Victoria crackdown targets unlicensed used car traders

Victorian authorities are preparing a crackdown on unlicensed used car traders after new research revealed some may be buying vehicles at auction and reselling them online at inflated prices while posing as private sellers. 

Consumer Affairs Victoria’s Unlicensed Motor Car Trading in Victoria report highlights growing concerns about some used car listings allegedly bypassing the consumer protections offered by licensed dealers.

The state government is now proposing reforms to strengthen consumer protections and modernise the state’s motor car trading regulations. Consumer Affairs Victoria will also launch a public education campaign alongside targeted compliance action.

Investigation uncovers concerning practices

An investigation by Consumer Affairs Victoria examined 50 vehicles listed for sale on public websites by individuals who were not licensed motor car dealers but had purchased at least four vehicles at auction over three months.

According to the report, many unlicensed traders, pretending to be private sellers, were purchasing used vehicles through auction houses before quickly relisting them on social media.

The organisation found that more than half of the auction-purchased vehicles were advertised for resale within two weeks, with an average profit margin of $2,500. Some sellers were seeking profits of up to $6,500 per vehicle.

One seller purchased 37 vehicles at auction in just three months, which could generate enough sales to potentially earn more than $50,000 in profit.

Odometer tampering raises serious concerns

Almost one-third of the vehicles sampled had advertised odometer readings at least 25,000km lower than when the vehicles were sold at auction. In some cases, Consumer Affairs Victoria investigators found evidence suggesting more than 200,000km may have been removed from odometers to make cars appear more attractive and command higher prices.

Risks of buying from private sellers

It can appear cheaper to buy a used vehicle privately than buying from a licensed dealer, but the Consumer Affairs Victoria warns buyers may miss out on key consumer protections, including:

• No statutory warranty
• No cooling-off period
• No guarantee of the vehicle’s history

Government data also shows that more used vehicles are now advertised on Facebook Marketplace than on classified websites such as Cars24.

The majority of vehicles identified in the investigation were lower-priced models commonly purchased by first-time drivers, people new to Australia and buyers from lower socio-economic backgrounds.

Also read: Victoria car thefts remain high as thieves steal cars without keys

Industry backs tougher action

Victorian Automobile Chamber of Commerce Chief Executive Peter Jones welcomed efforts to target unlicensed traders, saying the industry supports measures that stamp out odometer tampering and the sale of unsafe or misrepresented vehicles.

He added that licensed motor car traders provide statutory warranty protections, clear title assurances, roadworthy certification requirements and legal avenues for consumer recourse if problems arise. Unlicensed operators are deliberately avoiding these protections.

New laws and enforcement planned

Victoria’s Minister for Consumer Affairs, Paul Edbrooke, said the government intends to strengthen laws while increasing enforcement against suspected unlicensed traders.

“When you buy a used car, you should get what you pay for, and not get taken for a ride,” he said.

“More Victorians are shopping for cars online, and we’re making sure the dodgy operators have nowhere to hide.”

Dealer license limits across Australia

There is a limit on the number of vehicles one can sell privately without a motor dealer licence. This is done to protect consumers, ensure road safety, prevent tax evasion, and maintain a fair commercial marketplace.

The limit varies depending on the state or territory, generally capping at 4 vehicles within any rolling 12-month period.

Bottom line

Consumer Affairs Victoria says unlicensed used car traders may be exploiting online marketplaces by posing as private sellers, with investigations uncovering alleged odometer tampering, misleading vehicle information and rapid resale practices. 

The Victorian Government is responding with proposed legal reforms, education campaigns and targeted enforcement aimed at improving consumer protection when buying used vehicles online.