The case of a dealer that failed to disclose that the previous owner of a used car was a rental company was recently appealed, raising the question: what do customers need to know to make informed buying decisions? Jonathan Butler automotive specialist at Geldards, writes.
On 22 March 2019, a judge at Teesside Crown Court overturned on appeal Pendragon’s £134,000 conviction for failing to tell a customer in an online advert that a car had previously been owned by Enterprise Rent-a-Car.
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The customer, a Mr Wilson, had visited www.evanshalshaw.com wanting to buy a used Vauxhall Insignia. He complained that the advert had contained the words “one registered keeper”.
When he travelled to see the vehicle at the dealership, he was disappointed with its condition but said he would never have gone to the site had he been told that the vehicle had been owned by a rental company, a fact he said he only discovered when he saw a stamp in the service book in the glove box and made further enquiry.
At trial, District Judge Cousins, accepting that Wilson did not buy the vehicle but, a year later, did in fact buy a similar vehicle knowing it was ex-rental, nevertheless agreed with Middlesbrough Trading Standards that previous ownership by a rental company was material information under the Consumer Protection from Unfair Trading Regulations 2008 (CPUT) which Pendragon ought to have disclosed in its advert, and that failing to do so did mislead Wilson and would mislead the average consumer into assuming the words “one registered keeper” meant one private owner, and thus make a purchasing decision they would not otherwise make.
That decision rightly caused some consternation across the sector, because it revealed that the ASA’s worrying decision in the widely reported yet criticised case of Glyn Hopkin and Fiat Chrysler in 2017 was being wrongly treated as the law, and that if that trend continued, a trader’s disclosure obligations in the UK would be dramatically enhanced and contract law would be significantly recast in a way that the EU and CPUT had never intended.
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By GlobalDataIf that were to be the case, the result would be not only prosecutions but also innovative civil claims on a scale akin to a ‘new PPI’ by law firms nationwide. Indeed, by January 2018, legal practice Harcus Sinclair LLP was publicising that it had over 4,000 claimants already interested in pursuing financial compensation.
Appeal Decision
On appeal, the judge was not satisfied that the words “one registered keeper” had ever actually appeared on www.evanshalshaw.com at all, but that, in any event, it was put to him that the previous user’s identity was not a main characteristic of the vehicle for the purposes of EU law, nor was it a key purchase driver.
On the contrary, Pendragon’s position was that the ASA’s was inconsistent with a vast array of independent research commissioned by BCA between 2009 and 2014 to the effect that the main issue for consumers was quality, regardless of provenance, and that while some public perception might well be that a privately owned vehicle is better looked-after than a rental car, that is a legacy issue and simply no longer the case as a general rule.
In other words, the judge heard that the key point is not what a customer would like to know or would prefer to know, but what they need to know to decide whether or not to buy a used car, and the identity of previous owners is simply not a factor and has no adverse impact on value.
In allowing the appeal, His Honour Judge Crowson remarked: “The courts are not here to protect consumers from irrational prejudice. We are here to protect consumers against a bad bargain where the playing field is not level. If the value of the car is the same, there is no possibility of a bad bargain, is there? Here, we just have a feeling by Mr Wilson that buying a car that was owned by a rental company is not a good idea. Is that not irrational?”
Pendragon’s success is important for the sector. The case raises the question: what do customers need to know to make informed buying decisions? The arguments should inform the CTSI’s response to the consultation it launched in January 2019 over its planned implementation of its new Car Traders and Consumer Law: Guidance for dealerships.
This document stands to be the main reference tool and thus shape used car trade and practice for maybe decades to come. The case also underlines the need for care in distance and on-premises sales, staff training, good terms and conditions, and diligence in the arena of vehicle provenance systems, particularly following the GDPR changes to the V5C in May 2018.
But perhaps above all, the decision is an encouragement to the sector to defend these types of cases and more importantly, to champion how good a purchase ex-rental vehicles actually are.
by Jonathan Butler
