9:15 am, April 9, 2021
Dealers can avoid distance-selling obligations by asking for a reservation fee instead of a deposit.
That’s the advice from experts at automotive legal consultancy Lawgistics in their latest update as showrooms in England and Wales prepare to reopen on April 12.
Legal adviser Nona Bowkis said that with the gradual return to a normal way of trading, a reservation fee taken by phone or online after the vehicle has been physically seen by the customer means any deal is done on the showroom premises.
She pointed out that the fee doesn’t commit a buyer to a purchase, whereas a deposit does.
Dealers were barred from trading from showrooms during lockdown and could only respond to remote orders, which meant that all sales were classed as distance sales.
Bowkis commented: ‘A distance sale is classed as a distance sale if it is part of an “organised distance sales scheme.”
‘Therefore, if car dealers return to traditional forecourt sales and only very occasionally deliver a vehicle to a customer on a “sight unseen” basis, those occasional deals will not count as a distance sale.
‘However, if a dealer is offering deliveries on their website as a general option, this would be a distance sale and viewed as part of how the dealer operates.
‘For those car dealers not offering deliveries, a sale will only be a distance sale if the customer commits to purchase before ever laying eyes on the vehicle.
‘A deposit commits a buyer to a purchase whereas a reservation fee doesn’t.
‘So, if you take an online deposit, this would be a distance sale, which allows the customer the 14 days period in which they can return the car for essentially any reason, including because they just don’t like it.’
But, she said: ‘If you take an online reservation fee, the customer has not committed to purchase and they can change their mind.
‘In this scenario, the customer only commits when they pay a deposit or the full price once they have seen the vehicle and therefore it’s not a distance sale.’
Car dealerships in Northern Ireland that are outdoors will also be allowed to open as of April 12.
