Archived—Project Summaries 2007-2008 - Automobile Protection Association (APA)

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1. APA Investigation of Used Car Advertising


Advertising is frequently the first source of information about a used vehicle and a dealer consulted by the consumer. The APA has determined that advertising to consumers is failing to meet their needs. APA's current field study (2006-07 Program funded project Used Vehicle Retailing Investigation — $91,950) has revealed frequent misrepresentation of price (extra fees not disclosed in ads) and occasionally of condition and mileage (salvage status not disclosed, mileage rollbacks). Misrepresentations of price are so widespread that an honest dealership with all-inclusive no-surprises price is at a significant disadvantage. Increased government and media attention directed to the used car market has created an opportunity for the APA to have an impact on the marketplace. British Columbia, Ontario and Quebec have been active in the area, proposing changes to disclosure standards, and/or increasing inspections and disciplinary actions.

This multi-province project will enable the Association to make effective representations to raise consumer awareness on issues related to advertising, and encourage industry groups and regulatory bodies to upgrade, or more vigorously enforce, their standards related to consumer advertising.

APA will continue its collaboration with a professor at Cornell University, including a meeting in the first quarter to review the survey questionnaire used by the mystery shoppers involved in the investigation and make any additional refinements. As undertaken this year (2006-07), this professor will be invited to spend two or three days supervising the mystery shoppers in the field, and will review APA's final report before it is released to the public. The professor will use the APA's finding to support the peer-reviewed academic research on markets for consumer services.

The APA will prepare and undertake a mystery shopper investigation of 60 used car retailers in Vancouver, Toronto, and Montréal. This investigation of dealerships and curbsiders (dealers posing as private parties) will evaluate the following market practices:

  • Accuracy of price and payment representations in advertising.
  • Accuracy of representations on vehicle condition in advertising, including terms like "special, extra-clean, accident-free, one-owner".
  • Accuracy of representations made by retailers on-site. Disclosure of collision history, true mileage compared to advertised mileage and representations like "accident-free".
  • Compliance with used car labelling requirements of Quebec Consumer Protection Act, and certification requirements of Ontario's Ministry of Transportation.
  • Compliance with new advertising guidelines in Quebec and disclosure requirements in Ontario.
  • Condition of the vehicles offered for sale (evidence of misrepresented collision repairs, possible salvage status, accuracy of indicated mileage, disclosure of required safety and non-safety repairs).