Misleading advertising by Harvey Norman and Latitude Finance
The Federal Court recently ruled that Latitude Finance Australia (Latitude) and Harvey Norman engaged in misleading conduct and made false or misleading representations in a widespread marketing campaign. In this article, we explain the corporate regulator’s allegations that the national advertising campaign by Harvey Norman and Latitude did not adequately disclose the true scope and cost of the promoted payment method.
- ASIC alleged that the national marketing campaign by Harvey Norman and Latitude did not adequately disclose the true scope and cost of the promoted payment method.
- The Federal Court ruled the advertisements for an interest free offer were misleading and a hearing to determine the penalties will be scheduled for next year.
- Advertisers of financial products need to ensure their small print adequately and appropriately qualifies the main message of the advertisement.
- When planning advertisements, financial product providers should put themselves in the shoes of an ‘ordinary and reasonable consumer’.
Between January 2020 and August 2021, Latitude and Harvey Norman promoted an advertisement in newspapers, television and radio across Australia to promote the purchase of home and electrical goods from Harvey Norman stores which depicted a large red banner containing the following prominent statements (banner statements):
- 60 months interest free*1
- no deposit þ no interest þ
- with 60 equal monthly payments until [ * ]. Minimum financed amount $1,000.
(the promotion).
ASIC alleged the promotion was misleading because:
- it failed to adequately disclose that consumers could only access the promotion if they applied for and used a Latitude GO Mastercard to purchase the goods, and
- it failed to adequately disclose establishment fees and monthly account service fees.
ASIC was concerned the promotion misrepresented to consumers the true cost of using the promotion to purchase goods, causing them to pay more for the goods purchased from Harvey Norman than was expected.
The Court found the promotion was misleading and deceptive because:
- The payment method described in the banner statements was presented as a ‘complete statement’ of the method of paying for the goods. The banner statement qualified by ‘*1’, did not draw consumers to read and engage with the terms contained in fine print, which the Court criticised for lacking prominence and having nothing to do with the financial terms of the promotion.
- The purchase of goods on the terms described in the banner statements was simply not available. Rather, consumers who wished to purchase goods using the promotion had to take up a fundamentally different financial arrangement by entering into a continuing credit contract with Latitude linked to a credit card, which required consumers to pay an establishment fee and ongoing monthly account services fees for the linked account.
- Advertisers of financial products need to ensure that their small print adequately and appropriately qualifies what the main message of the advertisement is.
- When planning advertisements, financial product providers should put themselves in the shoes of an ‘ordinary and reasonable consumer’.
A hearing to determine the penalties will be scheduled for next year.
Reach out to the HW Funds team for assistance with preparing and reviewing advertisements of financial products so that you provide the correct information to audiences about your offerings.
This article was written with the assistance of Charlotte Pratt, Law Graduate.
