited distance selling regulations to gain full refunds on two Tesla EVs he had owned for over a year.
The managing director of Sutton-in-Ashfield-based Auto100, Christopher Smith, warned other retailers to double-check their sales process and contracts after being caught-out by the car buying legal professional who he alleges exploited flaws in their processes in a deliberate and premeditated scam.
“It was sickening,” said Smith, whose business was forced to take back the two Tesla’s - worth around £75,000 and £100,000 at the point of sale - after one year and 12 days in the customer’s possession, during which time thousands of miles were added to their odometers.
The transaction happened just two days inside the one year and 14-day cancellation rule stipulated by The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 in the event that a seller fails to provide the correct paperwork.
Smith said: “I want people to know about it because there will still be retailers out there who are in a position that might see them caught out. It can’t be allowed to happen.”
Smith told AM that the London solicitor had transferred the money to buy the two Teslas in full before he collected them in a process that transformed the transaction from a standard sale into one which was completed under distance selling regulations.
He conceded that, in failing to identify the knock-on effects at the time, Auto100 failed to give the customer a copy of his of his terms and conditions.
“As a result of that, one year and 12 days later you can come back to us and have all his money back, and that's exactly what he did”, Smith said.
Smith said he believed the customer bought and returned the cars in “full knowledge” of what he was doing, stating: “It was premeditated from the minute he bought the cars what he was going to do.”
Auto100, which stocks around £25 million of luxury and classic cars at its three-acre sales site in Nottinghamshire, has tightened its sales procedures and created new terms and conditions documentation since the incident involving the Teslas, which was settled in recent weeks.
Laying down the law
Lawgistics solicitor Nona Bowkis, which was consulted on Auto100’s issues, was still issuing a free ‘Lawgistics distance sale template’ to help car retailers avoid being caught-out by distance selling regulations.
She said: “In short, our advice is, provide the paperwork, or leave yourselves open for a full refund up to a year and 14 days.”
Outlining the law and the issues it raises, Bowkis said: “The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, allows a consumer a year and 14 days to cancel an item if the seller fails to provide the correct paperwork.
“Not only that, but the seller will have great difficulty trying to make a deduction for usage as the law explicitly prevents such a deduction if the correct paperwork was not given out.
“Obviously, this issue came up a lot during lockdown where most sales had to be distance sales to meet the COVID laws in place at the time.
“Essentially, a sale is a distance sale if a purchaser enters into a contract to buy before setting eyes on the goods. This is why we advise our clients to take reservation fees on vehicles as opposed to deposits (as a deposit binds the parties to the purchase/sale whereas a reservation fee does not).
“The law refers to contract ‘conclusion’ which does leave a small avenue of argument open to say that a sale where the customer collected the vehicle, was not a distance sale but a) this interpretation does not reflect the intention of the European law on which these Regulations are based and b) unless anyone wants to take a case to the Court of Appeal and test this point at the risk of paying multiple thousands of pounds in legal fees, double if they lose as they will need to pay the opponent’s legal fees too, then we always recommend our dealers err on the side of caution and issue the paperwork which makes absolute clear what deductions they will make if the vehicle is returned within those first 14 days.”