Thousands of buyers of ex-rental and former fleet cars have signed up to legal action after claiming they were mis-sold their vehicles.
Law firm Harcus Sinclair told Fleet News that less than two weeks after asking used car buyers to register their interest in its used car mis-selling group action, more than 4,000 people have been in contact.
Damon Parker, head of litigation at Harcus Sinclair, said: “I’m surprised by how many people have come forward saying they didn’t know .”
Following a ruling from the Advertising Standards Authority (ASA), dealers now have to disclose the full history of a car before selling it, including whether it was previously used for lease, hire or fleet purposes.
This is because the ASA considers it to be critical in influencing a consumer’s transactional decision in buying a vehicle.
The implication is that used car buyers might be deterred by a vehicle with a rental or company car history, favouring one with a private owner. If that’s the case, it could have implications for rental and fleet car residual values.
The ASA will be sending warnings to the Society of Motor Manufacturers and Traders (SMMT) so it can draw attention to the issue.
The SMMT said ex-fleet vehicles can be a great used car choice if, as with any other vehicle, it can be shown they have been maintained and serviced properly. It advises consumers to carry out all the relevant background checks before committing to buying a used car.
“Simple steps such as checking the log book, using the DVLA’s vehicle information checker and verifying MOT history can all offer peace of mind to car buyers,” it said.
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The warning comes after an ASA ruling on Glyn Hopkin and Fiat Chrysler Automobiles UK (FCA) in October 2017.
In that case, the ASA considered that because FCA was the previous registered keeper for the vehicles, it was reasonable to expect records showing how it had used them while under its ownership as a fleet operator, including whether they were driven by multiple users.
Furthermore, because Glyn Hopkin was an approved dealer and had bought the cars directly, the ASA considered that it was capable of easily obtaining such information as well.
FCA had provided evidence showing that each advertised car had only been used by one individual while they were part of its fleet. One was allocated to a contractor for training purposes and the other to an employee as a company car.
It also submitted documentation showing that both cars had a very low mileage prior to being allocated to their named users, which were returned at a later date to be sold off.
However, the adverts did not state that the cars were previously used for business purposes and, for that reason, the ASA concluded that FCA breached its code of conduct.
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A customer had bought the car in January 2017 for around £10,000 and was told at the time of sale that the car had had one previous owner.
It was only after he received the V5 registration documents for the car a few weeks later that he noticed that the named previous keeper appeared to be the car hire firm Europcar.
Parker said that they were in the process of examining the claims of complainants, but early indications suggest that people have been mis-sold vehicles.
He said: “There seems to have been a deliberate decision not to tell people . But whether that’s a conspiracy, or just people in the dealership not knowing, remains to be seen.”
Leaving out significant details breaks the Consumer Protection from Unfair Trading Regulations (2008), and the amount owed depends on how serious the case is, and how much it influenced the purchase decision.
In theory, successful claimants could claim up to 100% of a used vehicle’s purchase price back from the vendor, but Parker believes a more realistic readdress would be 25%.
Consumer regulations give protection from ‘misleading action’ and Parker explained it was important first to establish whether not telling the consumer a vehicle’s history is an ‘action’.
He continued: “Before we can do anything, we also need to work out how these people cluster together; how many people are concentrated on which dealerships and which manufacturers.”
Admitting, the firm was in the early stages of its investigations, Parker said Harcus Sinclair’s first priority was to speak to the majority of complainants over the next two weeks, before writing letters on their behalf to vendors.
“If it really is a problem, it will be a big deal and 4,000 people, in my book, is a lot,” he said.