Thursday, 15 February 2018 14:19

Car owners are being urged to be aware of their rights and car dealers to be aware of their obligations when selling vehicles by consignment.

Following a Consumer Protection investigation, charges have been laid against Perth motor vehicle dealer Luxuride Pty Ltd, trading as Luxuride of West Perth, and its Director Nicholas Ngo for allegedly failing to comply with laws relating to selling vehicles on consignment and for allegedly making false or misleading representations to the owners of the vehicles.

The company and its Director have been charged with breaching the Motor Vehicle Dealers Act by:

  • Selling a vehicle under a consignment agreement and failing to pay proceeds within two business days;
  • Receiving money from a consignment sale and failing to pay it into a trust account upon receipt or the day after;
  • Failing to ensure a copy of a consignment agreement was given to the vehicle owner immediately after signing;
  • Employing two people acting as a sales representative and yard manager without holding an authorisation under the Act.

It’s further alleged the Australian Consumer Law was also breached when false or misleading representations were made to vehicle owners regarding the sale price, enabling the dealership to gain a higher profit.

Commissioner for Consumer Protection David Hillyard said the laws surrounding consignment sales are designed to protect the owner of the vehicle and ensure the process is totally transparent.

“By not being directly involved in the sale of their vehicle, owners who agree to consignment deals need to be sure that they know exactly how much they will be getting from the sale,” Mr Hillyard said.

“Verbal agreements can lead to confusion, which is why the law requires any agreement to be in writing. And if the agreed sale amount changes over time, the written agreement needs to be amended.

“The law requires the agreement to clearly set out how much will go to the owner and the proportion that will be retained by the dealer as a commission, to prevent a dispute arising after the sale.”

Under the Act, motor vehicle dealers must adhere to the following conditions that apply to consignment sales:

  • All consignment contracts must be in writing and must contain certain regulated terms and conditions;
  • The consignment agreement must state in writing the amount which the owner should be paid;
  • The dealer can keep any money they receive from the sale in excess of the amount they agree to pay the owner;
  • The dealer must give the owner a copy of the consignment agreement immediately after the agreement is signed;
  • All proceeds or money from any consignment sale must be held in a trust account;
  • The dealer must pay the total net proceeds to the owner within two business days of receiving payment;
  • The dealer must get approval from the owner to conduct repairs prior to selling the vehicle; and
  • The dealer must pay for all warranty repairs after the vehicle is sold.

For more information regarding the laws covering the selling of vehicles on consignment, contact MTA WA on (08) 9233 9800.

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