ASIC claims Harvey Norman, Latitude ‘misled’ customers
The retailer is being sued over its no deposit, interest free pledge while Latitude is accused of failing to reveal the true cost of its in-store credit cards.
The corporate regulator has commenced legal action against Latitude Finance and Harvey Norman, alleging customers were misled over the promotion of interest-free payment methods and the “true cost” of in-store credit cards.
The Australian Securities and Investments Commission alleges that from January 2020 to August 2021 advertisements promoting ‘no deposit’, ‘interest free’ payment methods over a specified term for purchases at Harvey Norman were misleading.
ASIC said advertising did not disclose that consumers could only use the interest-free payment method if they applied for and used a Latitude GO Mastercard – a card exclusive to Harvey Norman stores and Latitude websites.
ASIC also alleges that the advertisements misrepresented the true cost of using credit card payment method because they failed to properly disclose establishment fees and monthly account service fees.
It claims the credit cards 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.
ASIC deputy chair Sarah Court said the watchdog feared the advertising did not provide consumers “with the full picture” and said ASIC took a closer look after receiving complaints from customers.
“We had a number of concerns and it’s those concerns that really drove the court action we’ve filed,” she said.
Ms Court said ASIC would allege attached to the use of the credit card were “substantial fees which were not made clear to consumers”, with some ultimately paying more than $1500 in fees.
“We’re concerned the misleading nature of the advertising may have led people into a new line of credit that they had not anticipated they would be required to obtain,” Ms Court said.
She said taking a credit card was a significant financial decision and “not something you would normally do at point of sale”.
ASIC has not detailed the number of customers affected by the advertising, but said it “would have been seen by very many consumers”.
Consumers who signed up to the GO Mastercard after March 16 2021 and before August 11 2021 and made a purchase at Harvey Norman using the 60-month interest free payment method and paid off their purchase over 60 months would be liable to pay at least $537 in fees on top of their purchase amount, ASIC alleges.
Latitude Financial said the allegations related to “historic” advertising and would review ASIC’s claim.
“Latitude takes these allegations very seriously and has worked cooperatively with ASIC during its investigation,” the company said.
“Latitude is now reviewing ASIC‘s claim and will not be commenting further at this stage given the matter is before the courts.”
Harvey Norman has been contacted for comment.
ASIC is seeking declarations, pecuniary penalties, injunctions and other orders against Latitude and Harvey Norman.
The date for the first case management hearing is yet to be scheduled by the court.
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