Car dealers are once again being advised to think carefully about the wording used to advertise ex-rental vehicles following Pendragon’s £134,000 fine from the Trading Standards team at Middlesbrough Council.
Pendragon, one of the biggest dealer groups in the UK, is appealing the fine issued in court last month which was issued after the court ruled that it had failed to tell a customer that a used car it sold was an ex-rental vehicle.
The dealer group was prosecuted under the Consumer Protection from Unfair Trading Regulations 2008.
Middlesbrough Council said the size of the fine is down to the fact Pendragon was taken to court for the same reason in 2016.
Jason Williams, Lawgistics legal advisor, said: “This case highlights why it is vital to advertise any matters concerning a car that might impact on the decision of the average consumer to buy it.
“The courts are clearly establishing that while factually correct, statements such as in this case, are misleading and punishable.”
Williams said that if a dealer sees from the V5 document on a vehicle where it has been sourced from, whether it has been used previously as a hire car, lease car, taxi, driving instructor vehicle or similar, then dealers must say so in the advert of the vehicle, whether it be advertised online or in the windscreen at point of sale.
Williams said: “In this particular instance the would-be consumer did not even buy the car.
“He saw from the V5 that the previous owner was a leasing company (very obviously named as such) and decided not to continue.
“He reported the matter to Trading Standards because he felt the garage had wasted his time.”
Williams said the fine was likely so high to act as a deterrent to repeat offences after Pendragon was ruled against for the same offence within an 18 month period.
He said: “For example, a court won’t fine a Premier League footballer £100 for a minor motoring offence in the same way that they might if you or I had done the same thing.
“But £134,000 does seem rather excessive – no matter how much money you have in the bank - given the actual ‘offence’.”
Many car retailers first became aware of the legal ramifications that could be attached to an omission of details indicating that a car had previously had multiple users as part of a fleet or rental usage following a ruling by the Advertising Standards Authority (ASA) in October 2017.
Ruling against Glyn Hopkin Group and franchised partner the FCA Group following a complaint related to classified adverts detailing two Alfa Romeo Guilietta hatchbacks, the ASA 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.