Commissioner's blog: Vehicle consignment selling – options to protect consumers
Have you ever engaged a dealer to sell a car or caravan on your behalf? This is known as ‘consignment selling’ and the laws that regulate this method of sale are currently under review, with a ban being considered as one of the options.
For those who don’t want to negotiate the sale of their vehicle privately, selling on consignment is a viable option but it comes with risk.
Given the dealer can keep any money they receive from the sale in excess of the amount they agree to pay the owner, this has at times resulted in dealers giving below reasonable value sale price estimates to vehicle owners.
In particular, the law review was prompted by two recent high-profile cases - Luxuride and Xoticar – both of which were motor vehicle dealers that broke the law while selling vehicles on consignment, leaving their victims a combined $2 million out of pocket.
Additionally, in August 2019 a caravan dealer selling caravans on consignment ceased trading, resulting in losses to 24 owners of around $550,000.
Consumer Protection has been consulting the industry and community about the future of these laws, proposing three options: maintaining the status quo; strengthening the consumer safeguards and training requirements; or banning consignment sales altogether.
The consultation paper considers marketplace factors, industry compliance issues and the effectiveness of existing protections around consignment agreements between licensed dealers and consumers.
Currently under the Motor Vehicle Dealers Act, all consignment sale contracts must be in writing, contain certain regulated terms and conditions and state the amount the owner is to be paid.
A trust account is required to hold all proceeds from any consignment sale, the total net proceeds of which must be paid to the owner within two business days of the dealer receiving payment.
The dealer must also get approval from the owner to conduct repairs before selling the vehicle and is required to pay for all warranty repairs after the vehicle is sold.
To have your say on the future of vehicle consignment sales, head to: www.commerce.wa.gov.au/consumer-protection/consultations
Commissioner for Consumer Protection
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