How to get your money back from dodgy car dealers

Tuesday, 18 December 2018

In the last 12 months to September, six traders had been banned from motor vehicle trading due to 'serious breaches'

If you've been caught out by a car deal gone wrong, it can be hard to know what to do.

The story of an Auckland car dealer, Motor Me, selling dud vehicles captured attention this month.

But its customers were far from alone: The Commerce Commission has fined and issued multiple warnings about dodgy car dealerships.

Last year the consumer watchdog received 420 complaints against car dealers.

And in the year to September, six dealers had been banned from motor vehicle trading due to 'serious breaches', including failing to comply with orders from the Motor Vehicle Disputes Tribunal.

So if you have been sold a lemon, don't suck it up, here's how you can get your money back.

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Your rights

If you find problems with your car and it's not your fault, you have rights under Consumer Guarantees Act (CGA) and the Fair Trading Act (FTA) that can protect you.

The tribunal deals with claims up to $100,000 under the CGA and FTA.

According to Consumer Protection buying from a dealer gives you many more consumer rights than if you buy privately.

This is because dealers must comply with the CGA, which guarantees new and used cars, and the FTA, which means the dealer cannot mislead you. Dealers also must comply with the Motor Vehicle Sales Act and display an accurate Consumer Information Notice on used cars.

If you have problems with your car, the first person to contact is the dealer, warranty insurer and finance company, if it is serious. If you take your car to a mechanic first you could lose your right to a remedy.

Private sales have more limited protections under the Contract and Commercial Law Act.

Consumer NZ says the act could help you out if a seller misrepresents the car to you.

Disputes Tribunal

If the car dealership ignores your concerns or does not agree with your dispute, the next step is the Motor Vehicle Disputes Tribunal.

The tribunal deals with claims up to $100,000 under the CGA and FTA.

If the car dealer fails to pay you back, you can apply for a bailiff to visit the dealer.

It is also lawyer-free, so consumers are not outgunned by companies, no matter how large, and cases are dealt with within weeks.

Claims must be against a registered motor vehicle dealer or an unregistered dealer who has a business selling motor vehicles.

The Motor Trade Association (MTA) also handles disputes about issues with its members.

The association's mediation manager, Tony Everett, said it was too easy to become a car dealer.

'There has long been criticism of the entry requirement being too low. After a law change in 2003, it's become a lot easier to enter and quit when something goes wrong,' Everett said.

In September the Ministry of Business, Innovation and Employment warned about a rise in the number of unregistered 'cowboy' car dealers.

I won my case but have not received my money

Consumer NZ says if you have won your case at the Motor Vehicle Disputes Tribunal, but the dealer hasn't paid, you can apply to the District Court to have the order enforced.

The court can issue a warrant that allows a bailiff to visit the dealer and seize assets.

If the dealer does not pay the debt, the assets will be sold at auction and you will be paid from the proceeds.

If the company goes bust, contact the receiver, liquidator or administrator to make a claim.

If the directors of a failed company have not met their responsibilities under the Companies Act, they may be personally liable and can be sued by creditors.

Consumer NZ says this may be an option where the company has continued to trade while insolvent and got further into debt.