Ethics and Professionalism Flashcards

A registered salesperson at a dealership discovers that their manager has instructed the finance office to systematically omit mentioning the $800 administration fee during negotiations, only disclosing it when customers sign the bill of sale. The salesperson has personally never charged the fee without disclosure. Under OMVIC's Code of Ethics, what is the salesperson's obligation?

Answer: Report the practice to OMVIC, since registrants are individually responsible for ethical conduct regardless of employer directives

Under OMVIC's Code of Ethics, every registrant bears individual responsibility for ethical conduct and compliance with the Motor Vehicle Dealers Act (MVDA). The Code explicitly prohibits misleading or deceptive practices, and deliberately concealing fees during negotiation — even if disclosed at signing — constitutes a deceptive trade practice. Registrants cannot shield themselves behind employer directives. Reporting to OMVIC is both permitted and ethically required; waiting 30 days or accepting late disclosure does not satisfy the obligation to deal fairly and transparently.

A dealership sells a used vehicle 'as-is' with a signed acknowledgment from the buyer. Three days later, the buyer discovers the odometer was rolled back 40,000 km — a fact the dealer suspected but did not verify before sale. The 'as-is' clause and signed acknowledgment:

Answer: Do not protect the dealer, because odometer fraud is a statutory violation that cannot be waived by contract

An 'as-is' acknowledgment addresses unknown defects and mechanical condition, not statutory violations. Odometer tampering is prohibited under both the Ontario Consumer Protection Act and federal law. A dealer who suspected an odometer discrepancy and failed to investigate before sale cannot rely on contractual waivers to escape liability — the obligation to disclose known or reasonably suspected material facts is non-waivable. OMVIC's Code of Ethics and the MVDA require accurate representation of vehicle history, and courts have consistently held that as-is clauses do not immunize dealers from fraud or statutory misrepresentation.

A salesperson is showing a pre-owned vehicle and the customer asks, 'Has this car ever been in an accident?' The salesperson pulled a CarProof report six weeks ago showing no accidents, but has since seen body shop invoices in the deal jacket suggesting front-end work. The salesperson should:

Answer: Disclose the body shop invoices to the customer and advise them to obtain an independent inspection before purchase

OMVIC's disclosure obligations require registrants to disclose all material facts known to them — not merely what appears on third-party reports. Once the salesperson became aware of information suggesting prior damage (body shop invoices in the deal jacket), that knowledge supersedes reliance on an older CarProof. Answering 'no' or deflecting to the CarProof while possessing contradictory information constitutes misrepresentation. The ethical obligation is active disclosure of the conflicting evidence and recommending an independent inspection, which also protects the registrant from future liability.

A dealership's online listing states a vehicle is priced at $22,499. When a customer arrives, the sales manager says the online price was a 'web error' and the actual price is $24,999, but offers to 'meet in the middle' at $23,750. The customer, unaware of their rights, agrees. Under OMVIC regulations, which statement is most accurate?

Answer: The dealer may be in violation of the MVDA's advertising provisions, as advertised prices must be honoured or the ad must be corrected before a sale is completed at a higher price

OMVIC's advertising standards require that all advertised prices be accurate and that registrants honour advertised prices or promptly correct the advertisement before completing a sale. A 'web error' claim does not automatically excuse a dealer from advertising obligations — the burden is on the dealer to have accurate listings and correct them immediately upon discovery. The consumer's acceptance of a compromise price does not cure the advertising violation, as consumer agreements cannot waive statutory advertising requirements. Online listings are fully covered under OMVIC advertising rules regardless of medium.

A finance manager at a registered dealership is offered a $500 'placement bonus' by an insurance company every time a customer purchases an add-on warranty product through that insurer — paid directly to the finance manager personally, not disclosed to the customer or reported to the dealership. This arrangement:

Answer: Violates OMVIC's Code of Ethics by creating an undisclosed conflict of interest and constitutes an improper secret commission

Accepting undisclosed personal payments from third parties (secret commissions) is prohibited under OMVIC's Code of Ethics and may also constitute a criminal offence under the Criminal Code of Canada. A finance manager recommending a product while receiving an undisclosed personal incentive has an inherent conflict of interest that prevents them from acting in the customer's best interest. There is no threshold below which such payments become permissible — the prohibition is absolute. OMVIC's oversight extends to all registrant conduct that affects consumers, including conflicts of interest arising from third-party payments.

A registered dealer is approached by an unregistered individual who proposes the following arrangement: the individual will source private-sale vehicles, the dealer will process the paperwork and transfer ownership through the dealership, and both parties will split the profit. The individual will have no formal role at the dealership. Under the MVDA and OMVIC regulations, this arrangement:

Answer: Is prohibited — it would constitute the unregistered individual trading in motor vehicles, and the dealer would be facilitating an MVDA violation by acting as a 'shadow' registration

The MVDA requires anyone who trades in motor vehicles — including buying and selling on behalf of others for profit — to be registered with OMVIC. 'Trading' is defined broadly and includes sourcing vehicles for resale profit. Using a registered dealership's infrastructure to process deals for an unregistered principal is specifically targeted by OMVIC as a 'curbsider facilitation' scheme. The registered dealer becomes complicit in the MVDA violation and faces disciplinary action, fines, and potential revocation of registration. A finder's fee framing or business licence does not create an exemption from the registration requirement.