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Home Rulings ALLIED CAPITAL LOANS / K MULAUDZI / 2016 – 5140 F

ALLIED CAPITAL LOANS / K MULAUDZI / 2016 – 5140 F

Mr Mulaudzi lodged a consumer complaint against an Allied Capital mobile billboard advertisement, which reads as follows:

"NEED CASH NOW?
GET CASH FOR YOUR CAR 
AND STILL DRIVE IT!
THAT’S HOW WE DO IT.
AlliedAuto.co.za
010 015 00 00”.

Complaint

The complainant argued that the advertising was misleading, because the advertiser operates like a loan shark, expecting customers to sell their cars to the respondent, and then lease their own cars at a 30% interest rate. This information is not listed anywhere on the advertising.

Relevant Clause of the Code of Advertising Practice

In light of the complaint Clause 4.2.1 of Section II (Misleading claims) was taken into consideration.

Response

The respondent submitted that the complainant had already lodged a complaint with the National Credit Regulator. It enclosed a copy of correspondence received from the Regulator indicating that "… our offices consider this matter having been dealt with”.

It explained that it does not advance loans to clients at an interest; it purchases vehicles and then leases these vehicles back to consumers. The complainant’s vehicle was purchased and a lease agreement concluded, in terms of which the complainant was compelled to pay his monthly instalments in order to continue driving his vehicle.

The complainant reneged on payments and his vehicle is up for repossession, which appears to have motivated this complaint.

ASA Directorate Ruling

The ASA Directorate considered all the relevant documentation submitted by the respective parties.

Clause 4.2.1 of Section II reads "Advertisements should not contain any statement or visual presentation which, directly or by implication, omission, ambiguity, inaccuracy, exaggerated claim or otherwise, is likely to mislead the consumer”.

The Directorate is tasked with determining whether the respondent’s advertising omits material information about its business model to an extent that it is likely to mislead consumers.

The advertising states that consumers who urgently need cash ("NEED CASH NOW?”) are able to obtain "CASH FOR YOUR CAR …” and continue to "… DRIVE IT”. The only reasonable interpretation is to assume that one’s vehicle will be the collateral against which cash will be advanced.

The Directorate accepts that the advertising does not specifically detail the intricacies of this arrangement (such as the interest rate charged and instalment terms), but it is not convinced that this renders the advertising misleading.

Effectively, the respondent makes an offer, which consumers are likely to interpret in the correct manner; i.e. "my vehicle will be the collateral against which my loan is obtained, and I will have to pay back the loan or risk losing my vehicle”. It is up to an interested individual to obtain more clarity before making the decision whether or not to accept the respondent’s offer.

Given the above, the Directorate does not agree that the advertisement omits material information in a manner that is likely to mislead. While the Directorate can understand the frustration of possibly having to lose one’s vehicle, this inconvenience is a consequence terms of the contract agreed to, rather than the advertising content.

The advertising is therefore not found to be in contravention of Clause 4.2.1 of Section II.

The complaint is dismissed.

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