Ethics and Professionalism Flashcards

A registered salesperson at a dealership is approached by a friend who wants to buy a used car. The salesperson knows the vehicle has an undisclosed prior collision repair that was not captured in any UVIP report. The salesperson's manager instructs them to say nothing, claiming 'if it's not on the report, it's not our problem.' What is the salesperson's correct course of action?

Answer: Disclose the known collision history to the buyer regardless of the manager's instruction, as registrants are independently obligated to disclose known material facts

Under the MVDA and OMVIC's Code of Ethics, every registrant — including individual salespersons — has an independent, non-delegable duty to disclose all known material facts that could reasonably affect a buyer's decision. A manager's instruction to withhold does not absolve the salesperson. Suggesting an inspection does not substitute for direct disclosure of known defects. Option D creates a paper trail but still facilitates a concealment, which remains a violation.

A dealer is advertising a vehicle as 'Certified Pre-Owned' with a manufacturer-backed warranty. The vehicle was actually inspected by the dealer's own technician using a non-manufacturer checklist, and no manufacturer warranty was applied. Which principle of OMVIC's Code of Ethics is MOST directly violated?

Answer: The prohibition against misleading advertising that misrepresents the nature of a warranty

Advertising a vehicle as 'Certified Pre-Owned' with a manufacturer warranty when no such certification exists is a clear misrepresentation of a material fact — the warranty's source and coverage — in direct violation of OMVIC's prohibition on misleading advertising. The other options address real obligations but are not implicated by the advertising misrepresentation described.

A salesperson's customer is clearly in financial distress and mentions they need a vehicle urgently for work. The salesperson knows a cheaper vehicle on the lot would meet the customer's needs, but steers them toward a higher-priced model that generates a significantly larger commission. The customer signs and later defaults on the financing. Which ethical concept does this scenario BEST illustrate a violation of?

Answer: Breach of the duty to deal fairly and not exploit a customer's vulnerability for personal gain

OMVIC's Code of Ethics requires registrants to deal fairly with consumers and prohibits exploiting a customer's known vulnerability — such as financial distress and urgency — to maximize personal commission at the customer's expense. This is distinct from misrepresentation (no false statements were made) or a cooling-off period (which doesn't apply to used car sales in most circumstances). Creditworthiness verification is the lender's obligation.

A registered dealer discovers that one of their salespeople has been conducting private sales of personally-owned vehicles to dealership customers, negotiated during work hours, without registering those vehicles through the dealership. Under OMVIC rules, which statement BEST describes the situation?

Answer: The salesperson is acting as an unregistered dealer, which violates the MVDA, and the registered dealer may also face compliance consequences for failing to supervise

Repeatedly selling personally-owned vehicles in a commercial context constitutes trading in motor vehicles, which requires registration under the MVDA. Doing so without registration is a violation regardless of disclosure. Additionally, registered dealers have supervisory obligations over their salespersons' conduct, and failing to detect or prevent this pattern can expose the dealer to OMVIC compliance action. Buyers in such transactions lose the consumer protections afforded by the MVDA.

A finance manager at a dealership adds optional products (paint protection, extended warranty, gap insurance) to a customer's financing agreement without clearly itemizing them or obtaining separate, explicit consent for each product. The customer only realizes later when reviewing their loan documents. This practice most directly violates which OMVIC/MVDA requirement?

Answer: The prohibition on bundling optional products into a purchase agreement without informed, itemized consent from the buyer

OMVIC's regulations and the MVDA require that all optional products and their individual costs be clearly disclosed and specifically consented to — they cannot be buried or bundled without the buyer's informed agreement. This is sometimes called 'packing.' While a disclosure statement is required, the more precise violation here is the lack of informed, itemized consent for each add-on product. There is no 30-day reporting requirement to OMVIC for financing, and equal-offering rules address discrimination, not consent.

A competing dealership approaches a salesperson and offers them a 'referral fee' paid in cash if they send customers who don't qualify for in-house financing to the competitor's lot. The salesperson tells neither their employer nor the referred customers about the arrangement. Under OMVIC's ethical framework, which statement is MOST accurate?

Answer: The arrangement violates the duty of loyalty to the employing dealer and the obligation to act transparently, constituting an undisclosed conflict of interest

Accepting secret payments from a competitor for redirecting customers creates a direct conflict of interest and violates the salesperson's fiduciary-like duty of loyalty to their employer and the obligation of transparency with consumers. OMVIC's Code of Ethics requires registrants to disclose conflicts of interest. Verbal disclosure alone (option D) would be insufficient and does not address the breach of duty to the employer. Income tax reporting (option B) is a separate obligation and irrelevant to the ethics violation.