Understanding consumer rights under the CGA
As traders in the used motor vehicle market, it's important to understand the Consumer Guarantees Act (CGA). The Act provides several guarantees that protect consumers when they purchase goods, including used cars.
The Commerce Commission receives many consumer complaints about used motor vehicles. Faulty cars, and getting compensation from used car dealers, is one of the most complained about topics.
Under the CGA, vehicles sold must be of acceptable quality. This means that the car should be fit for purpose, safe, durable, and free from minor defects. The car must also match any description given. If a vehicle fails to meet these guarantees, consumers have the right to seek remedies, which may include repairs, replacements, or refunds.
Correct information
It's important to clearly communicate the condition of the vehicle and any known issues to potential buyers. Transparency helps let customers know what to expect and avoids disputes.
Do not mislead consumers about their rights under the CGA. There are no time frames in the CGA, and you cannot put a verbal or written time limit on a consumer’s ability to get repairs or refunds.
Extended warranties
Offering extended warranties can be a valuable selling point, providing customers with peace of mind and demonstrating your confidence in the vehicles you sell. Make sure that the terms of any extended warranty are clear and detailed, specifying what is covered, the duration of coverage, and any conditions or exclusions.
What you need to do
When selling an extended warranty, you must clearly explain a consumer’s legal rights under the CGA and point out any differences between the CGA and the extended warranty you are offering.
For more information, have a look at the motor vehicle dealer motor vehicle dealer fact sheet and extended warranty fact sheet by the Commerce Commission.
Tips for motor dealers — fact sheet [PDF 483KB](external link)