by Iris Winston
Electronic curbsiding. Direct manufacturer-to-customer sales. Pricing discrepancies. Potential lack of protection for consumers.
These are just a few of the issues that could develop if e-commerce takes hold in the automobile industry.
“It’s not a huge problem here yet as very few are buying on-line in Canada now,” says University of Ottawa law professor Michael Geist, “but it has already arisen as an issue in the U.S. and it is an area that is going to continue to grow.”
The central issue is that manufacturers, dealers and electronic brokers all want control of the customer. The outstanding question is whether existing legislation must be modified to ensure that protection extends to electronic dealings.
Professor Geist, the author of a major paper on consumer protection and electronic commerce for the Ontario Ministry of Consumer and Commercial Affairs, says the biggest issue for purchasers in this province is whether the Motor Vehicle Dealers’ Act would still cover vehicles from outside Ontario if they were purchased electronically.
The act, which establishes dealer qualifications and administers a compensation fund for vicitimized consumers, may not extend to covering either dealers or vehicles in cyberspace, even if the vehicle is destined for Ontario.
“It is not entirely clear,” says Professor Geist. “What is clear is that if the act is about protecting consumers, it must retain that purpose.”
Other issues, such as varying regulations for vehicle safety checks, pollution controls or putting write-off vehicles back on the road could also be up for grabs in the purchase-without-borders Internet world.
In general, he says, when the Internet is used as a source of information, but purchases are made locally, existing statutes are unaffected. It is the “business model” of using a Web broker in the electronic acquisition of an out-of-province vehicle from an out-of-province dealer that has the greatest potential legal implications.
Therefore, Professor Geist foresees the possibility of changes to the act to extend coverage beyond physical presence. He also anticipates inter-provincial cooperation to deal with the growth of e-commerce. And, he emphasizes, “it may not be a big issue today, but an explosion of the (electronic) purchase of high-ticket items is set to take place. We need to be ready and get our laws in order for when it hits.”
He proposes a seal program that would licence auto dealers across provincial and national borders.
“In theory, you could have mutual recognition of a seal through the program,” he says. “It would also be one way to identify who is local, which would be an advantage to the dealers.”
In the U.S., such states as Texas and Arizona have already introduced statutes restricting Internet sales of automobiles – a reaction to such electronic points of sale as carsdirect.com, which guarantees vehicle price and manufacturer-to-consumer delivery in parts of the U.S.
“But cars are not manufactured in those states and the dealers are strong,” notes Professor Geist. “Dealers are very concerned about manufacturers getting into selling directly to consumers.”
Some auto-related web sites are relatively non-controversial. A referral site, such as the Autobyte.com is a means of establishing dealer/customer contact. The vehicle, is still purchased locally, however, and is covered by existing laws. Periodically, says Professor Geist, problems occur when there is a discrepancy between the price given on the Internet and the price at the point of purchase and “more protection may be needed in a referral context.”
Through a different type of site, consumers can advertise the price they are willing to pay for models with specified features and then purchase from local dealerships meeting the specifications. E-bay consumer-to-consumer sales and purchases are not generally creating regulatory problems (although this format may open the way to electronic curbsiding.)