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Over the past year, we’ve noticed a huge shift in the way people transact, with a lot of businesses investing into the e-commerce space in order to keep trading during the uncertain times and constant lockdowns.
Whilst this has been a smooth transition for some, it has been fraught with sleepless nights for others.
When it comes to selling online, car dealers have a multitude of regulations to adhere to and the fear of not staying on the right side of the law can be enough to keep car dealers from doing any transactions online, even preventing customers from reserving a vehicle.
Because of this, car dealers have been hit incredibly hard, so we’ve teamed up with the experts at Lawgistics, who specialise in motor trade law, to bring some peace of mind to those who still might not be convinced that they can legally sell cars online without worrying about returns.
Lawgistics specialise in providing legal advice to the automotive industry and have become recognised as legal experts within motor trade.
Nona Bowkis, Legal Advisor at Lawgistics has kindly provided us with some insight into the ‘distance selling’ regulations that we think would be beneficial to our customers. Nona has advised members of the Motor Trade Association on legal matters during her 7 years at Lawgistics and is often referred to as the ‘go to’ person within the motor trade.
So firstly, let’s discuss what distance selling is, so we can understand what this means for car dealers and how you can start trading online to bring your business back to life.
Nona Bowkis at Lawgistics explains, “The legal definition of a distance sale means that if a customer commits to a purchase before physically seeing a vehicle, it is almost certainly a distance sale. This includes a purchase where the customer has placed a deposit online or over the phone as a deposit is a commitment to purchase”.
It’s understandable that dealers are perhaps confused about the distance selling regulations and what the regulations means to them, especially when it comes to implementing e-commerce.
Click & Collect is just one component of distance selling and refers to a transaction that occurs whereby the customer will purchase the vehicle online, with the intention of visiting the dealership in order to collect their purchase.
There appears to be some confusion among dealers when it comes to Click & Collect and whether it still counts as distance selling.
If dealers take a reservation fee instead of a deposit, then there is no commitment to buy. The customer is free to walk away once they have seen the vehicle.
This will not be a distance sale as the customer only commits to buy after they have seen the vehicle. In short, if a contract has been made, and that can be by the placing of a deposit, before the customer sees the vehicle, it will be a distance sale.
Nona explains, “Essentially Click & Collect is not all about distance sales. Under the current law, what matters is only when the customer commits to buy. A deposit is a commitment to purchase, a reservation fee is not”.
This explanation makes sense and it’s important to understand that if the customer reserves a car to prevent someone else purchasing it before they can take a test drive, this is not a commitment to buy.
Home delivery is another form of transaction whereby the customer will purchase the vehicle without first seeing it, however, rather than collecting the vehicle from a dealership, there will be arrangements made to transport the vehicle to the customers home or work address instead.
Nona has a piece of advice on this; “It is important to note that if a dealer tries to avoid the distance sale rules by taking payment after delivery, a court is likely to see that as an off-premises sale for which the customer will still have the same rights and, the trader can leave themselves open to prosecution”.
One of the biggest worries among the car dealers we have spoken to in recent months seems to be that they fear the vehicle will be returned, which in most cases, is not a common occurrence.
The Motor Ombudsman makes it clear to car buyers what their rights are when it comes to distance selling, but by adhering to the distance selling regulations, you are far less likely to have vehicles returned.
Your fears can also be remedied by ensuring the vehicle is advertised with as much transparency as possible using your digital platform:
Vehicle images are incredibly important when it comes to selling online, as it is often the only way the customer will view the car prior to hitting that ‘buy now’ button.
A car is often considered to be the second most expensive purchase a person will make, so the decision to purchase on a whim isn’t likely to happen.
To give you the very best chance of selling your car online, you need to be 100% transparent and that means your vehicle images should show the true condition of the vehicle, including any imperfections.
You could offer vehicle walkaround videos as an alternative to simple static images, as these give the customer a 360 view of the vehicle, so they can be sure that there are no hidden surprises.
Similar to the images we mention above, the product description should be completely transparent – don’t attempt to hide any information that you think may put the seller off. For example, if the car has lots of miles on the clock, make this clear in your description so the potential customer can make an informed decision.
By choosing not to display this information, the potential customer may either leave your website completely, or have to call your dealership to obtain this information, which is then eating into the salesperson’s valuable time.
The worst scenario in this instance would be the customer purchases the car and then realises the mileage is much higher than they assumed and return the car, which they are fully within their rights to do as the customer can cancel their purchase without reason.
Nona explains the importance of a vehicle description; “The Consumer Rights Act 2015 expects three main things from a vehicle. First that it is of satisfactory quality (for the age, mileage and price paid), secondly that it is fit for purpose and thirdly that it matches the description. A misdescribed vehicle will create an easy win for a consumer wanting to reject a vehicle, so getting the description right is important. A disclaimer on a website advising a customer to check the description against the actual vehicle is good practice but it will not necessarily avoid a misdescription claim”.
We can’t stress this enough – be as transparent as possible. Don’t give the customer any reason to go to the trouble of returning the car.
If you are still unclear about the distance selling regulations and how you can legally kickstart your e-commerce journey, speak to the team at Lawgistics who have a range of services to assist you throughout the process.
You can also download their handy distance selling agreement which outlines details of the regulation for both your dealership and the customer.