The Commissioner for Consumer Protection has issued a warning to car buyers that they might have to pay costs if they sign up to buy a car and then change their minds or otherwise don’t go through with the deal.
The Commissioner, Lanie Chopping said that under the Motor Vehicle Dealers Act, a dealer was allowed to charge up to a maximum of 15 per cent of the contract’s value as ‘pre-estimated liquidated damages’.
“The actual amount should represent the true cost of the deal falling through to the business,” Ms Chopping said.
“Unfortunately though, it appears that sometimes this maximum rate is being used as a ‘flat rate’ in some sections of the industry.”
She said Consumer Protection had received 126 complaints relating to dealers holding deposits or claiming liquidated damages over the past two years.
“We were able to resolve more than 80 per cent of those cases, achieving $107,728 in redress for consumers,” Ms Chopping said.
“Charging the maximum rate as an automatic default amount is not compliant with the law and dealers should not be charging any more than the reasonably estimated actual cost to the business.”
She said that when Consumer Protection queried the amount of damages being charged, especially after receiving a complaint, the dealer needed to clearly justify how the damages had been calculated.
“The issue highlights the need for buyers to avoid being pressured into signing a purchase contract, as it is a legally binding commitment that could be costly if the contract is cancelled due a change of mind or circumstances,” Ms Chopping said.
“It’s important for consumers to query ‘excessive’ fees being imposed and, if the explanation is unsatisfactory, demand the charge be waived or reduced.”
She said that in the event of a refusal, a complaint could be lodged with Consumer Protection which could independently assess and attempt to resolve the matter.
