Penalize all dealerships charging extra fees, says only business fined under new law

New consumer legislation that was supposed to ensure a level playing field for car dealerships is not being applied evenly, according to the only dealership to be fined under the new rules.

"We feel it is unjust," said Auto Gallery of Winnipeg owners Gord Pedersen and Dan Gagnon in a written statement.

"Other dealerships in Manitoba have not been penalized even though a year and a half has passed since the legislation's introduction and weeks since the report by CBC's I-Team."

Following a CBC I-Team investigation last September, complaints to the provincial Consumer Protection Office resulted in 27 dealerships making 66 refunds or settlements to customers.

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Despite those refunds by other dealers, only Auto Gallery has been disciplined by the Consumer Protection Office since the new "all-in pricing" legislation came into effect in June 2015.

The business was fined $5,000 and publicly named by the CPO in November 2015, five months after the Motor Vehicle Advertising and Information Disclosure Regulation was in force.

NDP consumer affairs critic Andrew Swan questioned why the CPO named one dealership but not the others.

"If there have been 27 dealerships who have now been found to have overcharged their customers at a time where everybody in the business should be familiar with the law, I think it is unfair not to have that disclosure made," Swan said.

"If I was the one dealership that had been made public, I think we can all have sympathy that they may feel they've been treated unfairly."

At issue was Auto Gallery's online ads which promised customers a lower price on a vehicle if they entered into a financing agreement. According to the new legislation, the price advertised is the price consumers can expect to pay, not including taxes. By displaying two different prices for the same vehicle, Auto Gallery was deemed to have contravened the new legislation.

However, documents obtained by CBC News reveal the Consumer Protection Office initially failed to notify the business owners directly of the problem. The office first fired off a letter to a lower ranking employee in June 2015 but the owner didn't receive a letter until late August.

Trying to comply

The documents from an appeal hearing into the sanction show that upon learning the dealership's online ads were breaking the new rules, the owners of Auto Gallery of Winnipeg were in continued contact with the CPO. In the documents, the CPO itself acknowledged the business was actively trying to comply and had a web designer working to bring all of the listings on the dealership's website into compliance.

The documents show that Auto Gallery of Winnipeg repeatedly asked for a deadline to fix the problem but the CPO admitted "a deadline was not given."

The business contended it was fined without warning while actively bringing its website into compliance with the legislation.

In addition, Auto Gallery told the appeal hearing it never received any complaints from consumers about its previous advertising.

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The regulator countered that it notified the dealership on six dates between June and October 2015 by phone or by letter that the company's advertising was not in compliance and made several warnings that a penalty would be issued.

The CPO declined requests by CBC News for an interview about the new regulations and also about the sanction against Auto Gallery. A spokesperson said the CPO would not discuss its handling of the specific case, adding "that decision speaks for itself."

However,the Consumer Protection Office took a softer stance on the 27 dealerships that refunded 66 customers following the CBC I-Team investigation in September. Not a single warning letter was issued to those dealerships.

Education and mediation

When CBC News asked why the dealerships thathad issued refunds were not named or had not received warning letters, a CPO spokesperson said in a written statement those steps weren't necessary because "compliance has been achieved through education and mediation."

"By allowing motor vehicle dealers the opportunity to come into compliance, the CPO exercises fairness to all dealers they regulate. Discussions and advice are given to allow a business to voluntarily come into compliance," the spokesperson said.

"If this is not successful, the CPO uses escalating enforcement measures...becoming more serious or punitive if corrective action is not taken after the earliest indication that legislation has been breached.

"The CPO seeks voluntary compliance when possible, so dealers are provided the opportunity to come into compliance prior to enforcement measures being taken," the statement said.

Auto Gallery's ownership did not believe it was given enough time to comply with the rules. That's when the company hired a lawyer and appealed the decision. During the appeal hearing CPO acknowledged the dealership was coming into compliance and had repeatedly asked for a deadline. However, the appeal failed.

Ample opportunities to comply with law

"It is clear that the business was given ample opportunities over the course of five months to come into compliance," the appeal decision said.

CPO director Beatrice Dyce, who signed off on the original decision to fine the company, was also the sole arbiter of the appeal hearing.

That's a problem, said critic Andrew Swan.

"Generally the rule of natural justice is that if there is something which is considered to be an appeal, that it would be heard by somebody other than the person who initially made the decision," Swan said.

Despite being assessed a penalty, Auto Gallery's owners said in their statement that the new legislation on all-in pricing was a positive step for the auto industry.

"We trusted that the intent and spirit of these new laws was for complete transparency and clarity in every advertisement for all Manitoba consumers. Auto Gallery embraced the new laws and removed all documentation fees," the owners said. "Prior to our interaction with the Consumer Protection Office, Auto Gallery had not received any objections or complaints."

There are just under 1,500 active auto dealer permits in the province according to Manitoba Public Insurance.

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