Motor Vehicle Dealers Act
- Legislation category:
- Code of Ethics, Consumer Protection Act, Motor Vehicle Dealers Act, Sale of Goods Act
- Current to
- October 6, 2023
An overview of the Motor Vehicle Dealers Act
The Motor Vehicle Dealers Act (MVDA) requires that anyone who wishes to sell, lease or trade motor vehicles in Ontario must be registered with OMVIC. The MVDA outlines criteria for registration and requirements which must be fulfilled by those businesses buying and selling vehicles. OMVIC is the delegated authority responsible for administering and enforcing the MVDA by the Ministry of Public and Business Service Delivery.
What does the MVDA include?
- There are penalties for offences against the MVDA. If a person “furnishes false information” or fails to comply with the act or the general regulations, they can be fined and/or imprisoned. Similarly, if an officer or director of a corporation that is a dealer “fails to take reasonable care” to prevent the corporation from committing such an offence, that person can be fined and/or be imprisoned. The maximum penalty for an individual is:
- A fine of $50,000 and/or
- Imprisonment for two years, less a day.
- The maximum fine for a corporation is $250,000.
- The minimum penalty for an individual acting as a salesperson or as a dealer without being registered, known as “curbsiders,” is $2,500.
- Dealers and salespeople must abide by the [Code of Ethics] regulations. If a dealer or salesperson violates the Code of Ethics regulations, he or she can be brought before a discipline committee.
- The MVDA specifies several classes of dealers:
- General dealer – new and used vehicles
- General dealer – used vehicles
- Outside Ontario dealer
- Lease finance dealer
- Fleet lessor – commercial lessor.
- There are requirements for dealers and salespersons to notify OMVIC of significant changes to the information provided to the organization on registration or upon renewal of registration.
- OMVIC must make significant information regarding dealers and salespeople (including charges laid and/or conviction of an offence) available to the public .
- The requirements for disclosure by dealers to customers (and in dealer-to-dealer transactions) must be “clear and truthful” and any representations (including advertising) must be “legal, decent, ethical and truthful.”
- All customers (not just consumers) other than registered dealers are entitled to cancel a contract within 90 days if there was not adequate disclosure of branding, of the vehicle’s make, model and model year, of previous use as a police vehicle, emergency services vehicle, limo or taxi, or in some cases as a daily rental, or of the distance driven (within certain margins of error).
- General dealers (only) must set up a trust bank account for any individual deposit over $10,000 and for any monies received for a consignment transaction when the consignor is an individual who purchased the vehicle for personal or family use.
- The maximum compensation fund payout to a consumer for any one individual transaction is $45,000.
- OMVIC can appoint a “receiver and manager” to take control of a dealership and can issue a “freeze order” to seize the assets of a dealer or an alleged curbsider.
- A dealer may be required to submit its advertising to the registrar for pre-approval for up to two years.