Harvey Norman and Latitude Finance ordered to pay a combined $55 million for misleading ads

Australian retailer Harvey Norman and finance provider Latitude have been fined a combined $55 million for misleading ads.

Harvey Norman Holdings has been handed a penalty of $35m and Latitude Finance Australia has been slapped with a $20m fine over a national ad campaign that promoted a 60-month interest-free and no deposit method for goods bought at Harvey Norman stores, the Australian Securities and Investments Commission announced on Tuesday.

The combined fine is the highest the watchdog has handed down for misleading conduct and false or misleading representations relating to financial products and services.

ASIC chair Sarah Court described the penalties and order as a “significant outcome for consumers”.

“(It) sends a strong warning to the market about the importance of truthful and transparent advertising,” she said.

“This case is about integrity in consumer finance marketing. Consumers were entitled to know that this offer involved more than simply paying for their purchase in 60 instalments.

“The advertising encouraged consumers into an ongoing credit arrangement that carried additional costs and obligations.

ASIC said it was concerned the ads masked that consumers were required to take out a credit card, such as the Latitude GO Mastercard, to buy goods, and were liable to pay monthly account service fees and, up to March 15, 2021, establishment fees as well.

The ads would have been viewed by millions of Australians as they were published and broadcast thousands of times across the country between January 2020 and August 2021 in newspapers, television and radio, the regulator said.

“Today’s outcome sends a strong message that businesses must give consumers a clear and accurate picture of the products they are promoting and the costs that come with them.”

Federal Court Justice Michael O’Bryan said Harvey Norman and Latitude “put sales and their commercial interests above the interests of consumers, and also distorted the markets in which competing goods and finance are offered”.

In addition to the fine, the court has ordered Harvey Norman and Latitude to immediately publish visible corrective ads on website homepages for 90 days.