Car Buyer Protection Program: The Motor Vehicle Dealers Compensation Fund

Did you know that Ontario offers a car buyer protection program? If you have serious issues with the dealership where you purchased your car you may be able to make a claims to this compensation fund. Begun in 1986, the Motor Vehicle Dealers Compensation Fund has paid out over $5 million to consumers. In this blog post, I’ll explain the basics about accessing it. (Note: This is only available for car purchases made from a registered dealer in Ontario.)

Step 1: Know Your Rights and Responsibilities

Buying a car is not a casual transaction like buying groceries: you sign a binding contract to make your purchase. This car buyer protection fund is not meant to cover buyer’s remorse. In other words, if you realize you should’ve bought the yellow sedan instead of the black one and the dealer won’t exchange your vehicle, you can’t access this compensation fund. (Remember: a purchase contract for a vehicle in Ontario does not have a cooling-off period.)

This financial protection program for car buyers in Ontario is for serious issues only, e.g., the dealer misrepresented the vehicle to you, refuses to fulfill part of their contractual obligations to you, etc.

Step 2: Contact Your Dealer

The Motor Vehicle Dealers Compensation Fund is a last resort. If you have a problem with the vehicle you’ve purchased, you must contact your dealer first to try to resolve the issue. If the dealer you purchased your vehicle from is a member of the UCDA or Used Car Dealers’ Association, you can contact the UCDA to help settle your dispute. Settling disputes can often be done in as little as a few days.

Step 3: Check for Ineligibility

If the dealer won’t help you with the serious issues you’re having with your vehicle, examine your eligibility to access the compensation fund. First know if you’re ineligible to even apply.

You may not access the compensation fund under any circumstances if any of the following apply to you:

  • You did not purchase your vehicle from a dealer registered with the Ontario Motor Vehicle Industry Council (OMVIC). All dealers in Ontario are registered with OMVIC. Private sellers are not.
  • You bought the vehicle for business purposes.
  • You are related to the dealer by blood or adoption or are the spouse of the dealer.
  • You were complicit in illegal activity in the transaction to purchase the vehicle.
  • You applied for compensation to the fund but misrepresented the nature of your claim or submitted false or misleading evidence in support of the claim.

If any of those apply to you, your claim will be rejected.

Step 4: Check for Eligibility

You need only fulfill one of nine eligibility criteria to submit your claim to the compensation fund. I’ll list a few here and give the reference for full details at the end of this post.

  • Your dealer did not deliver the vehicle to you and refuses to refund your deposit.
  • Your dealer has become bankrupt.
  • Your dealer did not honour your warranty, e.g., by not remitting payment on an extended warranty to the warranty provider or not paying for a repair covered by the dealer’s own warranty.
  • Your dealer will not honour the conditions of their service plan agreement.
  • The dealer has seriously misrepresented the vehicle you have purchased.

Note that depending on the nature of the claim, you may first have to obtain a court judgement against the dealer, before submitting your claim to the fund.

Step 5: Apply

Submit a compensation fund application package and supporting documents as soon as possible. OMVIC staff will review the application and then forward it to the board of trustees. The board meets at scheduled meetings, where they will discuss all claims. They will then let you know if your claim was allowed. If you disagree with the decision, you can appeal it to the License Appeal Tribunal.

For more information about the compensation fund, visit the website of the Ontario Motor Vehicle Industry Council.

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