OMVIC Code of Ethics Scenarios 4

Question 1

A salesperson sells a pre-owned vehicle and a week later discovers, through a former employee's tip, that the vehicle had sustained significant undisclosed flood damage prior to trade-in. The buyer has not yet reported any issues. Under OMVIC's Code of Ethics, what is the salesperson's obligation?

Accepted Answer

Contact the buyer immediately and disclose the newly discovered information, regardless of whether the buyer has complained

Answer

OMVIC's Code of Ethics imposes a continuing duty of honest dealing. The obligation to disclose material facts about a vehicle does not end at the moment of sale. If a registrant learns of a material defect or undisclosed damage after the sale, they are ethically required to proactively contact the consumer. Flood damage is a material fact that affects both safety and value, and the consumer's right to this information does not expire upon transfer of title.

Question 2

A dealership's sales manager instructs a salesperson to list a used vehicle online as 'accident-free' based solely on the fact that no accidents appear on the CarFax report. The salesperson personally noticed uneven panel gaps during the pre-sale inspection but did not investigate further. Under the OMVIC Code of Ethics, the salesperson:

Accepted Answer

Bears personal ethical responsibility and must not make the 'accident-free' representation without investigating the panel gap discrepancy

Answer

Under OMVIC's Code of Ethics, each registrant bears personal responsibility for representations they make or facilitate. A salesperson cannot shelter behind a manager's instruction to make a claim they have reason to doubt. Uneven panel gaps are a visible indicator of potential prior collision repair, and noticing this creates a duty to investigate before making or endorsing an 'accident-free' claim. CarFax reports are not exhaustive and do not override physical evidence the salesperson personally observed.

Question 3

A registered salesperson arranges financing for a buyer and receives a flat 'volume referral bonus' paid quarterly by the financing company based on total deals referred, not per-transaction. The salesperson does not disclose this arrangement to buyers. Under OMVIC's Code of Ethics, this practice is:

Accepted Answer

A violation, because any financial benefit a registrant receives from a third party in connection with a consumer transaction must be disclosed to the consumer

Answer

OMVIC's Code of Ethics requires full transparency about all financial interests a registrant holds in a transaction. A volume-based referral bonus from a financing company creates a material conflict of interest — the salesperson has a financial incentive to steer buyers toward that lender regardless of whether it is in the consumer's best interest. The fact that the bonus is structured as a quarterly aggregate does not eliminate the conflict; it simply obscures it. Disclosure is required regardless of payment structure.

Question 4

A dealer acquires a vehicle at auction with a 'salvage' brand on the Ontario title. After having the vehicle repaired and inspected, the dealer applies for and receives a rebuilt title. The dealer lists the vehicle with full rebuilt-status disclosure in the fine print of a written contract but verbally describes it to prospective buyers as 'fully certified and road-legal.' Which statement best describes the ethical status of this practice?

Accepted Answer

It violates the Code of Ethics because verbal representations must be consistent with written disclosures, and describing a rebuilt vehicle without mentioning its history is misleading regardless of fine-print disclosure

Answer

OMVIC's Code of Ethics prohibits misleading representations regardless of technical disclosures buried elsewhere. Verbal statements that create a false impression — such as describing a rebuilt-title vehicle as simply 'fully certified' without mentioning the salvage/rebuilt history — are misleading even if the written contract contains a disclosure. The standard is whether the overall impression conveyed to the consumer is accurate, not whether a disclosure exists somewhere in the paperwork. Consumers who receive an inaccurate verbal picture may not carefully review fine print that contradicts it.

Question 5

During negotiations, a buyer tells a salesperson they have a hard credit limit of $28,000 all-in. The salesperson structures a deal at $27,800 but includes a $600 'documentary fee' on a separate line in the contract after the buyer stops reading. The buyer signs without noticing. Under the OMVIC Code of Ethics, the salesperson's conduct:

Accepted Answer

Violates the Code of Ethics because all fees must be clearly disclosed and the total must honestly reflect what was represented during negotiations

Answer

OMVIC's Code of Ethics requires that all fees be clearly and honestly disclosed, and that the total price presented to consumers be complete and accurate. Structuring a deal to appear within a buyer's stated limit while inserting additional fees after the buyer has effectively stopped reviewing the contract is a deceptive practice. The existence of the fee in the signed contract does not cure the ethical violation — the issue is that the overall representation of cost was intentionally misleading. OMVIC has consistently treated obscured fees as a Code of Ethics violation regardless of whether they represent real costs.

OMVIC (Ontario Motor Vehicle Industry Council) Practice Test

OMVIC (Ontario Motor Vehicle Industry Council) Practice Test

OMVIC Code of Ethics Scenarios 4