OMVIC OMVIC MVDA and Legislation 3 — Questions and Answers
Question 1: Under the MVDA, a 'motor vehicle dealer' is defined to include which of the following types of businesses?
- New vehicle dealers, used vehicle dealers, lease dealers, and wholesalers who trade in motor vehicles in Ontario (Correct answer)
- Only franchised new-car dealerships with manufacturer agreements
- Any business that repairs and services motor vehicles
- Finance companies that arrange vehicle loans for dealers
Correct answer: New vehicle dealers, used vehicle dealers, lease dealers, and wholesalers who trade in motor vehicles in Ontario
The MVDA defines 'motor vehicle dealer' broadly to capture all business types that trade in motor vehicles — whether new vehicles, used vehicles, leased vehicles, or wholesale transactions. All must be registered with OMVIC.
Under the MVDA, the dealer registration categories include: General Dealer (new and used), Used Motor Vehicle Dealer, Wholesaler (trades between dealers), Lease-Finance Dealer, and Exporter. Each category has specific conditions on what activities are permitted. A business cannot engage in any form of motor vehicle trading in Ontario without the appropriate OMVIC registration. Even businesses that primarily finance or lease vehicles but also trade in them may need registration.
Question 2: What is the significance of the 'Registered Salesperson Certificate' under OMVIC?
- It is the official proof that an individual has met OMVIC's registration requirements and is authorized to trade in motor vehicles as a salesperson in Ontario (Correct answer)
- It is a voluntary certification for experienced salespeople with no legal significance
- It is issued by individual dealerships and has no provincial regulatory standing
- It exempts the salesperson from needing to complete mandatory OMVIC education courses
Correct answer: It is the official proof that an individual has met OMVIC's registration requirements and is authorized to trade in motor vehicles as a salesperson in Ontario
The Registered Salesperson Certificate is the official OMVIC registration document for salespersons. Without it, an individual cannot legally trade in motor vehicles in Ontario. It is evidence of meeting OMVIC's registration requirements, including completing the mandatory salesperson education program.
Under the MVDA, no person may act as a motor vehicle salesperson in Ontario without being registered with OMVIC. The Registered Salesperson Certificate is issued upon successful registration, which requires: completion of the OMVIC Salesperson Registration Education Program (SREP), passing required examinations, employment by a registered dealer, and payment of registration fees. The certificate must be displayed or available for inspection. Salespersons who leave a dealership must transfer their registration to a new employer or their registration becomes inactive.
Question 3: Under the MVDA, what is a 'curbsider' and why does OMVIC enforce against this practice?
- An unregistered person who regularly buys and resells vehicles privately while posing as a private seller to avoid the legal obligations of a registered dealer (Correct answer)
- A licensed dealer who specializes in selling high-end luxury vehicles
- A mechanic who performs safety inspections on vehicles for dealers
- A consumer who purchases multiple vehicles per year for personal use
Correct answer: An unregistered person who regularly buys and resells vehicles privately while posing as a private seller to avoid the legal obligations of a registered dealer
Curbsiders are unregistered vehicle traders who misrepresent themselves as private sellers to avoid OMVIC registration, consumer protection obligations, and disclosure requirements. They harm consumers by selling vehicles without the protections that registered dealers must provide.
Curbsiding is a significant enforcement priority for OMVIC. Curbsiders typically purchase salvaged, flood-damaged, or high-mileage vehicles and resell them to consumers while posing as private individuals. Because they are not registered, consumers lose all OMVIC protections — no Code of Ethics obligations, no right to file an OMVIC complaint, and no access to the Motor Vehicle Dealers Compensation Fund. OMVIC conducts investigations and can prosecute curbsiders under the MVDA, and convictions can result in fines and prohibition orders.
Question 4: Under the MVDA, what obligation does a dealer have when taking a vehicle in trade from a consumer?
- The dealer must disclose any encumbrances (liens) on the trade-in vehicle and handle trade-in proceeds honestly (Correct answer)
- The dealer may retain the trade-in without any obligation to disclose its condition or value
- The dealer must report the trade-in to the Ministry of Transportation within 24 hours
- The dealer is required to offer the consumer at least 80% of the vehicle's wholesale book value
Correct answer: The dealer must disclose any encumbrances (liens) on the trade-in vehicle and handle trade-in proceeds honestly
When accepting a trade-in, dealers must handle the transaction honestly and must not misappropriate lien proceeds. If the trade-in has an existing lien (loan), the dealer is responsible for ensuring that lien is discharged properly using trade-in proceeds.
A common source of consumer complaints involves dealers who accept a trade-in with an outstanding loan (lien) but fail to pay off the lien. If the consumer continues to receive collection calls for the trade-in loan after handing over the vehicle, the dealer has failed in their obligation. OMVIC's Code of Ethics requires honest dealing in all aspects of the transaction. Misappropriating funds that should have been used to discharge a lien is a serious violation that can result in registration action and claims against the Compensation Fund.
Question 5: Under the MVDA, a registered salesperson who leaves their employer dealer must:
- Notify OMVIC of the change and either transfer their registration to a new registered employer or have their registration placed in inactive status (Correct answer)
- Surrender their certificate permanently and re-apply from scratch to work for a new dealer
- Continue operating as a salesperson for 90 days on a grace period without notifying OMVIC
- Work only at their previous employer for a mandatory 30-day notice period before any change
Correct answer: Notify OMVIC of the change and either transfer their registration to a new registered employer or have their registration placed in inactive status
Salesperson registrations are tied to a specific employer dealer. When employment ends, the salesperson must notify OMVIC and either transfer their registration to a new registered dealer or place it in inactive status until new employment begins.
Under OMVIC's registration rules, a salesperson's registration is linked to the employing dealer. When a salesperson leaves a dealership, their registration must be transferred to their new employer. Until the transfer is processed, the salesperson cannot legally trade in motor vehicles. The departing and arriving dealers both have notification obligations. Salespersons who trade in vehicles without an active registration linked to a current employer are in violation of the MVDA, even if their underlying registration was previously valid.
Question 6: Under the MVDA, what is the maximum penalty for an individual convicted of trading in motor vehicles without being registered with OMVIC?
- A fine of up to $50,000 and/or up to two years less a day in prison for a first offence (Correct answer)
- A warning letter with no financial penalty for a first offence
- A fine of up to $1,000 with no possibility of imprisonment
- Forfeiture of all vehicles held, with no additional penalties
Correct answer: A fine of up to $50,000 and/or up to two years less a day in prison for a first offence
The MVDA imposes significant penalties for unregistered trading. An individual can face fines of up to $50,000 and imprisonment for up to two years less a day for a first offence, reflecting the seriousness of operating outside the consumer protection framework.
Section 33 of the MVDA sets out offence penalties. For a first conviction, an individual faces a fine of up to $50,000 and/or imprisonment for up to two years less a day. Corporations face fines of up to $250,000. Repeat offenders face higher penalties. These significant consequences reflect the harm that unregistered trading (including curbsiding) causes to consumers who lack the protections of the registered dealer framework. Courts may also issue prohibition orders preventing convicted persons from engaging in the vehicle trade.
OMVIC OMVIC MVDA and Legislation 3
Under the MVDA, a 'motor vehicle dealer' is defined to include which of the following types of businesses?