7:49 am, February 7, 2024
Trading Standards officers have clamped down on used car dealers charging unfair admin fees after seeing a surge in the practice.
Officers said consumers were being charged the fees which were not refunded when cars experienced problems and needed to be returned to dealers.
The problem started in a pocket of London – just before the pandemic – and then spread across the capital, leading to Trading Standards stepping in.
Cenred Elworthy, director of London Trading Standards, told Car Dealer that the admin fee practice caused officers concern nationally too, so it decided to investigate.
He told Car Dealer that some dealers were charging admin fees of £50 while others were adding sums of up to £300-£500 on top of the price of cars.
Admin fees were said to cover the paperwork dealers needed to do to complete a sale and while they are not illegal if they’re clearly marked and explained in advance, they are frowned upon if they are added later.
In an exclusive interview with Car Dealer, Elworthy said: ‘We suddenly realised this was happening because of the right to redress, or refunds.
‘So within 30 days, people can say they want their money back if they can see a problem with the car. Because of that, it seemed like they were getting the refunds, but admin fees were being knocked off it.
‘Another real problem seems to be that we have some traders who were actually even over-stamping invoices with admin fee stamps.’
Elworthy investigated one case where the car dealer sold a car for £1,000 and when the buyer experienced a problem and returned it they were charged a £500 ‘admin fee’.
‘That’s a completely sharp practice,’ he said.
‘We had to nip this in bud, so we did. The only way admin fees can be justified is if they are actually shown with the price – there should be complete transparency with pricing.’
The London Trading Standards team investigated 60 used car dealers in a project funded by National Trading Standards and found nearly a quarter were non-compliant. Some were even charging ‘questionable’ fees for ‘cleaning’.
Officers said that their London clampdown did result in a reduction in the number of complaints but they are still seeing evidence that used car dealers are not following the rules.
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Elworthy added: ‘I’m aware there still is an issue out in the motor trade, but the number of complaints has reduced since our action.’
Elworthy and the Trading Standards team also had to warn dealers about ‘restrictive statements’ on invoices including ‘sold as seen’, ‘no refunds’ or ‘trade sale’.
‘Dealers cannot prevent consumers from exercising their rights,’ added Elworthy.
‘Dealers can break the law by having omissions, you can break the law by action or you can break the law by bad practices.
‘Our concern is many trading practices have not caught up with the legal requirements and dealers have an obligation to keep up to speed with changes.’
Trading Standards officers have also seen problems with ‘transparency’ where dealers have hidden insurance write-offs from consumers.
Common complaints
Elworthy said the most common issues raised by consumers were around ‘aftercare’ and their ‘rights to refunds, repairs or redress’.
He said: ‘I think that it is sometimes avoidable, because it can be just about people’s expectations. Things are very, very clear in terms of the consumers’ rights and traders should be fully aware of their responsibilities in terms of refunds, and repairs and right to redress.
‘A lack of communication can be a big issue. I think having someone within each dealer whose responsibility it is to deal with consumer complaints is a good idea. Have a proper process set up.
‘It’s a lot better for us if traders resolve things satisfactorily.’
Elworthy said it was cases where consumers had spent their last few thousand pounds on a car that then breaks, that he found the hardest to deal with.
He added: ‘We’re really trying to push that there’s a responsibility of the trade that if their vehicle is not roadworthy, or unsafe, or is just not going to survive a couple of weeks, then that shouldn’t be on sale.
‘Whatever the price, even if you are selling it for £1,000, there’s a basic quality, safety and some expectation of life in the vehicle that needs to be satisfied.’
Elworthy said car dealers can read up on their responsibilities at Businesscompanion.info.
