Latitude Finance Australia and Harvey Norman Holdings engaged in misleading conduct and made false or misleading representations in relation to a widespread advertising campaign for a 60-month interest free and no deposit payment method, the Federal Court ruled on Friday.
The advertisements were published between January 2020 and August 2021.
ASIC on Friday said it was “concerned the advertisements masked the fact consumers were required to take out a credit card, such as the Latitude GO Mastercard, to purchase goods.”
ASIC Deputy Chair Sarah Court said, “ASIC took this case because we believed many consumers may have been unaware of the financial arrangements they were entering into when they bought everyday products at Harvey Norman stores. In some cases, this may have meant they paid considerably more for purchases than they expected.'
“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.”
High interest rates indeed. The current interest rate on a GO Mastercard from Latitude is 28 per cent, though the judgement of Justice David Yates does not specify the interest rate that applied at the time.
Oddly, Yates’s judgement also fails to explore the implicit interest rate embedded in the ’60 months interest free’ deals on offer at the time.
ASIC in its case relied on the evidence of a number of consumer witnesses.
“Although the deponents had different understandings of what was being offered by the promotions, and although some idiosyncratic perceptions were revealed, their evidence, overall, was consistent with the conclusions I have reached, in that each deponent was unaware that he or she was required to obtain a GO Mastercard to take advantage of the promotion; and to pay fees and charges in addition to the monthly payments on account of the purchase price of the goods” Yates found.
During the period 1 January 2020 to 11 August 2021, the Latitude and Harvey Norman prepared and published (including by broadcasting) a large number of advertisements across Australia in newspapers and on television and radio, which promoted the purchase of home and electrical goods from Harvey Norman stores by equal monthly payments of the purchase price for the goods over 60 months on “no deposit” and “no interest” terms.
In measure of the otherwise well understood volume and frequency of Harvey Norman advertising, the court records that the television advertisements were broadcast on at least 900,000 occasions on 367 specified stations; the radio advertisements were broadcast on 143 radio stations; and the newspaper advertisements were published in 168 newspapers.
ASIC, Yates wrote “described this as an advertising blitz that ‘one may readily anticipate most adults in Australia saw, watched or heard’.
“It submits that this reinforced the ‘dominant message’ of the advertisements.
“According to ASIC, this: … had the impact that consumers would consider they already knew ‘the deal’ and therefore did not take any particular care in seeking to understand the ‘fine print’ of