Harvey Norman has been dragged to court over claims its ads mislead customers about the true cost of buying its products.
The household goods and electronics retailer is well known for claiming in its TV, radio and social media ads that customers can buy its goods on credit without a deposit or any interest charges for up to five years.
But in court filings on Wednesday, Australian Securities and Investment Commission (ASIC) officials revealed the deal is too good to be true.
The regulator alleged hundreds of dollars in undisclosed fees must be paid before the interest-free offer can actually be accessed by shoppers.
That’s because customers must first have a Latitude GO Mastercard, which comes with its own hefty establishment and monthly service fees.
In fact, ASIC calculates that customers who signed up for such a card in 2021 and bought a product from Harvey Norman using the offer would be liable for at least $537 in additional fees over the 5 year deal term.
“ASIC is concerned the advertising did not provide consumers with the full picture,” deputy commissioner Sarah Court said on Wednesday.
“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.”
Harvey Norman’s business partner Latitude Financial Australia is also being sued by the regulator, which is seeking financial penalties and a court injunction to prevent the companies from continuing their ads.
“‘Consumers have a right to make informed choices,” Ms Court said.
“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.”
In a statement, Latitude Financial said the court proceedings relate to historic advertisements between 1 January 2020 and 11 August 2021.
“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.”
