Know refund rules at Manitoba car dealerships, buyer warns after fighting to get deposit back

A woman who recently put down a $500 deposit on a vehicle she considered buying at a Winnipeg dealership warns potential buyers they need to understand the rules about deposit refunds, should they change their mind on going ahead with a purchase.

Monique Champagne saw a used Nissan that she liked at St. James Volkswagen, so when the salesperson said she should put down a $500 deposit to hold the vehicle, she agreed.

“I asked him directly — I said, ‘If I change my mind, will I get my money back?’ And he said yes,” Champagne told CBC News.

But that agreement was verbal, she said — none of it was in writing.

“My understanding was that he was just taking that money to say he’s not going to sell the car to someone else,” she said.

“I didn’t ask super-detailed questions and he didn’t give super-detailed answers. He just said, ‘Yes, you’ll get your money back.’ And I really thought it was as simple as that.”

She said she had not signed a purchase contract for the vehicle.

A deposit lets a car dealership know a customer is serious about purchasing a vehicle, says the executive director of the Manitoba Motor Dealers Association. Geoff Sine says preparing a vehicle for purchase can involve ‘a significant amount of work’ for the dealership. (Pincasso/Shutterstock)

After shopping around some more, she found a vehicle she preferred at a different Winnipeg dealership and asked the St. James Volkswagen salesperson for a refund of her deposit. 

“He said, ‘no, it’s procedure, we don’t give the money back,'”Champagne said.

“I can’t express to you how upset I was.… It’s a lot of money for me.”

She says she was offered a $500 store credit instead, which could be used toward services or a different vehicle.

She also noted that when she did buy a vehicle at a different Winnipeg dealership, that dealer also asked her to put down a $500 deposit, which she said she believed was refundable.

Dealers not obliged to refund deposits

After escalating her complaint to management at St. James Volkswagen, and consulting the Manitoba Motor Dealers Association, Champagne got her $500 deposit back a couple of days later.

What she didn’t know is that in Manitoba, auto dealerships are not required to return a deposit if a potential buyer decides not to go ahead with a purchase.

That information is on the Manitoba Consumer Protection Office website in a document with tips for buying a vehicle, but Champagne wasn’t aware of it.

“A dealer does not have to return a deposit,” says the consumer protection website. “Make sure you understand the terms and conditions on the deposit and get them in writing. If you aren’t comfortable with the arrangement, look for another dealership.”

Asked about Champagne’s experience, St. James Volkswagen general manager Chris Moore told CBC News “her deposit was refunded in full within a few days of her backing out of the deal she committed to.”

“Deposits are typically required in order for a dealership to take a vehicle off the market and begin preparation for pickup once a deal has been agreed upon by both parties,” Moore said in an email.

He said that can include things like installing accessories, additional reconditioning or detailing, finance sourcing and transit of the vehicle. 

“Should the customer not wish to fulfil their commitment of purchasing the vehicle they should speak to their dealership directly as there may be costs associated with this preparation work,” Moore said.

He added that his dealership follows the rules of the Manitoba Motor Dealers Association and consumer protection authorities on deposits.

Deposit means ‘serious about purchasing’

“The deposit is a form of security to hold the car until you pay the rest of the money and collect the vehicle,” Manitoba Motor Dealers Association executive director Geoff Sine said in an email to CBC. 

“It also lets the dealership know that you are serious about purchasing the vehicle and does not allow it to be sold to another customer,” he said, adding preparing a vehicle for purchase can involve “a significant amount of work,” like ordering the vehicle from the factory or another dealership.

His association’s buying tips also note that deposits are typically not refundable.

Champagne says she thinks Manitoba should have a regulation like Ontario’s on deposits at automobile dealerships. (Zoom)

“If a consumer agrees to a deposit on a vehicle and is not sure if they want to proceed, it’s important to voice those concerns to the dealership at the time of the deposit,” Sine said. 

“Consumers should then see if the dealership is willing to proceed with the purchase by including a written clause on the receipt or offer to purchase for refunding of their deposit.”

That should spell out the circumstances under which a deposit would be refunded if the customer decides not to proceed, he added.

Ontario regulates deposits

Unlike Manitoba, Ontario does have a regulation requiring dealerships to return deposits.

“Section 38 of the [Ontario] Motor Vehicle Dealers Act regulations requires a dealer to return a deposit where no contract has been signed,” said Conner Coles, a spokesperson for the Ontario Motor Vehicle Industry Council, the province’s regulatory body for dealerships.

He points to a 2018 discipline decision under that regulation that imposed fines totalling $650 against an Ontario dealership. That decision found the dealer had refused to return a $500 deposit to a customer who decided he was no longer interested in completing the transaction.

Champagne says she thinks Manitoba should have a regulation like Ontario’s on deposit returns.

“A lot of people have had some pretty bad experiences and there’s no one out there to help us regulate it,” she said. “It happened to me. Buyer beware.”