Vehicle buyers urged to be careful when dealers ask for deposits
Deposits unregulated by consumer protection laws, regulator says
Aghogho Oyearone thought she could simply ask Gateway Toyota in Edmonton to return her $2,500 deposit after the dealer couldn't deliver the new Highlander SUV in the agreed-to timeframe.
However, the dealership refused, citing its contract and policy, which say deposits are not refundable.
The company eventually returned the money after Oyearone said she would call CBC's Go Public, prompting consumer advocates to stress her case is a reminder that, with few exceptions, consumers don't have the right to ask for their money back.
Oyearone said she was relieved to get her money back, but found the experience "exhausting."
Although Oyearone's signed contract states "deposits, partial payments and down payments are non-refundable," she said she had been told not to worry.
"They made me feel comfortable [that] I'm not losing anything at all. All I'm doing is getting a new vehicle," she said.
"I felt betrayed, actually."
Gateway Toyota sales manager Rick Janes has called the incident "a miscommunication."
There is no consumer protection legislation in Alberta that deals directly with deposits, according to Laura Lowe of the Alberta Motor Vehicle Industry Council (AMVIC).
It's the same story across the country, except in Quebec, which give a consumer two days to get a deposit back when the contract is for a vehicle that needs to be financed, according to George Iny of the Automobile Protection Association.
Dealers don't have to return a deposit unless a refund is written explicitly into the deposit agreement, although a court could eventually limit the deposit to the actual losses the dealer experienced.
Vehicle was to be available within 10 days
Oyearone said it all began when her husband wanted a newer and larger vehicle to replace their Toyota Camry.
"We knew exactly what we wanted: a black-on-black Toyota Highlander, 2015," she said.
Gateway Toyota didn't have one in stock. But the salesman said he could get one within seven to 10 days, if they left a $2,500 deposit because that particular SUV was so popular.
"This [was] just for us to hold the vehicle because it's so much in demand," Oyearone said.
"If we don't sign and put down the deposit and the car comes in next week, it's going to be snatched away by another buyer."
Oyearone said she and her husband were excited about getting the new SUV and listed their Camry for sale on Kijiji.
Four days later, the dealer's finance manager called to say the Highlander was still being built and wouldn't be available for at least two months, Oyearone said.
"When I heard that, I thought, 'Are these guys kidding me?'"
She said that was too long to wait and they went looking elsewhere.
A week later, she said, they went back to Gateway to ask for their deposit back. She said she told Janes they were negotiating with another Toyota dealership.
Oyearone said Janes tried to convince them to buy a different vehicle or different colour Highlander from Gateway, or use the $2,500 to pay for servicing, but they wanted the black Highlander.
"I know what I want," she said. "I don't want another vehicle."
They left without getting their deposit back. That Monday, Janes told her and her husband that the dealership would not return the money.
Oyearone said that's when she said she would call Go Public.
The following day, about an hour after Oyearone spoke to Go Public, the original salesman called to apologize.
Gateway Toyota has since offered to return their deposit.
'We prefer not to keep deposits,' dealer says
"I would venture there may be one or two deposits a year that are not returned," Janes said. "Our policy is we prefer not to keep deposits."
He said the dealership can go to significant effort and expense to arrange a sale, and deposits are collected to protect itself against a customer who changes his or her mind.
Janes said the Oyearones "fessed up" that they had been negotiating with another dealer.
"Put yourself in the salesman's position. The people sign and [then] go shopping up the street. That's what you're really trying to stop," Janes said.
Janes told Go Public he doubted Oyearone was ever told the SUV was still being built, and said he could have had one delivered by June 24.
He said he told his salesman to offer a refund once he learned of his seven- to 10-day promise, and upon hearing they hadn't been able to buy from the other Toyota dealership.
"I've got no reason to hold her deposit. Legally, can I? Absolutely. But that's not what we're here for," he said.
Janes said even if he kept the deposit, the $2,500 would have been put on file for a new purchase.
Consumer law silent on deposits
Lowe said that so far this year, the provincial regulator has received about 100 complaints from consumers who can`t get their deposits back, but that the agency doesn't have jurisdiction to intervene.
"What that means is it's really between the consumer and the business," Lowe said.
"That being said, sellers always have to act fairly and honestly."
Although the law doesn't mention deposits specifically, there could be grounds for an investigation if there was evidence a consumer was misled or didn't properly understand the terms of what they were entering into, Lowe said.
"It's in how the deposit was pitched."
Complaints about deposits are so common that AMVIC has created a standardized deposit agreement with the terms of the deposit laid out in simple large print.
AMVIC recommends dealers and consumers use the agreement, though the recommendation isn't binding.
Oyearone said she didn't read the fine print of the contract she had signed, but feels she should have been told the deposit was intended to be non-refundable.
"If they had told me it was non-refundable, I would have thought twice before handing them my credit card," Oyearone said.
After this story first appeared, the minister of Service Alberta promised greater protection for consumers who are buying vehicles.
"It's not fair for someone to leave a deposit, they don't receive that good or product and then they don't get reimbursed," said Deron Bilous.
"I appreciate the fact that in this example the company did reimburse her, but she shouldn't have had to go through all of this headache. And quite frankly we need to ensure that Albertans are protected."
He said the government will look into how to prevent problems similar to what Oyearone experienced.