On April 1, 2009 the Ontario Motor Vehicle Dealers Act, 2002 (Act) and its two regulations, the General regulation and the Code of Ethics and Operation of Committees regulation, will come into force. The Act and its regulations will (among other things) impose new obligations on registered motor vehicle dealers and salespersons (registrants) for motor vehicle advertising.

False Advertising

Under the Act, registrants will be prohibited from making false, misleading or deceptive statements regarding the purchase, sale, lease or exchange of motor vehicles in any published material. If the registrar reasonably believes that a registrant is engaging in false advertising, the registrar may order the registrant to cease using the material, retract the impugned statement, and/or publish a correction.

Advertising Requirements

The General regulation, O. Reg. 333/08, sets out specific advertising requirements with which registered motor vehicle dealers must comply unless they are registered in a prescribed class that is exempt. Subject to a few exceptions, motor vehicle advertisements must state, in a clear, comprehensible and prominent manner, the dealer’s registered name and business telephone number, and the total price of the vehicle, including any and all charges related to the vehicle (i.e., fees, levies, taxes, freight charges and inspection before delivery charges). Should two or more registered dealers jointly advertise a motor vehicle for a particular price with certain charges that vary between dealers, the advertisement must stipulate that the actual purchase price for the vehicle may be lower than indicated in the publication and that the buyer of the vehicle may be subject to additional charges, which must be described.

The regulation also requires that a registered dealer be able to provide vehicles at the advertised price. If the dealer has a limited number of vehicles available at the advertised price, the advertisement must disclose the number of available vehicles. Additionally, the regulation provides that if an advertisement states that an extended warranty is included with the purchase of a vehicle, the warranty term and the maximum individual claim limits (if any) for the warranty must be clearly, comprehensibly and prominently described in the advertisement.

The Code of Ethics and Operation of Committees regulation, O. Reg. 332/08, establishes a code of ethics (Code) which all registrants must follow and which cannot be contracted out of or waived. The Code requires that, for disclosure and marketing purposes, registrants be clear and truthful in describing aspects of the motor vehicle and any associated products, services, programs and prices. Furthermore, all advertisements must be legal, decent, ethical and truthful.

Offences and Penalties

Engaging in false advertising, violating an order of the registrar or contravening any of the advertising-related requirements set out in the General regulation constitutes an offence under the Act. Individuals will be liable on conviction to a fine of up to $50,000 and/or to a maximum prison term of two years less a day; corporations will be liable to a maximum fine of $250,000. Officers and directors of a corporation will be guilty of an offence if they failed to exercise reasonable care to avoid contravention of the Act. Should a registrant fail to adhere to the Code, a discipline committee established by the Minister of Consumer and Business Services may make a prescribed order, such as the imposition of a maximum fine of $25,000. An order of the discipline committee can be appealed to the appeals committee.