Road transport ministry issues draft rules to curb fraud in used car market

Dealers of registered vehicles must get authorisation certification; intermediaries will have to provide details of each registered vehicle

After several regulatory gaps emerged in the fledgling pre-owned car market, the Ministry of Road Transport and Highways (MoRTH) has moved to address these concerns to prevent fraudulent activities around the sale and purchase of used vehicles, issuing a draft notification setting down guidelines and new regulations for the vehicle resale market.

“In the current ecosystem, many issues were being faced viz. during transfer of vehicle to subsequent transferee, disputes in regard to third party damage liabilities, difficulty in determination of defaulter etc.,” the ministry said, in the notification issued late on Wednesday.

Authorities will now mandate dealers of registered vehicles to get an authorisation certification from registering authorities, which will be valid for five years, according to the draft.

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The pre-owned car market has gradually gained ground in India, and especially with the advent of online marketplaces for buying and selling pre-owned vehicles, the ministry said.

However, this increase in online car reselling has made consumers vulnerable to fraudulent intermediaries.

Intermediaries will now have to inform authorities about each registered vehicle that will be taken up for resale, with part-onus of disclosure and compliance also on the original owner of the vehicle.

The new transfer process will also allow intermediaries to become de-facto owners upon the completion of the compliance procedures mentioned above. “Authorised dealer of registered vehicles shall be competent to apply for renewal of registration certificate/renewal of certificate of fitness, duplicate registration certificate, NOC, transfer of ownership of motor vehicle, in relation to vehicles in his possession,” the notification said.

Moreover, the ministry has also made it mandatory to maintain an electronic vehicle trip register that would contain details of the trip undertaken, such as trip purpose, driver, time, mileage etc.

These rules are expected to aid in recognising and empowering intermediaries or dealers of registered vehicles as well as provide adequate safeguards against fraudulent activities in sale or purchase of such vehicles, MoRTH said.

Stakeholders can submit comments and feedback on the draft notification within 30 days, according to the ministry.