B.C. man wins dispute over ‘preparation fee’ tacked on to used SUV price

A for sale sign is seen on the windshield of a vehicle in this undated file image. (Credit: Shutterstock)

A B.C. man has successfully challenged a hidden fee tacked on to the purchase price of a used SUV, according to a decision from the province’s civil resolution tribunal.

Ashish Malik bought his vehicle – a used Honda Pilot from Pioneer Garage Limited, doing business as Driveco Motors, in September 2023, the decision said.

Malik told the tribunal that the price he paid for the car was $2,166.88 more than the one agreed upon and was seeking a refund of the difference.

“Mr. Malik says that Driveco charged him an undisclosed preparation fee,” tribunal member Deanna Rivers wrote.

The dealership, for its part, sought to have the claim dismissed, saying an additional fee of $1,899 plus tax is listed on its website, that it was disclosed to Malik and that it was included in his purchase agreement.

There was no dispute among the parties that Driveco’s website listed the price of the SUV as $44,888 “plus taxes and licencing,” according to the decision. However, the purchase agreement reviewed by the tribunal showed the vehicle’s price as $46,787 – a difference of $1,899.

“Mr. Malik says he was not told about the preparation fee. He says he relied on the advertisement for the purchase price, and trusted Driveco to complete the paperwork,” Rivers wrote.

Driveco told the tribunal it “always verbally discloses all prices and fees up front” but the decision noted that no evidence was provided to show this happened in Malik’s case, specifically.

In coming to her decision, Rivers reviewed the ad for the SUV from the website. She found that the vehicle preparation fee was not included on the “main advertisement” but was mentioned on a different webpage, accessible by clicking a link labelled “vehicle disclaimer.”

“I find this is not sufficient to bring a fee to the attention of a potential buyer. As the advertisement webpage sets out the addition of licencing and taxes, it is reasonable for a consumer to believe these are the only additional costs above the listing price,” the decision said.

“Further, a disclaimer is a statement to be used as a defence against legal liability. There would be no reason for a person to seek information about additional fees in a disclaimer page.”

Similarly, the tribunal found that neither a vehicle disclosure form nor a photo of a window sticker on the Pilot were evidence that the fee was disclosed or advertised.

The decision explained that provincial legislation lays out “specific disclosure requirements for the sale of a used vehicle” and that a purchase agreement must include “the actual selling price of the vehicle and an itemized list of the cost of any other charges.”

By not including the vehicle preparation fee as a stand-alone item and instead rolling it into the price of the car, Rivers found Driveco did not comply with the Motor Dealer Act Regulation.

The tribunal also rejected Driveco’s argument that Malik agreed to the fee when he signed the purchase agreement.

“I find that Driveco unilaterally changed the price of the vehicle without Mr. Malik’s agreement, and did not bring the change to Mr. Malik’s the attention,” Rivers concluded.

In addition to the refund of the fee and associated taxes, Driveco was ordered to pay Malik $125 in tribunal fees.