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Sales Transactions Between Individuals: What to Do if it Goes Wrong

17 May 2019 by National Bank
Private purchase

Thanks to online sales platforms, transactions between individuals are increasingly popular. While they make it possible to save more, such transactions do not offer the same protections and guarantees as purchases involving a merchant. What recourses are available if a transaction proves unsatisfactory?

In recent years, the rise of e-commerce platforms (such as Amazon) and online classifieds sites (eBay, Kijiji) has largely contributed to the growth of sales between individuals. Automobiles and vehicles, electronic devices, rare books, animals, furniture... Today's buyers face an impressive array of products to choose from.

However, Ontario’s and Québec’s Consumer Protection Act  do not regulate transactions between individuals. In the absence of a legal guarantee, buyers and sellers alike need to be wary and take certain precautions to avoid unpleasant surprises.

What dangers await a buyer?

The non-reception and non-conformity of the item purchased are the two main causes of a dispute following a transaction between individuals. In the first case, the buyer does not receive the item; in the second, the item does not match the seller's description or is somehow damaged or incomplete. The available recourses vary from one platform to another.

Trusted platforms

E-commerce platforms such as Amazon withhold payment from the seller until the parcel is received by the buyer. Should a dispute arise as to an item's delivery, the seller is responsible for proving the shipment was made. Otherwise, the buyer is reimbursed.

When seeking reimbursement for an unsatisfactory purchase made via an e-commerce platform, the buyer is responsible for proving the item is not as described or otherwise active. The buyer must follow the site's complaint procedure. Amazon’s return service is easy to use and the process is explained step by step. The reimbursement procedure and its applicable limits are thoroughly outlined and every possible situation is covered.

Classifieds sites

Online classifieds sites do not offer the same protection, and dispute resolution basically relies on the seller's good faith. The seller may decide to offer a reimbursement or ship a second item to the buyer. The buyer has practically no recourse if dealing with a dishonest seller and must therefore be vigilant before finalizing any transaction. The buyer can consult the site's comments section, if there is one, and can also request secure postal delivery, which is recommended for valuable items. In case of a dispute, the platform's administrators may sometimes choose to intervene and mediate between the parties, or block a problematic user.

PayPal, a payment service offered by certain sites, is a fast and safe way to transfer funds. The service charges a commission on the transaction amount, and the buyer is protected and can be reimbursed if there is a problem.

A used car or a lemon?

The sale of a vehicle between individuals requires additional precautions. The best way to avoid buying a “lemon” is to have the vehicle inspected. Insist on obtaining proof of vehicle maintenance from the seller, check the mileage, and beware of fake individuals, i.e., dishonest merchants seeking to work around the law by passing themselves off as individual sellers. Know that sellers in Ontario are legally required to provide a Used Vehicle Information Package to a buyer when selling a pre-owned vehicle, as well as complete, sign and provide an Application for Transfer (found in the vehicle portion on the back the ownership permit). Within six days of purchase, the buyer must go to a ServiceOntario centre and register his or her name as the new owner of the vehicle. Be aware that the buyer pays RST (Retail Sales Tax) when he or she registers as the new legal owner of the vehicle; the buyer does not pay sales tax to the seller.

In Québec, to duly execute the transfer of ownership of a vehicle, you must go to an SAAQ (Société de l’assurance automobile du Québec) service outlet or fill out a power of attorney form. Be aware that for transactions between individuals, the buyer is required to pay only the QST (Québec Sales Tax), unlike a purchase made at a dealership, where the buyer bears both the QST and the federal sales tax.

What about hidden defects?

The Ontario Sale of Goods Act does not provide any protection as to quality of goods. Buyers will need to deal directly with the seller if they discover a defect, so a thorough examination of the goods should be performed before purchase. Buyers and sellers can also draw up a contract of sale that outlines what constitutes reasonable expectations of quality and performance.

The Civil Code of Québec protects you against hidden defects. However, you must prove to the court that the defect is significant enough to invalidate the transaction and that the buyer was not aware of the defect at the time of sale, which is not always easy to do.

Avoiding scams

It is very easy to create a scam ad by setting up a fake profile on a site dedicated to private-party transactions. Although platform moderators do their best to spot scammers, users must be prudent. Before shopping on a site, it is recommended you consult the site's section devoted to security. Kijiji’s website, for example, provides useful tips and specific examples of current scams to watch out for on their site.

What should the seller beware of?

Classifieds sites cannot guarantee payment, so the seller must take the necessary precautions to ensure their payment is received. Payment by cash or via PayPal is recommended. Funds transfers via e-mail or the use of services such as Western Union should be avoided, as transactions may be cancelled before the seller actually receives the money.

In life as on the web...

Show the same vigilance online as you would in a store, especially with respect to private-party transactions. When possible, meet with the seller in person, ideally in a public place, and inspect the merchandise yourself. Ask all the necessary questions and don't be shy about requesting to see invoices and proofs of purchase. After all, an item that is under warranty will remain so even if there is a transfer of ownership. Finally, before finalizing a sale, take time to evaluate the risk and decide whether any savings from the transaction are really worth it.

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