Carcraft: poor practices in the sale of vehicles, finance and guarantees

Office of Fair Trading (OFT) closed consumer enforcement case.

From:
Competition and Markets Authority
Published
1 October 2011
Case type:
Consumer enforcement
Case state:
Closed
Market sector:
Motor industry
Outcome:
Consumer enforcement - undertakings
Opened:
1 May 2009
Closed:
1 October 2011

Case information

CC Automotive Group Limited: Investigation into alleged unfair practices by a national second hand car dealer

Case Reference: Carcraft - CRE-E//25462

Complainant: Office of Fair Trading ('OFT') (own-initiative investigation).

Investigation into: CC Automotive Group Limited trading as Carcraft, company registration number 00819414, with a registered office address at Nixon Street, Rochdale, Lancashire, OL11 3JW (www.carcraft.co.uk) and related companies.

Issue

The OFT had concerns about a number of CC Automotive Group Limited's business practices in relation to the sale of vehicles, finance and after-sale guarantees.

Relevant provision

The Enterprise Act 2002, The Consumer Protection from Unfair Trading Regulations 2008 ('CPRs'), The Unfair Terms in Consumer Contracts Regulations 1999 ('UTCCRs'), The Consumer Credit Act 1974 ('CCA'), The Sale of Goods Act 1979 ('SoGA'), The Supply of Goods and Services Act 1982 ('SoGSA'), The Supply of Goods (Implied Terms) Act 1973 ('SoGITA').

Case description

This investigation was opened by the OFT on its own initiative to investigate the business practices of CC Automotive Group Limited trading as Carcraft ('Carcraft'), a national second-hand car dealer. The company has 11 showrooms in England and Wales and advertises itself as the UK's leading car supermarket.

As part of its investigation, the OFT reviewed consumer complaints and information provided to it by Carcraft and its commercial partners.

As a result of its investigation, the OFT formed a view that Carcraft was operating in breach of certain consumer protection legislation, including the CPRs, SoGA, SoG(IT)A, SoGSA and UTCCRs. In particular, the OFT believed that Carcraft:

  1. was not always properly carrying out the comprehensive 120-point pre-sale vehicle inspections it advertised, with customers complaining about vehicles suffering significant problems shortly after purchase
  2. did not always meet its legal obligations to repair or replace cars when cars sold were not of satisfactory quality
  3. did not make clear to some customers the terms of motor finance, such as the level of repayments or that they were signing more than one finance agreement
  4. gave some customers a misleading impression about the scope of the after-sale vehicle guarantee, or that the guarantee was free when in fact it was being charged for
  5. allowed some customers to drive vehicles off its premises without valid road tax
  6. incorporated potentially unfair terms in the standard terms and conditions of its contract of sale and after-sale vehicle guarantee.  

Carcraft fully cooperated with the OFT's investigation. Further to its investigation, the OFT consulted with the company, its officers and a number of associated companies with a view to ensuring that the alleged infringements were not continued or repeated. The OFT warned Carcraft that it would consider applying to the court for an enforcement order, should satisfactory undertakings not be agreed.

Whilst the company, its officers and associated companies did not accept that their business practices breached the law and contended that they had already made a number of unprompted changes to the business and were implementing others, they agreed to sign undertakings to address the OFT's concerns, which the OFT accepted. Undertakings were voluntarily given, without any admission of any breach of the law, by Carcraft, its officers and the following associated companies - All in One Finance Limited, UK Car Group Limited, Pennine Metals A Limited and Pennine Metals C Limited.

The Undertakings require that Carcraft does not continue or repeat the alleged conduct of concern in this case. For example, the company has agreed:

  1. to ensure that pre-sale checks on vehicles are carried out to a standard consistent with its statutory and contractual obligations
  2. to ensure that representations made to consumers about the nature and scope of the pre-sale checks carried out on vehicles are accurate
  3. to follow policies and procedures that are consistent with its statutory and contractual obligations in dealing with consumers who are trying to exercise their rights to redress
  4. to inform consumers in a clear and timely manner prior to sale of the terms of any finance agreements and ancillary products
  5. to ensure that effective audits are regularly undertaken of the sale of consumer finance and that ongoing training on the sale of consumer finance is provided to relevant staff
  6. to ensure that repairs to vehicles are undertaken with reasonable care and skill, within a reasonable time and without causing significant inconvenience to consumers
  7. to ensure that all vehicles sold to consumers have valid road tax when they are driven away from the company's premises
  8. to not use contract terms which have the effect, among other things, of (a) imposing responsibilities upon consumers to request and inspect the service history of a vehicle prior to sale; (b) disclaiming the mileage on vehicles; (c) giving the company an absolute discretion as to whether to provide a benefit or not under the terms of a guarantee.

During the course of its investigation, the OFT was provided with investigative assistance by a number of Trading Standards Services, including Rochdale Trading Standards Service.

Published 1 October 2011

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