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Guidance for the motor trade

Trading standards enforces and advises on a wide range of legislation. Some of the law directly relates to the sale of new and used vehicles including:

False or misleading claims and description of cars, including car ‘clocking’
The supply of un-roadworthy vehicles
Licensing, advertising and documentation relating to credit and finance
The display of prices and prohibition of misleading price indications
The prohibition of having notices which restrict consumers rights
The disclosure of information about business ownership.

We have prepared the following fact sheets which give practical tips to help honest traders meet their legal obligations and provide their customers with a high level of satisfaction.

For further advice contact the team, link below.

The information contained in these facts sheets is, to the best of our ability and knowledge, correct. However, only the courts can interpret the law with any certainty. Please call to check if you have the latest version of these notes.

Clocking

The mileage shown on a vehicle’s odometer is a ‘trade description.’ It is an offence to sell or offer for sale a vehicle with a false mileage reading.

It is also a criminal offence to apply a false trade description to a vehicle. This has the effect of making the act of clocking a vehicle, which will later be sold, illegal.

It is no longer permissible to clock a vehicle to read zero miles.

If you are a clocker, you cannot avoid the offence by using a disclaimer when the vehicle is sold.

If you are a dealer, you must exercise caution. If you sell a clocked car or display one for sale, you commit an offence. However, unlike the clocker, you may have a defence. These defences rely on having a system for checking the true mileages of vehicles and keeping full records.

These checks may include:

Signed declarations from previous owners that the mileage is correct. This can be obtained by contacting all the previous owners shown in the log book or if the log book is not available, contacting the DVLA to obtain details of previous owners. This is best handled by letter.

Checking the vehicle itself to find any indication of true mileage, for example, service records or stickers.

You should keep records of all transactions involved in acquiring vehicles and the checks made on them. Keep copies of letters sent to previous owners, together with proof of posting, written replies and notes of any telephone replies.

Disclaimers should only be used if a vehicle is displayed for sale before you receive responses from all previous owners and have completed other checks into the history.

If the checks carried out confirm the mileage is correct, no disclaimer is needed. If the mileage proved to be incorrect, a sticker showing the true mileage must be placed in clear view close to the false reading.

If your checks prove inconclusive, for example, no-one replies, the continued use of a disclaimer is advisable.

The wording of a disclaimer must clearly indicate the status of the vehicle, for example, "We have been unable to verify the mileage on this vehicle and so it must be regarded as incorrect."

To be effective a disclaimer must be bold, precise and compelling as the description it refers to and it must be brought to the notice of prospective purchasers.

The code of practice for the motor Industry requires traders to take reasonable steps to verify a vehicle’s mileage and to inform customers of the result of any checks made.

Pricing and description of vehicles

Any description made about vehicles that you supply must be correct. If an incorrect description is made, then you may be liable to be prosecuted.

A description can be applied in several ways:

On the goods themselves, for example a GTi badge on a standard car

Printed or hand written on a sign, for example, on the windscreen

A statement or picture in an advertisement in a catalogue or brochure

A verbal statement or answer, for example, in response to the question "has this car ever been written off?", the sales person denies that it has.

In the motor trade, common problem descriptions include:

Misrepresentation of mileage by clocking

Claims about extras on cars such as ABS, when none is fitted

Indications of performance, for example, a good little runner or excellent condition

Claims about the vehicle’s history eg. has full service history.

Pricing

Vehicles or other items you have for sale to consumers must be accompanied by a written indication of the selling price. It must be clearly legible, unambiguous and easily identifiable.

The price must include VAT (except for trade sales) and any other non-optional charge, for example, delivery charges and number plates.

You must indicate if you charge a different price for different classes of purchaser, for example, cash and credit card customers.

It is against the law to give a false or misleading indication of the price or anything you are supplying. Care must be taken not to overcharge customers and over how price reductions and other special offers are advertised.

Unless otherwise indicated, goods must not be marked down in price unless they were previously offered at the higher price for at least 28 consecutive days in the previous six months.

More information on price indications is contained in the Code of Practice for Traders on Price Indications published by the Department of Trade and Industry. Copies and advice are available from Trading Standards.

Consumer credit and notices

If you provide credit, act as a broker or debt adjuster or hire vehicles, you will need a consumer credit licence. You risk prosecution and agreements may be worthless if you fail to have a licence for the categories listed below:

Consumer credit – if you offer credit using your own funds

Consumer hire – if you hire, lease or rent vehicles in transactions which can last more than 3 months and the total payments are less than £15 000

Credit brokerage – if you introduce customers to a firm offering credit facilities or to other credit brokers

Debt adjusting – if you negotiate terms of settlement on outstanding credit agreements when cars are part-exchanged.

A credit licence is issued by the Office of Fair Trading. Application forms and guidance can be obtained from Trading Standards.

You do not need a licence to accept credit card payments.

Consumer credit advertisements are categorised by regulations as either simple, intermediate or full. Each type of advertisement is defined in terms of the information it may, must or must not include.

A consumer credit agreement will not be enforceable against the buyer unless it is signed by the buyer and all other parties to the agreement and is in the correct format.

The requirements relating to credit and hire advertisements and agreements are very detailed and we encourage traders to contact Trading Standards for more specific advice before advertisements are published and new agreements are used.

Restrictive notices

You must not display any sort of notice or include any statement on an invoice which seeks to remove your customer’s statutory rights, for example, signs stating no refunds given are illegal – if in doubt, check with us.

Business names

When trading under a name that is not your own, you must disclose details of business ownership in writing and on request and on:

Business letters, written orders, invoices, receipts and written debt demands issued in the course of the business

A notice clearly displayed in any premises where the public has access.

Limited companies must give the full corporate name, registered office address and company registration number. Partnerships and sole traders must give the names of the owners and an address where documents can be served.

Unroadworthy motor vehicles

If you are a motor dealer you are advised not to sell, supply, offer or expose for supply a motor vehicle in an unroadworthy condition. If you are offering an unroadworthy vehicle for supply, you must be able to show that you took steps to ensure that a prospective purchaser knew it was illegal to use the vehicle in its current condition.

The steps you must take are not defined. However, to help avoid committing an offence, you can do several practical things:

Only offer vehicles for sale when they have been thoroughly checked to ensure they are roadworthy. Keep a record of these checks

If you decide to offer vehicles for sale before they are checked, make sure that if a potential buyer sees them, they know they are potentially unroadworthy. For example, you may wish to display a sign on each unchecked vehicle:

"It is our policy to ensure that all vehicles are roadworthy before sale. This vehicle is awaiting preparation and must be regarded as unroadworthy and illegal for use on the road."

If you sell a vehicle which may be unroadworthy and do not want to be prosecuted, you may wish to: