Economy

Sh2m fine for fake used vehicle mileage records

cars

Car Bazaar at Jamhuri grounds in Nairobi on February 10, 2019. FILE PHOTO | NMG

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Summary

  • The law protects consumers from buying counterfeit goods and also upholds the rights of registered owners of trade marks.
  • Online shopping, which is fast gaining currency in the country, has seen rogue dealers accused of delivering lower quality of goods than initially promised.
  • Dealers who quote false mileage –number of kilometres travelled— on passenger cars or commercial vehicles will now be prosecuted if the law is overhauled as planned.
  • Offenders face a maximum fine of Sh2 million or a five-year jail term or both.

Car dealers face a Sh2 million fine and five-year jail term for misleading online advertising and declaring false mileages on imported vehicles under a proposed law meant to protect consumers from dishonest business practices.

The Bill, sponsored by the Leader of the Majority Party in the National Assembly Amos Kimunya, seeks to update the current Trade Descriptions Act (Cap. 505) that has been in place since 1979.

The law protects consumers from buying counterfeit goods and also upholds the rights of registered owners of trade marks.

Online shopping, which is fast gaining currency in the country, has seen rogue dealers accused of delivering lower quality of goods than initially promised.

Dealers who quote false mileage –number of kilometres travelled— on passenger cars or commercial vehicles will now be prosecuted if the law is overhauled as planned.

Offenders face a maximum fine of Sh2 million or a five-year jail term or both.

"The principal object of this Bill is to repeal the Trade Descriptions Act (Cap. 505) and replace the Trade Descriptions Act to take on board the substantive changes in conduct of business that have taken place for the last 38 years from the time the current Act was enacted," says the Trade Descriptions Bill, 2020.

"The Bill further seeks to address the emerging market trends in false trade descriptions, misrepresentations and other mis-statements by criminalising such acts."

Car mileage has been absent in the existing law despite explosion of motor vehicle sales, especially second-hand imports whose sellers have been accused of manipulating odometers to downplay usage and depreciation.

More than 80 percent of vehicles imported into the country are used models and mileage is one of the key determinants of the retail price besides year of manufacture.

Government inspectors will now be able to check a vehicles’ displayed mileage against that declared in the source markets to determine if the odometer has been tampered with.

It is estimated that many used vehicles have their mileage wound down by 50,000 kilometres or more.

False advertising on online platforms, including apps and websites, will also be punished under the proposed law.

"Advertisement includes a catalogue, a circular and a price list whether in digital format or not," the Bill says.

Online advertising has increased over the past decade, thanks to expansion of Internet access to companies and consumers alike.

The digital platforms have also become enablers of fraudsters and peddlers of counterfeit goods.

"For the purposes of this Act, false trade description includes— (a) any trade description which is false or misleading in a material respect as regards to the goods to which it is applied," the Bill says.

"(b) any trade description which, though not false, is misleading, that is to say, is likely to be taken for such an indication of any of the matters specified in section 8 (quantity, production process etc) as would be false to a material degree."

The proposed law covers numerous dishonest business practices under five major themes including false trade description, false indications as to price and false representation as to the supply of goods or service.

The others are misleading statements as to services and importation of goods bearing false indication of origin.

Inspectors attached to the Ministry of Trade are empowered to monitor compliance with the law.

"An inspector, may at any time and on production, if required, of his or her credentials— (a) make impromptu visits to traders’ premises within his or her area of jurisdiction for the purpose of inspecting, examining, testing and analysing goods therein to ensure compliance with the provisions of this Act," the Bill reads in part.

Goods bearing false description are to be seized and detained for up to 90 days as the suspects are being prosecuted.

Traders found guilty by a court within the 90 days will automatically forfeit the goods to the State.

Suspects can, among others, assert that they made a mistake or relied on information supplied to them by other parties in their defence.

They can argue that they took all reasonable precautions to avoid the commission of the offence themselves or by their employees.

Media companies and advertising agencies are largely protected from prosecution as they are allowed to say that they "received the advertisement for publication in the ordinary course of business and did not know and had no reason to suspect that its publication would amount to an offence under this Act."

The Ministry of Trade has already taken many enforcement actions against traders in a wide range of goods including cosmetics and electronics, according to court records.

Updating the law will expand the regulatory scope and reach, with fighting counterfeit goods being high on the agenda.

The contraband and counterfeit goods trade continues to thrive, hurting local and foreign manufacturers besides exposing consumers to financial losses and health risks.

Kenya loses more than Sh100 billion worth of revenue annually from illicit trade despite renewed efforts to curb the vice.

A multi-agency team, led by deputy head of Public Service Wanyama Musiambo, has been seizing and destroying contraband goods in the country in effort to tame illicit trade.