Take a closer look at the next automotive ad you see.
- Does the ad indicate the business is AMVIC licensed?
- What about the font size— is it legible?
- Did you know the vehicle advertised must be available for sale when the ad is placed?
These are just a few of the laws all AMVIC-licensed businesses are required to follow when placing an ad.
What’s considered an ad?
An ad could be any AMVIC-licensed businesses’ website or other online ads, print, social media, billboard, radio and TV. Remember, AMVIC licenses automotive sales including new, used and RV, lease, repair, consignment, wholesale and agent or broker businesses which means they all must comply with automotive advertising regulations.
The price advertised plus GST is the law.
All-in advertised pricing is the law in Alberta. That means when an AMVIC-licensed seller advertises the price of a vehicle it must include ALL fees and charges the seller intends to charge. The only fee that can be added to the advertised price is GST and any costs associated with financing.
The Automotive Business Regulation (ABR), Section 11(2)(l) states that businesses must include “[…]in the advertised price for any vehicle the total cost of the vehicle, including, but not limited to, all fees and charges such as the cost of accessories, optional equipment physically attached to the vehicle, transportation charges and any applicable taxes or administration fees, but not including GST or costs and charges associated with financing.”
Examples of fees or charges that may be included in the advertised price but cannot be added on to it:
- PDI-PDE (pre-delivery inspection/expense)
- Administration (Admin) fee(s)
- Levy recoveries (AMVIC levy, air conditioning levy, etc.)
- Pre-installed products and services (nitrogen/tire protection package, security or theft deterrent products/services such as etching, etc., fuel)
Be sure you fully understand what you are paying for. A salesperson or business must not mislead you into believing a fee is mandatory or required by law if it is not. Sometimes, automotive businesses may call an extra cost a market adjustment fee. AMVIC does not encourage or discourage businesses from selling additional features and add-ons, however they must accurately disclose all fees. All fees should be disclosed during the negotiation process and not after the purchase price has been established with a bill of sale. A market adjustment fee cannot be added to the all-in advertised price of a vehicle.
If a vehicle was not advertised at a specific price, businesses can charge the market rate and add extra fees, assuming the consumer is willing to pay them. No consumer should ever be forced to agree to extra fees, additional equipment or services, if they do not want them. If a consumer is unable to negotiate removing those fees, then walking away from the deal is an option.
Remember– when an AMVIC-licensed seller advertises the price of a vehicle they must advertise the all-in price. The only mandatory fee that can be added to the advertised price is 5 per cent GST. If a consumer chooses to finance a vehicle purchase, separate financing costs or charges may also apply.
Mandatory government fees (non-negotiable, must be paid by the customer):
- GST (Goods and Services Tax) 5%
Examples of other fees:
- AMVIC levy ($6.25) – It is mandatory that the business pay the AMVIC levy. AMVIC uses levy revenue to fund the AMVIC Compensation Fund and to provide investigation and education programs. The business can pass along the cost of the levy to the consumer, but it cannot be presented as a mandatory government fee.
- Advance disposal surcharge (tires)–$4/tire for cars and light trucks. $9/tire for rim sizes greater than 19.5” for use on larger vehicles. Under the Environmental Protection and Enhancement Act, Tire Designation Regulation and the Tire Recycling Bylaw, environmental fees must be remitted by a supplier when new tires are sold in Alberta or used tires are imported into Alberta from outside of Canada. This includes tires that are on a motor vehicle. More information on bylaws can be found at the Alberta Recycling Management Authority.
- Administration/dealer fees.
- Third-party warranties.
- Vehicle add-ons such as paint protection, etching or any add-on that is not factory installed.
- Air conditioning levy: the Canada Revenue Agency levies an excise tax of $100 on vehicles imported or manufactured in Canada at time of delivery to the purchaser, in most cases the automotive dealer. If the amount is being passed down to the consumer, they must be aware that it is a recovery of the levy.
- Any and all other fees or charges except GST and the tire levy.
Fees and charges that must be included on a bill of sale:
- All fees and charges including: any delivery/freight/transportation charges, any inspection fees, any licensing fees, charges for warranties and all taxes and levies, including GST; and the timing for payment of each fee and charge.
- A list of all extra equipment or options and the cost of each.
- The total cost of the vehicle including all fees, charges and costs of the extra equipment and options.
- If down payment or deposit amount is paid: the amount of the deposit or down payment and the balance remaining to be paid.
- Trade-in: identifying information on the traded in vehicle and the value of the trade-in allowance incorporated into the cost of purchase of the vehicle being sold to the consumer.
- Trade-in with loan still on it: the remaining loan balance incorporated into the cost of purchase.
- Credit agreement: a disclosure statement regarding the credit agreement must be provided on or attached to the bill of sale.
- Any and all promises, offers or inducements at no extra charge made to the consumer individually listed.
What to do:
- Document pre-purchase discussions and figures.
- Use a fully completed bill of sale that includes all of the mandatory information to best protect from price increases. The bill of sale is the formal agreement to purchase.
- Be certain you understand what all extra fees are for.
- Compare the all-in, or final price of the identical vehicle at other businesses.
- Slow down, take your time to decide if the sale is right for you.
- Check with AMVIC to ensure the seller is registered and the business is licensed.
- Contact AMVIC if you have any concerns or need information.
Misrepresenting fees or failing to disclose additional fees can be in contravention of the Consumer Protection Act which can result in various enforcement actions such as charges, an Undertaking or Administrative Penalties. If you believe this may have occurred file a complaint on AMVIC’s online portal.
Federal Competition Act and drip pricing
In June 2022, the Government of Canada amended the Competition Act to recognize the harmful business practice of drip pricing. The federal government defines drip pricing as involving “…offering a product or service at a price that is unattainable, because consumers must also pay additional non-government-imposed charges or fees to buy the product or service.” It is called drip pricing as additional fees are often added at the end of the transaction that were not previously advertised. An automotive business found to be non-compliant with the Competition Act could face significant penalties. For more information on drip pricing, please contact the Competition Bureau.
What about manufacturer ads?
Manufacturer ads are not subject to the advertising laws and regulations that AMVIC enforces including all-in advertised pricing. If an Alberta business is not identified in the ad it is most likely a manufacturer ad.
Manufacturer ads follow federal advertising laws and are subject to the general consumer protection elements of the Consumer Protection Act and can be investigated by Service Alberta and Red Tape Reduction.
However, ads in a local newspaper, radio, billboard etc., must follow the ABR and are subject to AMVIC oversight.
Once a manufacturer ad puts an AMVIC-licensee’s name on it, then it is expected that the licensee is able to deliver on all the promises of the ad, and the ad follow provincial legislation.
If the licensee cannot adhere to items or pricing offered in the ad, the business should call the manufacturer immediately to remove their name off the ad. It is up to the licensee to ensure all advertisements that include the business’ name to be lawful and truthful.
What if I want to add options that are not included with the vehicle being advertised?
The seller is permitted to increase the sale price if you request additional features that weren’t included in the advertised vehicle. For example, if the vehicle does not include heated seats but you negotiate to have them installed, the sale price will increase to reflect the results of your negotiation.
Does vehicle history need to be included in an ad?
Any online ad or sales tag affixed to a vehicle must include relevant vehicle history. This includes but is not limited to: fire or flood damage, rental vehicle use and if the vehicle was damaged as a result of an incident where the total cost of repairs fixing the damage was over $3,000. More information and consumer guides can be found here.
What if the advertised vehicle isn’t on the lot?
The advertised vehicle must be available for sale at the time the ad is placed. Advertising a vehicle that is not available for sale is known as a “bait and switch” and this practice contravenes advertising laws and regulations.
What can I do if I’ve been misled by an ad?
You can contact consumer services and file a complaint.
Do the same laws apply to both new and used car ads?
Yes— the same laws apply no matter if the vehicle advertised is brand new or used.
Is a deposit agreement the same as a bill of sale?
No, a deposit agreement is not the same as a bill of sale. Remember that other documents that are used as sales tools or are created during the negotiation process such as worksheets, in-house deposit agreements, deposit receipts and other documents are NOT a bill of sale. Consumers should use a fully completed bill of sale that includes all of the mandatory information to best protect themselves from price increases.
Do the laws also cover service and repair ads?
Yes— service and repair ads must also comply with Alberta’s advertising laws. For example, all automotive advertisements must use descriptions and make promises only in accordance with actual conditions, situations and circumstances.
What are some of the other requirements for ads?
Advertising laws can be found in Alberta’s Consumer Protection Act, Automotive Business Regulation and Cost of Credit Disclosure Regulation. A complete guide to all automotive advertising law can also be found here:
Why should businesses comply?
It’s the law.
Contraventions of Consumer Protection Act, Traffic Safety Act and associated regulations, such as the ABR, can result in enforcement action.
Check out examples of ads that are misleading and break the advertising laws in Alberta by clicking on the tabs below.
The new car Maria has been eyeing up is advertised for $22,000 at a local dealership. She went to the dealership, mentioned the ad and asked if $22,000 was “all-in”, the total price. She was told she could drive away with it for $22,000 plus the cost of freight and GST.
In this example the business is adding the freight charge on top of the advertised price which is against the regulations. Maria should not sign any paperwork agreeing to pay that price. Instead, she should contact AMVIC.
Cheng saw an SUV advertised for $30,000. Cheng went to the dealership looking to finance that vehicle. However, he was told if he chose the 0.6% financing promotion, the vehicle would actually cost $38,000 plus GST and financing fees. The only way they would sell the vehicle for the advertised price is if he chose the 7.5% financing option. In that case, he’d get the vehicle for $30,000 plus GST and financing fees.
This is against the regulations. The dealership cannot charge more than the advertised price plus GST and/or costs and charges associated with financing. The dealership must sell the SUV for the advertised $30,000 (plus GST and applicable financing costs) regardless of whether the buyer wanted to pay cash or finance at any rate offered. If the business wanted to sell it for $38,000 plus GST and financing then it should have advertised the vehicle at $38,000.
Tanya was looking online for a car. She found exactly what she was looking for and was happy with the $14,000 price tag. She went to the dealership to do a test drive and was told the vehicle had just sold but they had a similar model available for $17,000. Tanya settled for the $17,000 car, even though she originally wanted the $14,000 car. Two weeks later, she stumbled upon the same exact ad from the same dealership for the same used car even though she was told it was already sold…
The automotive business regulation requires that all ads include the stock number of the specific vehicle that is for sale and it must be available for sale at the time the advertisement is placed.
Once a vehicle is sold, the vehicle cannot be advertised again. It is against the laws and regulations to use “bait and switch” style sales tactics. In this case, Tanya should file her concern with AMVIC.
Rick saw an ad on Kijiji for a brand new car posted by a dealership for only $580. Rick knew $580 was far too little to pay for a brand new car, so he clicked on the ad to see if he can find the all-in total advertised price of the vehicle. Unfortunately, the total cost of the vehicle was nowhere to be found.
The ad the dealership posted is missing the total cost of the vehicle which is a requirement of the Automotive Business Regulation. Consumers could find the ad misleading.