Court finds Harvey Norman breached law over ‘interest-free’ promotions in case brought by ASIC

The retail giant will face a penalty hearing next year after ASIC successfully claimed customers were misled over the promotion of interest-free payment methods for its products.

Harvey Norman breached the law over ‘interest free’ payments, court finds: NCA NewsWire / David Geraghty

Retail giant Harvey Norman is set to face a penalty hearing next year after the corporate watchdog successfully claimed customers were misled over the promotion of interest-free payment methods for its products.

The case was brought by the Australian Securities and Investments Commission in late 2022, when it alleged Harvey Norman had been misleading customers by promoting interest-free and no-deposit payment methods without disclosing customers could only access those methods by being a Latitude GO Mastercard holder.

The allegations related to a period between January 2020 and August 2021, and Latitude Finance was also included in the case by ASIC.

ASIC deputy chair Sarah Court welcomed the outcome, and said the regulator believed many consumers may have been unaware of the financial arrangements they were entering into when they bought everyday products at Harvey Norman stores.

Harvey Norman CEO Katie Page. Picture: John Feder

“In some cases, this may have meant they paid considerably more for purchases than they expected,” she said.

“The financial obligations under a credit card are different to what was advertised by Harvey Norman. A continuing credit contract can involve multiple advances of credit together with monthly account service fees and high interest rates, all of which add up for consumers.

“Consumers deserve to be fully informed so that they can consider their current financial position and decide if a credit card is the appropriate product for them.”

ASIC alleged in the proceedings that Latitude and Harvey Norman contravened the ASIC Act by pursuing a national advertising campaign in newspapers and on radio and television stations across Australia, which ASIC alleged failed to adequately disclose the true scope and cost of the promoted payment method.

Federal Court judge David Yates said he was satisfied each of the customers involved in the case was not aware they needed to obtain a GO Mastercard to take advantage of the promotion and that they would have to pay fees and charges in addition to the monthly payments after purchasing the goods.

“Consumers who wished to make such a purchase had to enter into a fundamentally different financial arrangement than the one promoted,” he said.

But, he said he was not satisfied with ASIC’s argument that Harvey Norman CEO Katie Page “micromanaged” the process by which newspaper, television and radio advertisements were created.

“However, I have found that, within Harvey Norman these advertising campaigns were undertaken under the overall direction and control of Ms Page with significant management involvement from (director Chris Mentis) and other senior employees within Harvey Norman,” he said.

“I see no reason why it was incumbent on Harvey Norman to call Ms Page and Mr Mentis as witnesses.”

Mr Mentis acknowledged the reasons published in a statement to the ASX on Friday.

“The company will review those reasons carefully before deciding whether to appeal the decision,” he said.

As well, Latitude told the market it acknowledged the outcome.

“We are reviewing the decision in detail, including considering whether to appeal. The judgment does not relate to current advertising,” the statement read.

Originally published as Court finds Harvey Norman breached law over ‘interest-free’ promotions in case brought by ASIC