National Consumer Tribunal fines two car dealerships for stiffing consumers

9 Jul 2024

The National Consumer Commission has welcomed rulings against Wingfield Motors and Sandton Repo Cars (now Cresta Car Centre). Both have been forced to refund consumers and pay administrative fines for legal violations.

Two car dealerships have been fined and ordered to refund consumers over sales that were in contravention of the Consumer Protection Act.

The National Consumer Tribunal has ruled against Wingfield Motors and Sandton Repo Cars (now trading as Cresta Car Centre) after the National Consumer Commission had referred complaints to it for adjudication.

In both matters, consumers first complained to the Motor Industry Ombudsman of South Africa, who attempted to mediate – but when that failed, the ombud advised the consumers to lodge complaints with the Consumer Commission. The commission investigated and then referred the matters to the tribunal for declaratory orders that the respondents had contravened various sections of the Act.

The Consumer Commission told Daily Maverick that Wingfield Motors (which is also trading as Best Price for My Car in the Western Cape), was found to have contravened sections 55(2)(a) to (c), which address consumer’s rights to goods that are safe and of good quality, and 56(2) – implied warranty of quality – of the Act.

Wingfield Motors

In the Wingfield Motors matter, the customer disputed the sale after buying a second-hand 2017 Ford Focus RS 2.3 EcoBoost AWD with 41,214km on the clock for R568,000. The customer paid a R20,000 deposit and secured financing from Wesbank for the remaining balance through a 73-month loan agreement, which included the car price, warranty plans, service fees, taxes and registration. The total principal debt, VAT inclusive, was R788,936.40, with initiation fee and finance charges included.

Significant defects were discovered three days later: the vehicle’s flywheel had a burnt spot and the clutch was damaged. The repairs were estimated to cost around R62,000, but Wingfield Motors denied liability.

The consumer then tried to cancel the deal and sought a refund, which Wingfield refused. It argued that the vehicle was not advertised as “brand new”, and that the consumer had test-driven it twice before purchasing it.

Wingfield said that a second-hand vehicle was subject to wear and tear, and since it did not present any defects on the purchase date, and the consumer added 200km within three days after purchase before complaining, it was not liable.

The tribunal found that Wingfield Motors had violated the Act and its conduct was declared prohibited. It was ordered to refund the customer R568,000 within 15 business days and that it pay an administrative fine of R50,000.

Sandton Repo Cars

In what it termed an “egregious” case, Sandton Repo Cars was also ordered to refund a consumer the full purchase price of R459,900 for a defective 2018 Volkswagen TSI Golf-R with 9,420km on the odometer.

Sandton Repo Cars claimed the vehicle was accident-free and made the complainant sign a mechanical breakdown warranty refusal notification as part of the sale agreement, which effectively exonerated them from any defects manifesting after collection.

Shortly after collecting the vehicle, the consumer noticed an oil leak that had not been declared. She took it to VW for an assessment, which determined that it had been in an accident and was unsafe to drive.

It said the vehicle’s safety system was compromised and that it had found extensive undercarriage damage, welding to the gearbox casing, an extensive oil leak at the engine and excessive knocking in the front suspension. In the absence of a warranty, the VW dealership refused to work on the vehicle, which has not been driven since April 2021.

She then cancelled the transaction and demanded a refund, which the dealership refused.

The Consumer Commission’s investigation confirmed that the vehicle had been involved in an accident before the sale.

Besides “numerous bare denials”, the respondent argued before the tribunal that the complainant confirmed that she bore all the risks to the vehicle upon delivery and that they could not provide any further guarantee on the vehicle as the respondent was not the manufacturer. It also denied that it engaged in any prohibited conduct.

The tribunal found Sandton Repo Cars had not only supplied a vehicle that was not fit for purpose but that it had preemptively made the purchase agreement subject to terms aimed at depriving the complainant of her rights while avoiding its obligations under the Act.

To make matters worse, the tribunal said, the respondent instructed its lawyers, Nourse Incorporated, to use the unlawful terms to “vigorously resist the complainant’s claim and undermine her consumer rights”.

For about three years, the complainant had not enjoyed the use of her vehicle while paying huge monthly instalments for it. The tribunal imposed an administrative fine of R100,000 and ordered Sandton Repo Cars to refund the consumer R459,900.

Consumer Commission acting commissioner Hardin Ratshisusu raised concern about the continued disregard of the Act by some car dealerships.

“Dealerships for second-hand vehicles must provide vehicles that are safe, defect-free and durable, and must repair, replace or refund vehicles that fail to meet these standards,” he said in a statement.

“Failure to adhere to these principles not only harms consumers but also undermines the core objectives of the [Consumer Protection Act]. The judgment and reasons of the tribunal in these two cases affirm that the rights of consumers must be respected.”

Wingfield Motors sent Daily Maverick a message receipt but had not responded by deadline.

Sandton Repo Cars was unreachable. Its website was down and its listed number matches Cresta Car Centre, which does not have a website.

Brandon Cohen, the national chairperson of the National Automobile Dealer’s Association (NADA), told Daily Maverick that a lack of accurate information about the history of a vehicle affects the entire value chain, from the banks financing the vehicles to the companies selling online to the professional dealers who trade in vehicles for sale in their used vehicle departments.

“Without access to all the information, a dealer cannot be expected to know everything about every car.”

He said NADA does not tolerate any form of intentional misrepresentation. “However, this commitment hinges on the comprehensive and timely disclosure of accurate data to the appropriate parties within the value chain, including banks, insurers, motor body repairers, dealers, and end customers.” DM

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