Motor Vehicle Dealers Compensation Fund
The Motor Vehicle Dealers Compensation Fund is a consumer protection fund that was introduced in 1986. It reimburses eligible consumers who have suffered a proven pecuniary or out of pocket loss related to a vehicle purchase or lease transaction. Consumers can only make a claim to the Fund if they have dealt with a registered dealer at the time of the transaction.
An independent Board of Trustees consisting of nine members from the public and industry review claims and make decisions about compensation for eligible claimants based on the MVDA and its Regulations (or its predecessor legislation). Consumer are expected to have exhausted all other legal remedies prior to making a claim against the Fund and full documentation as evidence of their claim is required.
To be eligible for consideration by the Fund’s Board of Trustees, a written claim must be submitted within two years of a registered dealer refusing or failing to pay compensation, and must be based on one of the situations described below if the transaction occurred after January 1, 2010:
- The dealer has failed to satisfy a court judgement that has become final
- The dealer has failed to return a deposit to a consumer or an undelivered motor vehicle
- The dealer has failed to remit an extended warranty contract and/or payment for same to the warranty company or has not paid for a repair which would have been covered and/or refunded the warranty premium paid by the consumer
- The dealer has become bankrupt
- The dealer has been convicted of an offence related to the trade in the motor vehicle
- The dealer has seriously misrepresented the vehicle to the consumer and the consumer would be eligible for rescission of the contract
- The dealer has had its licence revoked by the Registrar and one of the reasons includes issues related to the transaction
- The dealer has failed to remit or honour the conditions of a service plan agreement
- The motor vehicle has been seized by law enforcement or lawfully by a creditor (not the consumers) and the motor vehicle will not be returned
The Motor Vehicle Dealers Compensation Fund is supported through a fee that dealers must pay when they apply for registration to the Ontario Motor Vehicle Industry Council. The maximum amount that can be paid for any one claim is $45,000 (CAD).
If a consumer's transaction happened before January 1, 2010, their claim would be judged by the previous criteria and the maximum amount they could receive has not changed from $15,000 as set in the previous Act.
When the Fund pays a claim, the consumer signs over to the Fund all rights and remedies related to the claim to which he or she is entitled. The Fund may then pursue its own legal action to recover the amount of the claim from the dealer or the dealer’s representative.
The Fund cannot compensate consumers for a loss resulting from a private sale or a transaction involving a company that is not registered under the Motor Vehicle Dealers Act. Nor can the Fund compensate a business, other dealer or other customer acting in a business relationship even if the dealer is registered under the Act and a court judgment received.
Read more about this topic: Ontario Motor Vehicle Industry Council
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