We Buy Any Car: unfair practices by trader offering vehicle buying service

The Competition and Markets Authority  website gives details of the old OFT's investigation into teh activities of webuyanycar.com. This is from the release:

This investigation was opened by the OFT on its own initiative to investigate the business practices of We Buy Any Car Ltd, which offers a vehicle buying service to the general public.  Consumers are directed (via search engines or television or radio advertising) to the webuyanycar.com website where they are invited to input details about their vehicle and its condition to obtain a free online valuation. If the consumer is happy with the online valuation they can arrange an appointment at the trader's premises for their vehicle to be inspected. At the onsite inspection, the vehicle is given an examination and an offer is made to the consumer to purchase the vehicle. As at 3 August 2010, the company had 114 branches throughout England, Scotland and Wales.
The OFT investigation found that nearly 96 per cent (note 1) of customers who sold their car to We Buy Any Car Ltd between 1 July 2009 and 30 June 2010 received less for their vehicle than the original online valuation.  The OFT was concerned that We Buy Any Car Ltd was reducing the valuation of the vehicle for reasons other than that the condition of the vehicle at the inspection differed from that reported by the consumer when obtaining the online valuation.

As a result of its investigation, the OFT formed a view that We Buy Any Car Ltd may be operating in breach of certain provisions of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs). In particular, the OFT identified the following practices that the company was or had been engaging in, amongst others, with which it had concerns:

1. giving the impression to consumers that they would be paid the online valuation amount if their description of the vehicle and its condition was accurate, when in fact the final valuation price offered at the appointment might also be dependent on other factors (such as market conditions)
   
2. giving the impression to consumers that their online valuation was valid for seven days when this was not in fact the case
   
3. failing to make clear that the online valuation figure included an amount for any road tax refund, which would be deducted from the final price offered.  The consumer would then have to claim the tax refund from the DVLA 
   
4. the use of key performance indicator ('KPI') targets for calculating bonus payments to vehicle inspectors that had the potential to encourage unfair conduct. In particular, the use of KPI targets based upon reducing the valuation of vehicles upon reappraisal by an average amount or percentage as against the original online valuation (known as 'chipping')
   
5. failing to make clear to consumers at the appointment that the next working day payment service (which incurs an additional charge of £24.75) was optional
   
6. failing to assess customer complaints in a fair, reasonable, consistent and professional manner, in particular as a result of a lack of formal written complaint policies and procedures
   
7. incorporating potentially unfair terms in its standard terms and conditions, such as limiting its liability for any damage done to the vehicle during the onsite inspection.
   

The OFT was concerned that the effect of some of these practices might be to encourage consumers to attend an onsite inspection without being aware of the true nature of the online valuation.  In the OFT's view, once at the onsite inspection consumers were more likely to accept a lower final valuation price, even if they were unhappy with it, because of the time and expense already incurred, or because their personal circumstances meant they needed a quick sale (for example, because they were in financial difficulties,  or were emigrating).  Had they been aware of the likely reduction in value they might have chosen to explore other options for selling their car first.
During the investigation We Buy Any Car Ltd engaged constructively with the OFT and affirmed its commitment to providing greater transparency to consumers in the way in which it conducted its business.
Following its investigation, the OFT warned We Buy Any Car Ltd that it was considering applying to the court for an enforcement order, and consulted with the company with a view to ensuring that the contended infringements were not continued or repeated. We Buy Any Car Ltd and its directors then signed undertakings to address the OFT's concern that the above practices may breach the law, which the OFT accepted. Whilst the company and its directors do not accept that their business practices breached the law, they have agreed to make revisions to those practices in light of the OFT's concerns.
The Undertakings require that We Buy Any Car Ltd does not continue or repeat the conduct of concern in this case. For example, the company has agreed:

• i. to make it clear to the consumer, both before and at the time when the online valuation is communicated to them, that the online valuation is not a price at which the company is offering to purchase the vehicle, but is a valuation that is based upon the consumer's own assessment of the condition of the vehicle, which may change following an onsite inspection;
  
• ii. to not reduce the valuation of a vehicle on the basis of a change in market factors, unless (i) it has made it clear to the consumer at the time when they receive their online valuation  that this might happen, and - in the event that it does - (ii) it has used reasonable endeavours to inform the consumer, at least twenty-four hours before any appointment, of the amount to which such change has reduced the valuation;
  
• iii. to ensure that its practices and procedures, including its use of key performance indicators, targets and rewards, do not encourage any conduct on the part of its employees to reduce valuations for reasons beyond the specific limited circumstances made clear to the consumer prior to the inspection;
  
• iv. to not make any statement to consumers to the effect that a valuation will be valid for a specified period of time unless it will be treated by the company as valid for that period of time;
  
• v. to not deduct from any valuation of a consumer's vehicle the amount of any refund that is available to the consumer from the DVLA in respect of vehicle tax;
  
• vi. to maintain effective and transparent procedures for the reasonable and prompt handling of consumer complaints;
  
• vii. to revise its terms and conditions to no longer use terms which have the effect, among other things, of excluding any liability on the part of the company for (i) oral representations made by or on behalf of the company; (ii) damage caused to a consumer's property by negligence.
  

During the course of its investigation the OFT was provided with investigative assistance by a number of Trading Standards Services, including Rochdale Trading Standards Service.
Note 1: Figures quoted here are based on vehicle purchase data provided to the OFT by We Buy Any Car Ltd, covering a period from 1 July 2009 - 30 June 2010.  The OFT excluded a small number of transactions that were obviously business transactions, that attracted VAT, or that clearly indicated recording errors.