Friday, December 26, 2014

Do you feel being victim of misleading advertisement of Volvo Cars

Volvo Cars have come out with an advertisement in The Times of India dtd. 04/12/2014 with following terms which are subject matter of this blog. The main attraction of the title of the advertisement is "100% Luxury. 0% Interest rate."

1. Interest Free Loan for First two years
2. Insurance Free
                                                                                                     Times of India dtd. 04/12/2014
The author of the blog has been raising up the issues with Advertising Standard Council of India (ASCI) on both terms being used by other industries. However, ASCI could not find any objections to such terminology in the advertisement.

The main objections found by the author are:

1. Interest Free Loan or prominently advertised as "zero percent EMIs" as there could not be     any finance schemes without any interest as it is common logic that the Financial companies are not doing business for charity. There is a reason to believe that the prices are being build up with financial charges and offered to buyers as if the products are being sold without charging any interest for the products being sold on EMIs or deferred payment basis. Reserve Bank of India has already banned advertisement where the Banking Industry offers "interest free schemes." However, RBI has been silent over Non-Banking Financial Companies (NBFCs) and that is where ASCI has not found any objections to misleading advertisement in association with NBFCs. My conclusion herein would prove that interest free schemes are not only misleading but also leading to adaption of unfair trade practices. 

2. Insurance Free: The Volvo Cars being offered with free insurance schemes. The terms Insurance is used as to cover Risk and the payment of insurance premium is a pre-condition to cover the risk. It means if the vehicle is required to have insurance plicy, a basic condition that the payment of insurance premium is required to be fulfilled. Now the question arises as to who is paying the premium and what could be the objectivity of misleading. 

As said, the payment of the premium in any case has to take place. It is also common logic that neither the distributors or dealers of the vehicles can pay out of their profits just for charity nor the Insurers do the business of charity. One can very well imagine beyond any doubts that the prices are escalated by the amount of premium and offered to buyers as free insurance. This very well leads to the theory of misleading the consumer or buyer by pretending it to be free insurance and still charging the buyers silently. 

This practices of misleading the consumers and cornering off the business to their preferred Insurance Companies also could be unfair trade practices (UTP) as the offering of free insurance schemes basically obstruct the "Right to Choose" as per Consumer Protection Act (CPA) 1986. By offering the free insurance schemes, the buyers are also compelled to forego the "No Claim Bonus (NCB)" that might have been accrued to them out of their previous policies. My analysis in the next post would be as to how the buyers are put to a loss of more than 10 to 15,000/- over a period of next 5 to 6 years if the buyer opts for free insurance schemes worth a premium of Rs. 10,000/- on the purchase of cars.

My previous posts titled 
" " 
is also quite relevant to this posts.

The author of the blog tried to unearth certain revealing points on such advertisement. The company was asked 
" Discount if the payment is made upfront instead of EMI."

The response of the distributor was 
"We will offer you the upfront discount of Rs. 3,50,000/- if you buy the car in cash(No Finance)."

(It is worth mentioning that the above reduction in prices is on account of non-availing "0% EMI" is just without any negotiation or bargaining but on a logical discussion)

As is quite clear from the above that the price of the car was built up with Rs. 3,50,000/- to cover the finance or the interest charges if the buyer opt to their "0% interest rate" . This is not only the misleading  as it is not a 0% interest but is also unfair trade practices (UTPs) as the business to the tune of Rs. 3,50,000 is being guaranteed to the financial companies through the Act of misleading.  

It is just a matter of wondering if the buyers who have already purchased the car with advertised "0% Interest" EMI would assert their right to get refund as they have already paid and cheated by Rs. 3,50,000/-  as interest on a Zero Percent Interest Loan. It will not be too much if we expect ASCI to award refund of the extra amount charged from the buyers on the pretext of misleading and unfair trade practices.

This post is with an objective to create awareness not to fall prey to misleading advertisements and unfair trade practices of the business houses  

Thursday, December 25, 2014

Is there any remedy to address Misleading Advertisements?

It has always been a trend to mislead the consumers. The company offers attractive schemes which practically do not exist. Some of the misleading advertisements in the recent times have been offering sale of product and services at deferred payment terms without interest, free insurance schemes by Automobile companies, Real Estate, Builders, fairness cremes, speak English fluently, get rid of Wrinkles etc. etc. The consumer also become victims of such advertisements etc. There is a sudden spurge in the recent times about such misleading advertisements as basically the industry is without any regulator despite being billion dollar industry.

However, Advertising Standard Council of India referred as ASCI which seems to be a remedy to address such issues. ASCI is a voluntary self-regulatory organization, registered as a not-for-profit company under section 25 of the Indian Cos. Act. The sponsors of ASCI, who are its principal members, are firms of considerable repute within Industry in India, and comprise Advertisers, Media, Advertising Agencies and other professional /ancillary services connected with advertising practice.

Now the question arises as to why still the misleading advertisements continue to have flourishing  business despite the self regulatory organization. If one visit the site of ASCI, one can find following:

About ASCI: A self regulatory voluntary organization of the Advertising Industry.

Mission: To maintain and enhance the public's confidence in Advertising.

Support to ASCI:  The Advertising Standards Council of India (ASCI), established in 1985, is committed to the cause of Self-Regulation in Advertising, ensuring the protection of the interests of consumers. ASCI was formed with the support of all four sectors connected with Advertising, viz. Advertisers, Advertising Agencies, Media (including Broadcasters and the Press) and others like PR Agencies, Market Research Companies etc. 

1. Normally it takes about 4 to 6 weeks in deciding on the complaint raised by any one and by the time decision comes and by chance the complaint is upheld and advertiser asked to modify the advertisement, the damage has already taken place. Some of the schemes advertised are for limited time and hence those advetisements have already caused damage to the public who have already availed those mislead schemes. 

2. Now if any person has made any complaint against an advertisement, the complaint is decided without hearing the complainant. If the decision is taken in favour of the advertiser without upholding the complaint one can file an appeal and the complainant is asked to remit an amount of Rs.15,000/-. Why should any complainant be asked to pay fee against an advertisement misleading the consumers/public if no satisfactory redressal to the complaint of a public interest and specially when the complainant does not get heard during the process.

3. The Council is supported by the industry like Advertising, viz. Advertisers, Advertising Agencies, Media (including Broadcasters and the Press) and others like PR Agencies, Market Research Companies etc. Why not an independent authority to take an independent decision or the Council itself could be financed by the Govt. so as to overrule the possibilities of biased.

The Council has not found any objection if the 
1. Real Estate /Builder has stated distances in "minutes/hours drives" from certain prominent places without stating the address of the sites/corporate offices.
2. The advertisements of tooth pastes duly endorsed by Doctors in violation of code of Ethics for Medical Professionals.
3. Zero Percent Interest free EMIs as many as 36 months and free insurance schemes for as many as 3 years by automobile companies. 
4. Zero percent interest free EMIs for high value electronic and other domestic appliances misleading the consumers about the prices being same irrespective of whether the purchase is on upfront payment basis or deferred payment basis.

While there have been some of my previous posts on certain misleading advertisements there would be few more posts on such advertisements with analysis as to how the consumer is misleaded.  Such misleading advertisements are not only the misleading but also leading to unfair trade practices (UTP)

Saturday, December 6, 2014

Whether Chevrolet adapting to unfair trade practices (UTP) by misleading the consumers?

Chevrolet has come out with an advertisement in The Times of India dtd. 27/11/2014 for their "Beat" model. 
The Company offered following benefits through the advertisement:
1. Insurance @ Re.1/- for 3 years (benefits upto Rs. 47,000/-) plus
2. Accessories worth Rs. 20,000/-  is misleading on several counts plus
3. Cash benefits Rs. 10,000/- plus
4. Loyalty Bonus Rs. 20,000/- plus
5. Corporate Offer Rs. 3,000/- 

It states in bold box "Total Benefits Rs.1,00,000/-"

I am just giving below an analysis of the above discounts and offers as such offers are fashion of the day as it suits companies, traders, dealers etc. I am confident that the analysis could be of informative for all those who have already purchased or those who are likely to purchase the vehicles with such kind of offers and discounts. I am just wondering if those who have already purchased "Beat" model, could relook as to whether they got real benefits of Rs. 1,00,000/- in their purchase.
1. This special offer was valid for 4 days only from 27th November to 30th November 2014. The question is why a hefty offers and discounts of Rs. 1,00,000 is applicable only for 4 days. Is it that the cost of the vehicle will be increased by Rs. 1,00,000/- after 4 days and any rationale behind such increase or the limited time period of 4 days is to attract the customer and put a psychological pressure to take hasty decision without any proper market survey and analysis.
2. The advertisement offer of benefits of Rs.1,00,00/- includes discounts/benefits namely:
a) Cash benefits of Rs. 10,000/- . However, on inquiry it was revealed that the said discount is applicable if you are having any make any model car and the perspective buyer need to produce a copy of RC and insurance. The said advertisement does not state anything like that. In a layman language cash benefit is termed as benefit given in the cash and their is no rider attached to the scheme in the advertisement. Therefore the total benefits offered as Rs. 1,00,000/- in the advertisements stands reduced by Rs. 10,000/- for those who are the first timer in purchase of vehicle.

b). The said advertisement offers Accessories worth Rs. 20,000/- . Since the high end model does not require any accessories, no discount of Rs.20,000/- is offered in the high end model. Therefore the total benefits of Rs.1,00,000/- stands reduced by Rs.20,000/-. On discussion, the dealer offered at best the "mats". I cant believe the cost of mats is Rs. 20,000/-. 
c) Loyalty bonus of Rs.20,000/- is offered only if you have an existing vehicle of their make and produce a copy of RC and insurance. Therefore the benefits to non-company customers gets reduced by another Rs. 20,000/-. 
and the last but the most important among all proving to be not only the misleading but also unfair trade practice is:
d) Insurance at Re 1/- for 3 years (benefits up to Rs.47,000/-). The insurance is applicable if and only if the premium is paid. Payment of the premium is the pre-requisite to cover any risk. The advertisement states benefit upto Rs.47,000/- which means the company is paying premium from their side. Now the question comes whether the company is paying the premium from their margins or it is being charged from the customer by building up the price by the premium and then misleading the consumer as if there is no premium or the premium is just Re.1/-. The following points would be more relevant:

i) If the premium is paid out of the margins, it leads to believe that the company is having sufficient margins. When the company is prepared to pay premium to the insurance company, the company should offer that much cash discount as well if the consumer wants to purchase the vehicle without insurance. This is just a concept of fair trading. Now either the consumer is being misleaded or unfair trade practice is being resorted to by the company. Both way it is misleading for the consumers. Misleading in the sense that the consumers if being offered free insurance otherwise it is unfair trade practice in the sense that consumer is being denied of his right to choose or get benefit of No Claim Bonus assuming that the insurance is free and no money is being charged which will ultimately prove to be misleading. Hence this is unfair trade practice through the means of misleading.
ii) As a consumer having enough awareness to discuss on the deal, the company offered two prices: One with free insurance for three years having price of Rs. 4,70,845/- and for vehicle without insurance with a price of Rs. 4,40,916/- This price is when we are comparing exactly the same model without any change of the product i.e apple to apple comparison.  Now the question arises as to why two prices and why such a difference. When the insurance benefit has been shown as Rs. 47,000/- then why only a difference of Rs.30,000/- between the two vehicles i.e. one with insurance and another without insurance.  The theory of two prices is proving to be that the prices of the products are build up with the premium and is offered as free that means misleading the consumer. Then when the benefit arising out of the offer of free insurance is Rs. 47,000/- then why only a difference of Rs. 30,000/- or so as against Rs. 47,000/- 
iii) The dealer on further probing stated that they have two set of prices one with insurance and one without insurance. This again proves that such offers are with an intention of misleading the consumers by charging the price but offering as free. Due to lack of awareness and intent of unfair trade practices also being resorted to by the companies, the consumers having no claim bonus (NCB) will have to forego as he has been misleaded that it is free. 

iv) The dealer also stated having no tie up with PSU insurers that means there is some element of duping the consumer by misleading means and the private insurers being favored for some obvious gains.

Incidentally I have already brought out an article titled Are you really getting free insurance as offered by Automobile Companies in their advertisements
 on my blog the link of which is

Foregoing article proves that the advertised benefits of Rs. 1,00,000/- stands reduced by Rs. 67,000/- for those consumers who do not have any existing car of any make plus who do not have existing Chevrolet car and who wish to claim No Claim Bonus from their existing insurance policies plus they intend to buy high end models. 
 The last but not the least where this difference of Rs. 67,000/- is going?

Saturday, November 29, 2014

Are you really getting free insurance as offered by Automobile Companies in their advertisements

Whether advertisements like "Free Insurance" not misleading advertisements?

Now a days there is flood of advertisements by Automobile companies offering free insurance. Even there is a recent  advertisement which offers free insurance for 3 years. Now lets see whether it is really a free insurance or is being paid by you and still you being mislead through such advertisement.

1. One of the condition for any product to be covered for insurance is payment of premium. Hence there is no term like free insurance. Insurance is a matter of risk and no risk is covered unless and until a premium is paid.
2. I have every reason to believe that the prices are build up with insurance premium and offered to buyer as free insurance. I have negotiated with the dealer who offered free insurance at the first instance and then later on agreed to give an amount of Rs. 18,000/- if I do not accept their offer of free insurance. It clearly proves that the price of the car was built up with the insurance premium and then offered you as "Free Insurance". There were three options which were offered:

a) Net cost payable If the vehicle is purchased with 3 years free insurance        : Rs. 4,70,845/-
b) Net cost payable if the same vehicle is purchased with 1 year free insurance: Rs. 4,58,916/-
c) Net cost payable if the same vehicle is purchased with no free insurance       : Rs. 4,40,916/-

It is very much clear that customer is paying insurance premium of Rs. 18,000/- in the first year despite the advertisement claiming free insurance.
3. The companies are offering such insurance through private insurer. 
4. If the prices are build up with insurance premium and offered you as free insurance, the buyer does not have any choice to subscribe the insurance policy with the company of buyer's choice..
5. Now when the buyer is being offered free insurance, most of the buyer are to forego the no claim bonus arising out of their previous policies. This would make buyer at a loss in the long run say after 2-3 years. 
The advertisement is misleading as the customer is being misled by offering something free which is not a fact. Those buyers who are selling their old vehicles and intend to buy new vehicle should ask dealers to offer discount equivalent to that of insurance premium. The buyers in such cases would be able to subscribe the policy for new vehicle with insurance company of their own choice with No Claim Bonus ( NCB ) which would enable them to save more in the 2nd year onwards.There is another aspect involved in such business practices. The companies tie up with some insurance company and get margins for passing on the business to them. It is also possible many customers may be interested only in the 3rd party insurance whereas by pretending it to be free insurance, the customers are being duped off by compelling them to buy comprehensive insurance in the name of free insurance  and thus could be well categorize as Unfair Trade Practices.

        ( A link of the post is being mailed to Advertising Standard Council of India)

Thursday, August 28, 2014

Unethical business revenue by banks on account of charging SMS Alert Services

An article titled "Do the charges for SMS services being charged by State Bank of India are ethical?" was written on the blog on 5th April 2014. A copy of the article was mailed to State Bank of India. However, the amount got refunded. Such unethical charging for SMS Alert Services is not only by the SBI but almost all banks with exception of UCO Bank resorting to. While most of the banks are charging Rs. 15/- per qtr., UCO bank is just charging Rs. 0.12 per SMS for transactions.

All the consumers are facing the same problem and even the consumers may not be aware of such money being deducted from their account.  It is understood that the matter was taken up by  Department of Consumer Affairs  with Department of Financial Services of Ministry of Finance. The view points were concurred by the Ministry of Finance.

It is learnt that Ministry of Finance has also directed all the Banks and RBI and IBA to ensure that RBI's directives are implemented immediately and further they are required to comply with action taken report within 30 days. 

The banks have already made huge sums on this account. A rough estimates indicates such unethical revenue to be to the tune of around Rs. 3,000 crores. The banks are expected to discontinue such unethical business practices. The consumers need to be charged on actual usage basis i.e on per transaction basis instead of fixed charges per month.

Thursday, August 21, 2014

Advertisement by EMI Free Car Pvt. Ltd is misleading-says Advertising Standards Council of India

I have brought two articles on the subject of misleading advertisement by EMI Free car Pvt. Ltd as:

                                          Misleading Advertisement by EMI Free Car Ltd
1.    Points that need to be taken care of while dealing with
2.  EMI Free Car Pvt. Ltd. has not got any permission to display advertisement on the cars/ vehicles- Revealed under RTI- Perspective buyers need to be careful. 

Both articles  were referred to Advertising Standard Council of India as these advertisements were misleading the consumers. In addition to the misleading advertisements, the company is also resorting to illegal business in the way that the display of advertisement on the side body of the car (which is the key to the misleading the consumers) is not allowed under Motor Vehicles Rules. Neither the company is in possession of any permission letter from the concerned authorities to display advertisements on the side body of the car nor it is allowed to do so.

Advertising Standards Council of India (ASCI) has upheld the complaint raised in this regrads and further have issued order to the company to remove all content leading to mislead the consumer from their advertisements by 26th August 2014.

The two issues which are important for the public to keep in mind before they take any purchase decision to buy car through EMI Free Car Pvt. Ltd are:

1. The advertisement as well as their domain name is misleading as no one can purchase car without payment of EMIs.
2. Neither the company is in possession of any permission from the authorities for display of advertisements on the side body of the car nor it is allowed under Motor Vehicle Rules.  


Wednesday, August 20, 2014

Have you ever purchased items from SRS on discount sales?

A copy of the complaint on illegal charging of VAT on discount sales by SRS Parivar

                                                                                                                                Dt. 20/08/2014

SRS Value Bazaar (a unit of SRS Ltd.)
SRS Multiplex City Centre,
Sector-12, Faridabad (NCR Delhi)-121007

Sub: Illegal charging of VAT on purchase of items (Peter England) being sold under discount sales.

Dear Sir,

            I had a chance to visit SRS Multiplex City Centre, Faridabad on 18/08/2014 at an outlet offering Peter England Garments. It was glad to see 50% discount on MRP being offered to the customers. I had purchased a shirt whose MRP was Rs. 999.00 and the discounted price offer 50% discount becomes Rs. 499.50. It was surprised that the outlet charged an amount of Rs. 26.22 on the sale price of Rs. 499.50. Since the price of Rs. 499.50 already includes a VAT at Rs. 24.92, the additional charging of Rs. 26.22 becomes illegal. The fact was brought to the notice of the shop owner who preferred to charge the VAT despite stating by me that it is illegal but he mentioned that this is a company policy.

            The MRP of Rs. 999.00 as tagged on the shirt as per provision of Sales Tax Authority is having Rs. 949.16 as basic price and Rs. 49.84 as VAT. 50% of discount which has been offered on Rs. 999.00 makes basic price as Rs. 474.58 and Rs. 24.92 as VAT. The charging of any additional VAT which in the present case is Rs. 26.22 has been charged illegal. Either the VAT is inclusive in the price or if at all it was to be charged should be on the basic selling price which in the instant case was Rs. 474.58. The additional VAT charged illegally need to be refunded back

            Since the person at the counter preferred to charge illegal VAT despite protest, the amount may please be refunded at my residential address within next 72 Hours of this mail failing which I shall have no other option but to report the matter to the concerned authorities of Government of India as well as Government of Haryana besides taking legal remedies at your risk and cost. A confirmation to this mail may be acknowledged with the proposed course of action.
            A copy of invoice No. T17/00071924 dtd 18/08/2014 along with item tag is attached herewith.