ASIC alleges that from January 2020 to August 2021, ads promoting ‘interest free’ payment methods for purchases at Harvey Norman were misleading ‘because they did not disclose that consumers could only use the interest free payment method if they applied for and used a Latitude GO Mastercard’.
LFS and HVN shares were flat on the news.
Source: Trading View
ASIC’s case: HVN and LFS misleading customers
ASIC has filed a legal complaint against Australian fintech Latitude and retailer Harvey Norman for allegedly broadcasting misleading advertisements between January 2020 to August 2021.
These ads allegedly promoted interest-free payment methods for Harvey Norman’s goods over television, print, and radio, extending over a 60-month period.
In receiving customer complaints and procedural surveillance, it came to ASIC’s attention that there were specific terms attached to the supposed deal not always disclosed in the ads.
Customers were required to sign up for a Latitude GO Mastercard, inclusive of establishment and monthly account fees which would have incurred an extra $537 (minimum) in hidden costs on top of Harvey Norman purchases.
According to the claim submitted to the court, the advertisements used large writing and an ‘upbeat’ narrator to highlight the ‘interest-free…no deposit’ tagline, while smaller, ‘tiny’ print outlined a minimum financed amount of $1,000, additional applicant requirements, conditions, fees, and charges.
Source: ASIC
ASIC Deputy Chair Sarah Court 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.
‘Consumers have a right to make informed choices. Credit providers and retail partners such as Latitude and Harvey Norman should ensure that their advertising clearly discloses all important information about payment methods and any fees.’
Ms Court added that in applying for Latitude’s credit card, customer credit ratings could have been severely impacted without them even being aware.
While there is yet to be a date set by the court for the first hearing, ASIC will be seeking certain declarations, financial penalties, sanctions, and other related orders against both Latitude and Harvey Norman.
Latitude and Harvey Norman prepare to face the music
Latitude has acknowledged the civil proceedings pertaining to its credit card and said the allegations relate to ‘historic advertisements’, agreeing they ran between the specified dates.
The fintech said it will take the allegations seriously and intends to cooperate, saying ‘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 not yet provided an official comment yet.
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