A direct mail letter from Volkswagen Bank addressed to Volkswagen owners promoted an open event for offers on 181 Volkswagen models. The letter also enclosed a brochure.
The direct mail letter included the following:
“Order your new 181 Volkswagen during the Open Event and you will receive a FREE 3 Year Service Plan*. You can make significant savings on our exclusive PCP finance offers through Volkswagen Bank with Purchase Contributions of up to €2,500 and low APR interest rates***.”
The footnote linked from the 3 asterisks above stated:
Purchase Contributions only available on new retail sales ordered before January 31st 2018 and must be financed through Volkswagen Bank.”
The brochure featured three Volkswagen models on the front cover and page two of the brochure included the following:
“The Touran. Now with more features than ever – making family life even more enjoyable.
Available from €329 per month with 1.9%* APR PCP Finance and a €1,000** Purchase Contribution from Volkswagen Bank.”
“Finance your new Touran with a finance contract through Volkswagen Bank and we’ll give you a €1,000 Purchase Contribution**.”
On the back page of the brochure in the ‘small print’ section, linked from the previous pages by way of asterisks, the following note was included:
“*Typical Finance Example: Touran HL 1.2 TSI 110HP. Recommended OTRP €35,170. Deposit/Part Exchange €10,534.50. 36 monthly payments of €329. Optional Final Payment €13,758. Total cost of credit €1,116.50. Including acceptance fee (€75) and completion fee (€75) Typical APR 1.9%. Minimum deposit is 10%.
The complainant received the mailing and brochure in the post and noted the advertised APR of 1.9% for a new Touran. The complainant said that their last three cars were Tourans and they were aware of the importance of obtaining a low APR. After ordering their Touran, the complainant noted that their hire purchase agreement included an APR rate of 3.9%. After querying the matter with Volkswagen, he was told that he was being charged the correct interest rate and that the lower rate only applied to selected models. The complainant considered that the direct mailing and brochure were misleading as they had not included any reference to a higher APR rate of 3.9% being charged which, in his case, would have amounted to a price difference of over €1,200.
The advertisers stated that they were authorised by the Federal Financial Supervisory Authority in Germany and regulated by the Central Bank of Ireland for conduct of business rules. They said that they have a strict policy based on the Central Bank’s requirements and legal advice obtained, that any advertisement in connection with a specific product that mentions Volkswagen Bank or finance, requires a full and complete illustrative example.
They also stated that they had an internal process in place that all advertisements for their vehicles that include a finance option are firstly reviewed and signed off by their marketing department and secondly are reviewed and signed off by their compliance department to ensure that the advertisements meet the required standards.
The advertisers stated that the offer advertised in the direct mail was for a Touran HL (Highline) model at 1.9% Typical APR. They said that this Typical APR had been clearly stated throughout the direct mail piece and the full Typical Finance Example provided in the terms and conditions was based on the Touran HL 1.2 110HP. They also said that the model shown in the mail was a Touran HL R model which was available at 1.9% Typical APR at that time. They also stated that throughout the mailing “Available from €329 per month with 1.9%* APR Finance” had been highlighted as this was the offer they were promoting at the time.
They said that their Touran product range had two other variants, the TL (Trendline) and the CL (Comfortline) which customers could order if they wished. They said that at the time of going to print, the TL was available at 5.9% Typical APR and the CL was available at 3.9% Typical APR. They said that the mailing had not made any reference to the other variants of the Touran model. They said that the mailing had encouraged customers to visit their local Volkswagen retailer and/or visit a dedicated website URL “Volkswagen.ie/181” for further information. They said that during the sales process at their retailers, a customer would be given a quotation which would include the APR and it was at this stage that the customer would review the quotation before making any purchase decision. They referred to the fact that there was a ‘cooling off’ period where a customer could change their mind after signing a contract.
Finally, the advertisers noted that the complainant had 3 previous Tourans, therefore, they considered that the complainant would have been familiar with the different variants in the model range. In response to the price difference of over €1,200 referred to by the complainant, the advertisers stated that they were not in a position to comment without having the breakdown of the price quotation the complainant received. They said that car prices differed from variant to variant and if a customer had requested any add on’s or extra features, then this would affect the final price.
In further comments, the advertisers reiterated that it was their intention that both the letter and the spirit of the Consumer Protection legislation be adhered to as well as guidance from the ASAI Code. They considered that the type of advertisement used in their direct mail had complied with regulatory requirements and appeared to be the industry norm and they had ensured that the model quoted and photographed were identical. They said that the purpose of the direct mail was as an invitation to the customer to an open event at their local dealer.
They said that the nature of the product being advertised required the customer to physically visit an authorised dealer and have a full financial consultation. They did not agree with the contention that the rate of 1.9% apr should apply to all models of the vehicle in that range as it had related to the particular vehicle type which was shown in the photograph and featured in the illustrative financial example. They said that it was in the interest of the customer that they did not feature every variant/specification of each model as the detail of the finance/APR attached to each variant would be excessive and may be confusing to the customer.
They did not agree that the advertisement had breach Section 4.4 of the Code as their customers must complete a full financial consultation with qualified advisors and the advertisement had included the statement “from”.
Finally, they have apologised if the wording or the presentation of the content was in any way misleading as this was not their intention. They said that they would ensure going forward, that their advertising was clear as to which model and variant the APR quoted related to, or that it related to selected models within the range. They said that they would also ensure that their “small print” including asterisked information was of sufficient size, is clearly legible and is not ambiguous.
The Complaints Committee considered the detail of the complaint, the advertisers’ response and their undertaking to amend the advertising. The Committee noted that the page outlining the Touran offer in the brochure had not made reference to any of the three variants in the Touran range. The Committee noted the advertisers’ statement that the image used was a Touran HL model. While the Committee noted that the offer had stated “Available from €329 per month with 1.9%*APR PCP Finance…”, they considered that the reference to ‘from’ could be interpreted as only applying to the per month price and that this, together with the inclusion of the words “with 1.9%*APR..”, implied that the interest rate offered was a flat rate of 1.9%. The Committee also noted that the promotional rate of 1.9% was asterisked and that the asterisk was linked to a footnote that was on the back page of the 4 page brochure, with the relevant linked text contained in the middle of the footnote, outlining the typical finance example for a Touran HL 1.2 model. In the light of the fact that the brochure had not specifically stated that the reduced APR rate of 1.9% applied only to the Touran HL model, the Committee considered that the advertising was in breach of Sections 4.1, 4.4 and 4.6 of the Code.
The advertisement must not appear in its current format again. As the advertisers had undertaken to amend future brochures, no further action was warranted.