The Federal Court of Australia has ruled in favour of the Australian Securities and Investments Commission (ASIC), finding that Harvey Norman (ASX:HVN) and Latitude Finance Australia engaged in misleading and deceptive advertising practices. The case stemmed from promotional campaigns that ran from January 2020 to August 2021, which offered interest-free payment plans for Harvey Norman products, but failed to disclose key terms about the financing arrangements.
The advertisements, which appeared across various media outlets, promoted offers for up to 60 months of interest-free payments. However, the court found that the ads did not adequately inform consumers that they would need to apply for a GO Mastercard, issued by Latitude Finance, which came with additional fees. These included a $25 establishment fee and a monthly account service fee. This lack of transparency led customers to believe they could make purchases without any extra costs beyond the instalments.
Judge Yates noted in his decision that the advertisements were "carefully crafted to give the impression that the only cost to the consumer was the price of the goods spread over interest-free instalments." He went on to state that the companies "failed to make clear that the consumer was required to enter into a credit contract, which would impose additional fees." The court found that this created a misleading impression about the true financial commitment consumers would face.
The judgment represents a significant victory for ASIC, which has been increasingly focused on ensuring greater transparency in financial promotions. Harvey Norman and Latitude Finance now face potential financial penalties, with a hearing to determine the penalties expected next year.
Chris Mentis, Company Secretary of Harvey Norman, stated that the company is reviewing the court’s decision and considering an appeal.
