Consumer Tribunal orders refunds after consumers bought defective cars

The National Consumer Tribunal has ordered another car dealer to refund a consumer who was sold a defective car.

Earlier this year, the Tribunal ordered a different car dealer to refund a consumer and pay a fine of R100 000 for selling a defective car.

In the latest incident, the National Consumer Tribunal (NCT) ordered Claremont VW to refund a consumer R106 000 after he complained to the National Consumer Commission (NCC) that the car dealer sold him a defective vehicle and refused to honour his consumer right to a refund.

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Following an investigation, the NCC revealed that the consumer was sold a defective vehicle that failed to perform barely two months after delivery.

By delivering a defective vehicle, the supplier contravened section 56 (2) of the CPA which notes how a consumer can return goods bought to a supplier within six months after delivery, without penalty and at the supplier’s risk and expense, if the goods fail to satisfy the requirements and standards contemplated in section 55.

Sections 55 and 56 and consumer rights

Section 55 stipulates that goods must be reasonably suitable for the purposes they will be used for, of good quality, in good working order free of any defects and should be usable and durable for a reasonable period.

Section 56 also gives consumers the right to direct the supplier to repair or replace the vehicle or receive a refund. The consumer exercised his right to a refund and the supplier refused. The NCC issued a compliance notice directing Claremont VW to refund the consumer the purchase price of the vehicle as the consumer chose.

However, Claremont VW ignored a lawful instruction and requested the NCT to review and set aside the compliance notice, but the NCT found that the NCC followed the correct procedure to issue a compliance notice, as Claremont VW did not raise valid grounds for reviewing and setting aside the notice.

Thezi Mabuza, deputy commissioner of the NCC, says the NCC welcomes this judgment and believes that it will deter other suppliers from ignoring the provisions of the CPA. “We want to remind suppliers that they have the responsibility to distribute goods that are of good quality, in good working order and free of any defects for a reasonable period of time.

“If goods fail to meet these standards, the consumer has the right to choose if the supplier must repair, replace or refund the consumer. Where suppliers fail to honour the consumer’s choice, we will not hesitate to issue non-compliance notices.”

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Another dealer had to pay for a defective car

In January, this year the NCT also found in favour of the NCC in a similar case against BNA Motors, directing the car dealer to refund the consumer who bought a Volkswagen Polo Comfortline from BNA Motors.

When enquiring about the car, the salesperson told the consumer that the sale price was R160 000 and that it had travelled 145 000 km, which was confirmed by email. About five days after taking delivery of the car, the consumer returned it to the dealer due to an expired licence disc.

When he returned to collect the vehicle, he realised that its mileage was 190,000 km. He raised the discrepancy with the dealer but got no response. A month later, the consumer also discovered that the car made a terrible sound when turning left or right, there were issues with the headlights, it failed to start on numerous occasions and the hand brake did not work.

The consumer then wanted to return the car to BNA Motors for a replacement but got no response. He then referred the matter to the Motor Industry Ombudsman of South Africa, who investigated and recommended that the dealer cancel the purchase agreement within 15 working days.

BNA Motors did not comply and resorted to fixing the car. There was a reasonable suspicion that the dealer contravened the CPA and the ombudsman directed one of its investigators to investigate. The investigator concluded that BNA motors contravened various provisions of the CPA.

The consumer chose to cancel the transaction and be refunded the purchase price, but this was not done. BNA Motors also did not file an answering affidavit opposing this application. The NCT found that the dealer also contravened the provisions of section 55(2) (a) to (c) and that the contravention constituted prohibited conduct.

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NCC asked for an administrative fine as well

The NCC requested the NCT to impose an administrative fine on BNA Motors as provided in section 151 (1) of the National Credit Act that established the NCT and its powers. An administrative fine may be imposed for prohibited or required conduct in terms of the CPA. It may not exceed the greater of 10% of the respondent’s annual turnover during the preceding financial year or R1 million.

The car dealer sold a defective vehicle to the consumer and disregarded the consumer’s rights under the CPA. The dealer did not accept the ombudsman’s recommendation to cancel the purchase agreement and refund the purchase price to the consumer.

The NCT said as a result of BNA Motors’ actions, the consumer has been out-of-pocket for R160 000 since November 2020. The consumer has not been able to derive any benefit from the use of the car and the dealer’s actions are worse because the consumer was saddled with monthly instalments of R3 194.57.

In addition, the consumer incurred insurance premiums of R4 000.00. The NCT was unable to make a finding concerning the level of profit derived from the dealer’s contravention. However, the dealer benefited from the purchase price the consumer paid for a vehicle he used for less than a month.

Therefore, the NCT found that an administrative fine of R100 000 is appropriate.