Car supermarket Carcraft has had its wrists slapped and has been ordered to comply with the law after a watchdog found major problems in the way it sold vehicles and motor finance.
Carcraft, which has 11 car supermarkets in England and Wales, has made changes to its practices and given undertakings about its future conduct, which address the Office of Fair Trading's (OFT) concerns.
If it fails to adhere to these, the OFT can take it to court, but does not have power to issue a fine.
The OFT found the following problems with the company's practices.
- It did not always properly carry out the comprehensive pre-sale vehicle inspections it advertised, with customers complaining about significant problems shortly after purchase.
- It did not always meet legal obligations to repair or replace cars that were not of satisfactory quality.
- It did not make clear to some customers the terms of motor finance, such as the level of repayments or that they were signing more than one finance agreement.
- It gave some customers a misleading impression about the scope of the after-sale vehicle guarantee, or that the guarantee was free when there was a cost.
- It allowed some customers to drive vehicles off its premises without valid road tax.
Cavendish Elithorn, senior director of the OFT's Goods and Consumer Group, says: "Car buyers often choose to purchase from a large dealer in expectation of peace of mind.
"Carcraft promised customers that it aimed to help them 'find the perfect car with confidence', but we don't think its practices ensured that it always lived up to expectations or met its legal obligations. We welcome Carcraft's undertakings which should ensure customers are treated fairly.
"The industry should take note of our action against Carcraft as it shows that dealers will face enforcement action where their practices cause serious problems for consumers."
Last year's OFT market study into second hand car sales found that the market was often not working well for consumers. The results of that study led the OFT to warn used car dealers they must comply with the law or face enforcement.
The OFT will shortly be launching a consumer campaign to increase awareness of consumer rights when buying a used car.
Carcraft says it believed its business practices complied with the law.