Car dealer 2 Cheap Cars charged by Commerce Commission over 'liquidation' sale, misleading discount claims

Car dealership chain 2 Cheap Cars is being charged by the Commerce Commission over a number of alleged offences, including attempting to get customers to sign away their warranty rights.

The Commission said in a release today that the company, that operates from 14 locations nationwide, is facing 10 charges under the Fair Trading Act over its "must liquidate" and 84% off" advertising campaigns, as well as the use of "warranty waiver" forms.

The Commission received a number of complaints from consumers and an investigation into the practices and claims was opened in November of 2017.

During an advertisement campaign in 2017, the company allegedly told consumers it was "in hot water" and that it "must liquidate immediately", as well as promising "a massive price drop this weekend!"

However, the Commission says the advertising was misleading because the company never was in liquidation, and that not all of the 710 vehicles then for sale nationwide were discounted - some had discounts as little as $5.

Another 2 Cheap Cars advertisement in a newspaper in January of 2017 promised "84% off", but this claim related only to the price of a $300 GrabOne voucher, which could be used towards purchasing a vehicle - not the vehicles themselves.

Additionally, the company is also alleged to have been involved in a practice known as "warranty waivers", when buyers are asked to sign a document if they chose not to buy an extended warranty.

The waiver included terms such as:

- "The vehicle you are purchasing does not include a warranty of any kind."
- "[If] you choose not to purchase the indicated warranty at this time, you must sign this waiver."
- "I do understand that 2 Cheap Cars will comply with the Consumer Guarantees Act. I also understand that I am, and would prefer to be, solely responsible for any repair bills."
- "If any repairs are carried out it will be done by 2 Cheap Cars [L]imited at a time of their convenience and that there are no courtesy cars provided."
- "Consumable items such as but not limited to tires and batteries … are not covered by the [Consumer Guarantees Act]."

The Commission says the document misrepresented consumers' rights under the Consumer Guarantees Act 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.

The Commission says 2 Cheap Cars stopped using the forms only after they heard they were being investigated, and up to 20,000 forms may have been signed.

A 2 Cheap Cars yard in Penrose, Auckland.
A 2 Cheap Cars yard in Penrose, Auckland. Source: Google Streetview