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Car Market Operator policy
It’s Trade Me’s policy to not allow car market operators to create listings on behalf of, or for, private traders.By Trust and Safety 14 July 2020
Car Market Operators must act as a Motor Vehicle Trader
It’s Trade Me’s policy to not allow car market operators to create listings on behalf of, or for, private traders.
This is to protect consumers from confusion about the nature of the sale and from potential fraud opportunities.
Here’s a bit of background information about our reasons for this policy.
When a CMO makes a listing to sell a privately owned vehicle, mixed messages can be sent to potential buyers.
An example of this confusion is when a Trade Me member selling cars appears to be ‘in trade’ or a registered Motor Vehicle Trader (MVT) by displaying a ‘dealer’ badge, but their listing uses wording like “this is a private sale” or “the seller is not in trade" or “the seller is not a Motor Vehicle Trader”.
That wording is potentially confusing to buyers as the Fair Trading Act requires traders to identify themselves as ‘in trade’ or a ‘dealer’ if they are either or both of these things.
Offers by a CMO to pay cash for ‘trade ins’, or offers to arrange mechanical inspections, vehicle grooming, and insurance may also create an impression that the member advertising the vehicle is in the business of motor vehicle trading, potentially confusing prospective buyers.
This potential confusion can be increased by listings that feature Consumer Information Notices (CINs) that have been converted into a ‘Private Sale Notice’. Examples we’ve seen can look pretty much the same to the official CINs.
CINs are designed to give important information to buyers, like whether there is a security interest registered over the vehicle.
This is an important area to avoid potential confusion, especially in case issues occur after the sale.
CMO legal definition
A CMO is defined in the Motor Vehicle Sales Act as a person or entity that carries on the business of providing premises, or a place for a market for the sale by other people of used motor vehicles.
A CMO includes a person commonly referred to as a car fair operator or a display for sale operator.
CMOs fitting the definition in the Act have an exemption from meeting the registration requirements of MVTs.
Where a CMO goes beyond the simple model of a CMO (such as by offering services in addition to providing a place, or venue, for the sale of the vehicle) then, arguably, the entity or person is no longer a CMO. The CMO may need to consider registering as a MVT, if they aren’t already.
The circumstances may vary for everyone, so we suggest any CMOs in this position take legal advice on this point.
Identity of seller
Trade Me operates on the basis that the identity of the person selling the vehicle is disclosed to potential buyers (via their Trade Me username).
This is to ensure both buyers and sellers meet their obligations and so that Trade Me can help with member disputes.
Where CMOs sell on behalf of clients (whether professional traders or private sellers), the trading identity of the seller is hidden from buyers and Trade Me, leaving the potential for trades to go wrong with no ability for buyers to contact the seller for a remedy.
A further risk is that third party MVTs (registered or off the grid) could use the service to hide behind a CMO’s identity, and by doing so avoid detection by Trade Me (this behaviour does occur on other memberships from time to time when the MVT is banned from using the site or it wants to appear as a private seller).
A MVT could also use the CMO mechanism to avoid their Motor Vehicle Sales Act obligation to register as a MVT and attempt to hide from the Ministry of Business Innovation and Employment’s enforcement teams.
While CMOs provide a service to both buyers and sellers, the transaction is between the buyer and the seller.
If a CMO were to list vehicles on behalf of private sellers, Trade Me is concerned that any Trade Me feedback on a transaction could only be placed on the CMO’s membership and will not accurately represent who has participated in a trade.
Prospective buyers may also get a misinformed view of the character of the CMO account if the feedback is not a genuine reflection of transactions conducted by that member.
Where private sales are completed via auction, the contract is formed between the seller and buyer.
If a successful auction was to occur between the CMO and the buyer, the actual owner of the vehicle is not formally a part of the transaction.
This isn’t an ideal situation and leaves the buyer in a vulnerable position if something goes wrong.
Private sellers may create their own listings, even if the vehicle is available for inspection with a CMO
Trade Me members who use the services of CMOs are welcome to list their own vehicle and explain where the vehicle is displayed for inspection.
Motor Vehicle Traders and ‘on behalf’ sales
Registered MVTs may sell vehicles ‘on behalf’ of consumers but these should not be advertised as a ‘private sale’.
This is because the MVT is effectively an agent of the seller and the Consumer Guarantees Act applies to the sale. In law, the sale is not by a ‘private’ seller as it is undertaken by an MVT.
For clarity, CMOs who are registered as MVTs may not sell vehicles in this manner, unless they’re selling the vehicle as a MVT.
Where a MVT lists a vehicle on Trade Me on behalf of a private seller, no contracting out of the Consumer Guarantees Act can occur.
This means statements such as “private sale, no warranty applies” or “private sale, as is where is” may not be made in the listing body.