Volkswagon Financial cops ASIC fine for misleading car finance offer
The regulator was concerned the "significant" balloon payment and limited finance term wasn't made obvious to consumers.
Volkswagon Financial Services Australia (VFSA) has been issued 20 infringement notices and paid a penalty of $216,000 after alleged misleading advertising for its car finance offer. The Australian Securities and Investments Commission (ASIC) alleges that the "1% you can't ignore" campaign run by VFSA did not adequately explain various important aspects of the offer, including the "significant" balloon payment and the 48-month contract term.
"Proper disclosure requires a genuine effort to ensure consumers will be aware of and able to understand any conditions," said acting ASIC chair Peter Kell. "Consumers cannot reasonably be expected to navigate through dense text of fine print to find them."
VFSA ran the advertisements in various newspapers, flyers and on websites and states that Volkswagon vehicles were available for purchase on finance "for a set weekly payment". While some advertisements did contain disclaimers outlining the conditions, others did not. ASIC was also concerned that the advertisements containing the disclaimer did not give it enough prominence.
ASIC says that the advertisements were misleading in that they didn't:
- Clearly disclose the consumer had to pay a significant balloon payment at the end of the contract in order to retain ownership.
- Clearly disclose that the finance contract was only for a period of 48 months.
- Adequately explain the term "GVF balloon".
- Adequately inform the consumer that a significant dealer administration fee may be imposed.
The fine comes at a time when ASIC is cracking down on unscrupulous practices in the car finance market. In September 2017, it banned flex commissions in an effort to keep car finance interest rates affordable.