By offering consumer finance, Byju’s helps parents break the accessibility barrier

A detailed analysis of the 110 complaints The Ken analysed has thrown up worrying evidence: 54 of the complainants, claimed to have had no idea they were signing up for a loan to buy their subscription. The average ticket size of the loans were Rs 66,000 ($952), and down payments ranged from Rs 1,000 ($15) right up to Rs 60,000 ($864).

“Subscriptions sold through Capital Float accounted for almost 70% of our total sales. We would take any amount, even 5% of the total subscription fee as upfront payment, if it would help us close the sale. So on a Rs 60,000 packet, I’ve come away with as little as Rs 100 in upfront payment,” said the Haryana-based BDA.

The Ken interviewed 22 individual complainants to understand how the sale unfolds. Inevitably, the problem starts when parents realise they have been signed up for a loan. Or, in the case of parents who knowingly took on a loan, were asked to pay EMIs despite asking Byju’s to cancel their subscription.

Efforts To Make A Conversation

“I have sent countless emails and made phone calls to Byju’s. I want to cancel my subscription. But they haven’t entertained my request and the EMI process has been triggered. Neither was the loan mentioned during the sales pitch, nor the 15-day trial period,” says a Pune-based complainant.

In fact, she claims, even on pointing out that the Byju’s terms and conditions stated a 15-day trial period, she was assured by the BDA that this cancellation would be done “anytime”. The person requested anonymity, claiming they had been physically threatened by Capital Float’s collection agency for non-payment of dues. Other complainants also report being repeatedly harassed by lenders to complete EMI payments. From the 110 complaints analysed, 22 parents claim to have been misled by the Byju’s sales agent about the 15-day trial period.

BDAs The Ken spoke with admitted to playing fast and loose with the 15-day trial period. And it has led to some particularly thorny issues for both parents and lenders. While clearly mentioned in Byju’s terms and conditions document, sales agents often give parents the impression that cancellations can happen even after the 15-day mark. If parents do reach out to customer care beyond this time frame, they are told in no uncertain terms that cancellations are now impossible.

Seems like good, old-fashioned miscommunication. But on closer scrutiny, a definite pattern of selling is discernible.

Meeting The Targets

Remember Byju’s BDAs have aggressive and unforgiving weekly meeting and sales targets? That means BDAs often obfuscate the loan part of the process for fear of losing their customer’s built-up interest. In addition to not being explicit about the loans, the BDAs admit they never make parents aware of the nature of the documents they are asked to sign. The whole process, claim complainants, is rushed. After spinning a three-hour sales pitch, the documentation process is a measly five minutes.

It’s a textbook example of how to use behavioural economics and nudges to your advantage. Human beings have a limited amount of mental energy to spend during a given period of time. If you wear it down through activities or conversations that use the brain (like a two- to three-hour long sales pitch featuring educational concepts and career decisions), then it will be easier to get people to gloss over the final five minutes.

Most commonly, the signatures are obtained on electronic clearing service (ECS) forms, which trigger the EMI process, and feature the name of the third-party lender. The details often escape the parents’ attention. “I trusted the sales agent because his pitch was detailed and he was an IIT graduate,” says the Pune-based complainant quoted above.

The Ken’s conversations with both current and former Byju’s BDAs revealed a particular context for the sale. Most sales agents, or counsellors, exhibit a deep understanding of the subject matter, promise personalised guidance throughout the subscription period and build personal relationships with the family. By the end of the pitch, most sales are a simple matter of signing up in good faith.

In most cases, the lender approves the loans even before the 15-day trial period is over. Without any real recourse to cancel subscriptions, most customers were doomed from the start.

“Even if a customer requests a cancellation within the 15-day period, the BDA doesn’t entertain their request. They stop answering calls or responding to emails. By the time the parent finally gets through, the 15-day trial period is over, and cancelling the subscription becomes almost impossible,” says the Delhi-based BDA quoted earlier.