| Title: | Disclosures Guideline |
| Guideline Topic: | Enforcement |
| Legislation: | MVDA |
| Section/Subsection(s): | |
| Date Created: | 2023-07-14 |
| Date Revised: |
There are certain types of information that dealers are required to disclose to their customers. These requirements are covered in the relevant legislation and regulations. Dealers who don’t make the required disclosures might face legal or regulatory penalties as a result. Earlier guidelines on advertising and dealer inquiries covered some of this material; this guideline is intended to provide a full overview of all disclosure requirements as they relate to advertising, marketing, sales and leasing.
Consumers are entitled to the disclosure of any facts that could reasonably be expected to influence the decision of a buyer or lessee to purchase or lease the vehicle on the terms disclosed in the contract. The Act sets requirements for dealers and salespersons to disclose specific information related to the vehicles, and its financing.
These disclosures must be clearly, comprehensibly and prominently written on the contract and be presented in a timely manner so the consumer can review them before signing the contract. Sections 14 and 15 of the Consumer Protection Act (CPA) require dealers and salespersons to make reasonable efforts to ensure that a consumer understands the disclosures being made.
It is in the dealer’s best interest to know the full history of the vehicles they offer for sale or lease and make proper disclosure to any consumers. Although obtaining a Carfax is not required by law, it can serve as an important tool when learning the vehicle’s history. It’s worth noting that Carfax reports and similar products are not foolproof because they rely on information being reported by third parties. Dealers shouldn’t rely solely on Carfax, but should consider taking other reasonable measures such as having the vehicle properly examined by a licenced mechanic or other professional. The dealer or a qualified mechanic should also perform a thorough inspection of the vehicle, to also ensure there are no vehicle condition issues, alterations or damage to the vehicle not captured by vehicle history reports.
Some mandatory disclosures only apply to trades with purchasers who are not dealers (in other words, consumers or other types of businesses). Other disclosures have to be made whenever a vehicle is being traded, regardless of whether it is to another dealer or a non-dealer. Registrants are required to ensure that all representations, including advertising they do, or that is done on their behalf, in connection with trading in motor vehicles, is legal, decent, ethical and truthful. Further, dealers must indicate in a clear, comprehensible, and prominent manner in their advertising and contracts if the vehicle was previously:
Dealers are also required to disclose in contracts the following information to the consumers:
Detailed disclosure requirements are available here.
The disclosure requirements for retail and wholesale sales are almost identical. The only difference is that on a retail sale you must disclose if repairs are needed to:
These disclosures are not required on dealer-to-dealer sales. However, dealer-to-dealer disclosure is a legal requirement in the Code of Ethics. Section 5(22) requires dealers to disclose any other fact about the vehicle that affects the structural or mechanical quality or performance of the vehicle, and that if disclosed could reasonably be expected to influence the decision of a buyer or lessee to purchase or lease the vehicle on the terms disclosed in the contract.
A material fact is information that might affect the consumer’s decision to purchase or lease the vehicle if he or she knew about it. What is a material fact may differ from one customer to another. Dealers and salespeople have an obligation to disclose all material fact about the vehicles, even if the consumer does not ask.
As a general guideline, OMVIC encourages that dealers and salespeople provide a consumer with as much disclosure as they have access to for the purposes of avoiding any potential disclosure and misrepresentation related disputes.
Where a vehicle is sold with a warranty, a dealer should fully disclose the details of the warranty and provide a copy of the details to the purchaser. The details disclosed in the warranty contract should include the following:
The details disclosed in the retail contract regarding the extended warranty should disclose an accurate description of the warranty and its retail value. Other mandatory requirements are explained in section 47(4) of the regulation.
The Act has defined the term and requires dealers to include the following statement on the contract of any vehicle sold as is:
“The motor vehicle sold under this contract is being sold “as-is” and is not represented as being in roadworthy condition, mechanically sound or maintained at any guaranteed level of quality. The vehicle may not be fit for use as a means of transportation and may require substantial repairs at the purchaser’s expense. It may not be possible to register the vehicle to be driven in its current condition.”
It is not sufficient to simply state the vehicle is being sold as is.
Section 73 and 74 of the Regulation 17/05: GENERAL under the Consumer Protection Act require the following information to be made clear, comprehensible, and prominent when advertising finance and lease offers.
Dealers must ensure that the payment and APR are displayed in equal prominence (i.e., same font size, boldness, etc.)
Providing disclosure verbally does not meet the requirements of the Act. Dealers are responsible for providing proper disclosure in writing in a “clear, comprehensible, and prominent manner.”
Failure to comply with certain disclosure requirements automatically triggers the consumer’s right to cancel the contract within 90 days of purchasing or leasing a vehicle, if the contract does not accurately disclose, in writing, any of the following:
Section 50 of the regulation also allows for recission if the dealer fails to accurately describe the true distance travelled by using the correct statements found under S.42 or the statement is inaccurate.
Under the Consumer Protection Act (CPA), consumers may also have further rescission rights for misrepresentation up to one year after entering into the agreement.
Full text of all relevant sections of the Legislation and Regulations is available in the Appendix.
Some dealers have recently approached OMVIC to request clarification on certain types of advertising. One question that comes up is whether dealers can charge different prices for different methods of payment. There generally aren’t any prohibitions in the legislation or the regulations preventing a dealer from these types of activities. However, advertising that mentions different price points must still comply with the all-in pricing rules, including the requirement that the essential information be displayed in a manner that’s clear, comprehensible and prominent. Mentioning in fine print that some buyers will have additional fees applied to their purchase price does not conform to the requirements outlined in the Code of Ethics. For example, a dealer price would be considered compliant if it was available to everyone (e.g., cash price).
The Ontario Motor Vehicle Industry Council (OMVIC) administers and enforces the Motor Vehicle Dealers Act, 2002 (MVDA), its regulations and code of ethics, as well as relevant sections of the Consumer Protection Act (CPA), on behalf of Ontario’s Ministry of Public and Business Service Delivery and Procurement. OMVIC’s mandate is to maintain a fair and informed marketplace by protecting the rights of consumers, enhancing industry professionalism, and ensuring fair, honest, and open competition for registered motor vehicle dealers.
The list of available guidelines can be found here.
Q1: What’s included in this guideline?
A1: There are certain types of information that dealers are required to disclose to their customers. These requirements are covered in the relevant legislation and regulations. Dealers who don’t make the required disclosures might face legal or regulatory penalties as a result. This guideline covers the disclosures that dealers are required to make in both wholesale and retail transactions. It also includes disclosures related to material facts, warranties, the sale of as-is vehicles, financing and leasing, as well as the consequences that dealers might face for non-compliance.
Q2: What are the consequences for non-compliance?
A2: Failure to comply with certain disclosure requirements automatically triggers the consumer’s right to cancel the contract within 90 days of purchasing or leasing a vehicle, if the contract does not accurately disclose, in writing, any of the following:
Under the Consumer Protection Act (CPA), consumers may also have further rescission rights for misrepresentation up to one year after entering into the agreement. It’s also important to note that providing disclosure verbally does not meet the requirements of the Act. Dealers are responsible for providing proper disclosure in writing in a “clear, comprehensible, and prominent manner.
Q3: Are dealers allowed to charge different prices for different methods of payment?
A3: There generally aren’t any prohibitions in the legislation or the regulations preventing a dealer from these types of activities. However, advertising that mentions different price points must still comply with the all-in pricing rules, including the requirement that the essential information be displayed in a manner that’s clear, comprehensible and prominent. Mentioning in fine print that some buyers will have additional fees applied to their purchase price does not conform to the requirements outlined in the Code of Ethics. For example, a dealer price would be considered compliant if it was available to everyone (e.g., cash price). If there are any conditions for eligibility for that dealer price, those conditions must be displayed in a manner that is clear, comprehensible and prominent.
Q4: What should a warranty contract include?
A4: A warranty contact should include a number of things, including:
Other mandatory requirements are explained in section 47(4) of the regulation.
Q5: Is it sufficient to mention in an ad or a contract that a vehicle is being sold as-is?
A5: No, it’s not. Both the guideline and the legislation provide the specific wording that must be included.
Q6: Where can I find all the guidelines you’ve published?
A6: The list of available guidelines can be found here.
[1] S.50 of the regulation also allows for recission if the dealer fails to accurately describe the true distance travelled by using the correct statements found under S.42 or the statement is inaccurate.
The Dealer Support team is available to assist dealers in achieving and maintaining
compliance with the MVDA and Code of Ethics. Registrants who wish to contact Dealer
Support can reach the team at the phone number below and leave a message.
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