OFT takes action against used car supermarket over sales practices
121/11 9 November 2011
The OFT has taken enforcement action against Carcraft, which has 11 car supermarkets across England and Wales, over concerns about its business practices when selling cars, finance and after-sale guarantees.
Following its investigation, the OFT believed that Carcraft:
- was not always properly carrying out the comprehensive pre-sale vehicle inspections it advertised, with customers complaining about vehicles suffering significant problems shortly after purchase
- did not always meet its legal obligations to repair or replace cars when cars sold were not of satisfactory quality
- 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
- 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
- allowed some customers to drive vehicles off its premises without valid road tax.
Carcraft fully co-operated with the OFT's investigation. Whilst the company said it believed that its business practices complied with the law, it has made changes to its practices and given undertakings about its future conduct, which address the OFT's concerns.
Cavendish Elithorn, Senior Director of the OFT's Goods and Consumer Group, said:
'Car buyers often choose to purchase from a large dealer in expectation of peace of mind. Carcraft promised customers that it aimed to help them 'find the perfect car with confidence', but we don't think its practices ensured that it always lived up to expectations or met its legal obligations. We welcome Carcraft's undertakings which should ensure customers are treated fairly.
'The industry should take note of our action against Carcraft as it shows that dealers will face enforcement action where their practices cause serious problems for consumers.'
Last year's OFT market study into second hand car sales found that the market was often not working well for consumers. The results of that study led the OFT to warn used car dealers they must comply with the law or face enforcement action.
The OFT will shortly be launching a consumer campaign to increase awareness of consumer rights when buying a used car and where consumers can go for advice should they encounter problems after they buy.
- View the case closure summary for this investigation.
- Carcraft advertises itself as the 'UK's leading car supermarket' with 11 car supermarkets based in Rochdale, Newport, Sheffield, Merseyside, West Midlands, Leeds, North East, Lakeside, Trafford, Enfield and Chertsey. The company had a turnover of £127 million for the financial year ending 30 September 2010.
- During the course of its investigation the OFT was provided with assistance by a number of local authority Trading Standards Services, including Rochdale Trading Standards Service.
- Undertakings under section 219 of Part 8 of the Enterprise Act 2002 were given by CC Automotive Group Limited, which trades as Carcraft, with a registered address at Nixon Street, Rochdale, Lancashire OL113JW, (www.carcraft.co.uk). Undertakings were also given by each of the company's officers and a number of related companies, including UK Car Group Limited and All in One Finance Limited. The undertakings were voluntarily given by each party without any admission of any breach of consumer protection law.
- The undertakings provided relate to alleged breaches of the Consumer Protection from Unfair Trading Regulations 2008, the Unfair Terms in Consumer Contracts Regulations 1999, the Consumer Credit Act 1974, the Sale of Goods Act 1979, the Supply of Goods and Services Act 1982, and the Supply of Goods (Implied Terms) Act 1973.
- If these undertakings are breached, the OFT may consider applying to the courts for an enforcement order under the Enterprise Act 2002 based on alleged infringements of consumer protection law.
- The OFT published its market study into second hand car sales in March 2010. The study, which was prompted by consistently high numbers of consumer complaints, found that the market was often not working well for consumers and that more needed to be done to ensure dealers were aware of the law and that those who failed to comply faced a real threat of effective enforcement action by Trading Standards Services and the OFT. Following the market study the OFT issued guidance to the industry on their legal obligations and made clear that it would take action against dealers who ignored the law. See Guidance for second hand car dealers (pdf 173kb).
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