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  

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