• Vehicle sales contracts must state the new five per cent max. cancellation fee
• Infringement notices served on dealer for using old contract with the higher fee
• Zero tolerance with dealers who continue to use outdated and illegal contracts

Consumer Protection is cracking down on motor vehicle dealers in WA using incorrect or outdated sales contracts which state a cancellation fee that is higher than what is now legally allowed.

Since 1 January 2022, the maximum amount dealers can charge a consumer who cancels a purchase contract is five per cent of the contract’s value. Previously, sellers could charge up to 15 per cent as “pre-estimated liquidated damages” (PELD).

A dealer in Perth’s northern suburbs has been issued with two infringement notices after buyers signed outdated contracts which stated the old 15 per cent PELD fee.

Since the reduction came into force, Consumer Protection received 47 complaints in 2022 relating to disputes over fees charged after contract cancellations, double the number lodged in 2021. Most complaints have been resolved.

Commissioner for Consumer Protection Trish Blake said there will be zero tolerance to dealers who continue to use outdated and now illegal contracts.

“Our officers will be taking enforcement action against dealers who break the current laws by getting their clients to sign sales contracts that contain the higher amount, or worse, charge them the higher amount when they cancel,” Ms Blake said.

“To comply with the current laws, the sales contract must now state a five per cent maximum PELD fee and consumers need to be aware of this reduction if they find themselves in the unfortunate position of having to cancel a motor vehicle sales contract.

“There is no cooling off period for vehicle sales in WA so buyers need be certain before signing a contract and make sure they can afford it, as cancellations can be costly.

“Dealers should not automatically charge the maximum five per cent fee, as the amount needs to realistically reflect the actual costs of the cancellation to the business. They may need to demonstrate how the fee has been calculated if a complaint is received.”

More information on dealing with motor vehicle dealers and repairers is available on the Consumer Protection website where complaints can be lodged online. Enquiries can be made by email consumer@demirs.wa.gov.au or by calling 1300 30 40 54.

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Media Contact: Alan Hynd, (08) 6552 9248 / 0429 078 791 / cpmedia@demirs.wa.gov.au