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ASIC sues Harvey Norman and Latitude Finance for allegedly misleading customers with 'interest-free' ads
Harvey Norman and its credit service provider, Latitude, are being sued by the Australian Securities and Investments Commission (ASIC) for allegedly engaging in intentionally deceptive and 'misleading' advertising.
Customers were allegedly led to believe that they could buy furniture and appliances for their homes for '60 months interest-free' in exchange for making equal monthly payments on the advertised price.
However, the fine print seems to have told a different story…
The Australian Securities and Investments Commission (ASIC) is suing Harvey Norman over its ads for 'interest-free' purchases. Credit: Carly Earl/The Guardian.
The regulatory commission claimed that the company's advertisements, which ran between 1 January 2020 and 11 August 2021 in newspapers, on radio, and on TV, deceived potential customers into thinking they could purchase household goods from Harvey Norman by splitting the cost into 60 equal monthly instalments.
What the customers didn't realise was that in order to take advantage of the 'promo', they had to sign up for and use a Latitude credit card, which came with fees and charges that might add hundreds of dollars to the final cost of the items they purchased.
Sarah Court, the deputy chair of ASIC, said: 'ASIC is concerned the advertising did not provide consumers with the full picture, that they could only use the interest-free payment method by applying for and using certain Latitude credit cards.'
'These credit cards, ASIC alleges, attracted substantial fees over the course of the 60-month payment term, and exposed consumers to the risks of incurring further debts and charges, as well as potentially affecting their credit rating.'
An example of the ad that ASIC is concerned about. Credit: ASIC.
According to court records, ASIC claims that in order to prevent customers from fully understanding the terms, conditions, and fees, the information was purposefully written in small print in the newspaper, 'tiny text' in the TV advertisements, and 'spoken at a greater speed and in a more muted tone' in the radio advertisements.
The fees charged for the GO Mastercard, however, varied and may differ depending on the period.
Some users had to pay a $25 establishment fee and a monthly fee of $5.95, while others had to pay a monthly fee of $8.95. They may also be subject to extra monthly charges if their balance on the card is more than $10.
'These fees were substantial, and could comprise a substantial proportion of the overall repayments,' ASIC continued.
'For example, a consumer who, during the relevant period after 16 March 2021, purchased a refrigerator with a retail price of $1,000 using the payment method… and paid the 60 monthly instalments on time, would have to pay a minimum total of $1,537 (which would include $537 of monthly account service fees over the course of the 60-month payment term).'
The Australian Securities and Investments Commission (ASIC) has filed a motion asking the court to force Harvey Norman and Latitude to pay a fine and run corrective advertising in newspapers, televisions, and radio programs three times a week for two weeks.
Furthermore, they requested that the court issue an order requiring the corporations to clearly and conspicuously disclose all applicable terms, conditions, and fees in all future advertisements.
Harvey Norman is one of Australia's biggest advertisers across print newspapers, radio and TV. Credit: NCA NewsWire/Dean Martin.
Latitude has already released a statement regarding the matter and said that they are currently working with ASIC regarding their investigation.
A representative for the company stated: 'Latitude is now reviewing ASIC's claim and will not be commenting further at this stage given the matter is before the courts.'
So there you have it, members! Keep this in mind before making any major purchases: false advertising is a serious danger that lurks in plain sight.
What are your thoughts on this? Should retailers be more transparent with their ads, just like ASIC is calling for? Let us know in the comments!
