Vehicle retailer 2CheapCars facing 10 charges following Commerce Commission investigation

The Commerce Commission has been underway since November 2017. Photo / File

Vehicle retailer 2CheapCars is facing 10 charges under the Fair Trading Act 1986 following a 14-month long investigation by the Commerce Commission.

Misleading advertising claims such as "must liquidate" and "84 per cent off" and their use of "warranty waiver" documents got 2CheapCars in the firing line.

Following a number of complaints by consumers, the Commission opened the investigation in November 2017 to the car dealership company.

Between September 30 and October 1, 2017, 2CheapCars advertised it was going into liquidation with statements like "2CheapCars is in hot water, it must liquidate immediately" and "A massive price drop this weekend!"

The Commission alleges the advertising was misleading as it suggested there would be drastic drops in vehcile prices, however, they weren't.

Not only was it found 2CheapCars weren't in or going into liquidation, most of the 710 cars they were selling had not been discounted.

In January 2017, an advert in a newspaper included the words "84 per cent off" which the Commission also alleges is misleading to customers.

Together with the phrase "Massive Stock Liquidation: This Weekend Only" an impression was created the discount was off the price of cars.

However, the investigation found the discount was of a price a $300 GrabOne voucher which could be used towards purchasing a vehicle.

The Commission also estimates over 20,000 customers signed warranty waivers during the charge period and 2CheapCars stopped using them in December 2017, after being told of the investigation.

Between January 1, 2014, and December 31, 2017, 2CheapCars frequently asked buyers to sign a warranty waiver if they decided not to purchase an extended warranty, the Commission said.

The waiver included phrases like "the vehicle you are purchasing does not include a warranty of any kind" and "[If] you choose not to purchase the indicated warranty at this time, you must sign this waiver."

The Commission alleges the waiver misrepresented consumers' rights under the Consumer Guarantees Act 1993 (CGA) because:

• Under the CGA consumers have rights of remedy against suppliers whether or not the goods are covered by any other warranty

• A consumer does not lose the CGA protections by declining to purchase an extended warranty

• Remedies under the CGA must be done within a "reasonable time", not at the convenience of the supplier, and consumers can recover from the supplier costs which are reasonably foreseeable as a result of the failure. They may include the cost of hiring a rental car while a repair is being undertaken

• The CGA applies to the goods purchased which in this case includes the tyres and batteries.

2CheapCars operates 14 car yards throughout New Zealand and because the matter is before the court the Commission will make no further comments.