Distance Selling – Used Car Sales

As more and more business is generated through dealer websites, ‘distance selling’ remains a hot topic on our legal telephone advice line.

As a reminder The Consumer Protection (Distance Selling) Regulations 2000 were superseded by The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 which came into force, not in 2013, but June 2014. This means that any contract entered into from June 2014 is subject to the new Regulations.

In the new regulations, the definition of a distance contract is stated as follows:

“distance contract means a contract concluded between a trader and a consumer under an organised distance sales or service-provision scheme without the simultaneous physical presence of the trader and the consumer, with the exclusive use of one or more means of distance communication up to and including the time at which the contract is concluded”

I have highlighted and italicised part of the above deliberately as the inclusion of the bold part changes the entire definition. If the law makers had not added the part in bold, dealers would be legally discouraged from taking deposits over the phone and delivering vehicles to a customer’s home as any sale whereby the customer had not visited the showroom would become a distance contract subject to the normal 14 day cancellation rights. However, the inclusion of the bold part leaves it open to dealers to assist customers in this way as a one-off. Quite how many one-offs it will take over what period to add up to an ‘organised distance sales scheme’ is yet untested so dealers need to bear that in mind but for now, if your main business is showroom based, helping the occasional customer by taking a deposit over the phone and delivering a vehicle to them, should not require you to provide all the distance contract information and cancellation rights.

Below is our suggested wording that should be included in your website terms and conditions if you DO NOT operate an organised distance selling scheme.

Additional wording for website terms and conditions

Please note we do not operate an organised distance selling scheme as defined by The Consumer Contracts (Cancellation, Information and Additional Charges) Regulations 2013. Therefore, even if you choose to not view your vehicle at our premises prior to purchase, you will not be entitled to cancel your order under any 14 day cancellation period. All other statutory rights remain unaffected.   

Distance Sales Checklist

If you are selling cars under “an organised distance sales scheme” you need to consider the checklist below.

NB – it has not yet been established in law what constitutes “an organised distance sales scheme” under these 2013 Regulations and so if you are selling vehicles over the phone or internet without meeting your customer face to face prior to taking a deposit, please call us for advice.

Distance Sales Checklist (Car Sales)

All the following information must legally be made clearly available to the consumer BEFORE the customer is bound to make the purchase.

• Each vehicle’s main characteristics.  Be aware of pre-populated descriptions as these are likely to give the customer a reason to seek a refund or price reduction if an item is listed but not actually on the vehicle.
• Your correct trading name.
• Your geographical address, telephone number, fax and email address.
• If you are acting on behalf of another trader, that traders geographical address and identity.
• The address for any complaints.
• The total price inclusive of VAT.
• Any delivery or actual or potential additional charges – if these are not made clear, prior to the contract, you the trader will be liable for these costs.
• Payment and delivery arrangements and timescale.
• Your complaint handling policy.
• Conditions, time limits and procedures for exercising the consumer’s cancellation rights – see model form. – NB If you fail to provide this information correctly, the consumer gets a 12 month period in which to exercise their cancellation rights.
• That the consumer will have to pay the cost of returning the vehicle and your reasonable costs if they choose to cancel. If you do not make this clear, you the trader will need to bear any such costs.
• If you believe there is no right to cancel due to an exemption, you must tell the customer that they have no right to cancel.
• A reminder that you are under a legal duty to supply goods in conformity with the contract.
• Conditions of any after sales support and/or warranty terms.
• Any code of conduct you must meet for example, as part of a trade membership.
• The conditions of any deposit to be paid by the consumer.
• Details of any mediation service you are bound to offer under any Trade Association membership.

Once the contract is signed you must give a copy to the consumer and it must have all the above information as part of it, unless you have already given the above information separately.

Off Premises Sales Checklist

If you are selling cars away from your normal business premises, any sale is likely to be an off-premises sale for which you need to consider this checklist.

NB – this area of law is complex and so please check with the Legal Team if you are making sales from anywhere other than your permanent physical business premises.

Off Premises Sales Checklist (Car Sales)

All the following information must legally be made clear to the consumer BEFORE the customer is bound to make the purchase. All are required by law but failure to comply with the cancellation requirements (marked with an *) can lead to a fine and criminal conviction.

• Each vehicle’s main characteristics.  Be aware of pre-populated descriptions as these are likely to give the customer a reason to seek a refund or price reduction if an item is listed but not actually on the vehicle.
• Your correct trading name.
• Your geographical address, telephone number, fax and email address.
• If you are acting on behalf of another trader, that traders geographical address and identity.
• The address for any complaints.
• The total price inclusive of VAT.
• Any delivery or actual or potential additional charges.
• Payment and delivery arrangements and timescale.
• Your complaint handling policy.
• *Conditions, time limits and procedures for exercising the consumer’s cancelation rights – see model form. NB Failure to provide this information can not only lead to the cancellation period being extended to 12 months but it is a criminal offence under Section 19 of these Regulations.
• That the consumer will have to pay the cost of returning the vehicle and your reasonable costs if they choose to cancel.
• If you believe there is no right to cancel (and be very sure about this as you could end up with a fine and prison sentence if you are wrong) you must tell the customer that they have no right to cancel.
• A reminder that you are under a legal duty to supply goods in conformity with the contract.
• Conditions of any after sales support and/or warranty terms.
• Any code of conduct you must meet for example, as part of a trade membership.
• The conditions of any deposit to be paid by the consumer.
• Details of any mediation service you are bound to offer under any Trade Association Membership.

Once the contract is signed you must give a copy to the consumer and it must have all the above information as part of it, unless you have already given the above information separately.

On Premises Sales Checklist

This checklist applies to all sales from your permanent business premises i.e. your showroom, forecourt or garage. It also applies to any sales at any ‘moveable premises where you trade on a usual basis’ – this possibly includes trade fairs although it could be argued that trade fairs come under the rules for ‘off premises’ sales and so please discuss with us if you are unsure.

On Premises Sales Checklist (Car Sales)

All the following information must legally be made clearly available to the consumer BEFORE the customer is bound to make the purchase.

• Each vehicle’s main characteristics. Be aware of pre-populated descriptions as these are likely to give the customer a reason to seek a refund or price reduction if an item is listed but not actually on the vehicle.
• Your correct trading name, address and telephone number.
• The price inclusive of VAT.
• Any delivery or additional charges.
• Payment and delivery arrangements.
• Your complaint handling policy.
• You must remind the customer that you are under a legal duty to supply a vehicle which conforms with the contract.
• If you are giving any after sales services or guarantees, the conditions of these must be made available.  If you are providing a warranty, you should provide the customer with a written copy of the terms and conditions of that warranty.

*Once the contract is signed you must give a copy to the consumer and it must have all the above information as part of it, unless you have already given the above information separately.