The Federal Court has found that Latitude Finance Australia and Harvey Norman engaged in misleading conduct and made false or misleading representations in a widespread advertising campaign for a 60-month interest-free and no deposit payment method.

The Australian Securities and Investments Commission (ASIC) expressed concern that the advertisements masked the fact that consumers were required to take out a credit card, such as the Latitude GO Mastercard, to purchase goods. The advertisements were published between January 2020 and August 2021.

ASIC alleged that Latitude and Harvey Norman contravened the ASIC Act by pursuing a national advertising campaign in newspapers, and on radio and television stations across Australia, which failed to adequately disclose the true scope and cost of the promoted payment method. The Court found that the advertisements' statement of the payment method was presented as a complete statement, when it was far from complete.

Justice Yates found that consumers who wished to make such a purchase had to enter into a fundamentally different financial arrangement than the one promoted. Specifically, a continuing credit contract with Latitude that was linked to a credit card (the GO Mastercard), whether or not they wanted a credit card (let alone a GO Mastercard), which required them to pay an establishment fee and ongoing monthly account service fees in respect of that linked account.

"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," said ASIC Deputy Chair Sarah Court. "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.

"Consumers deserve to be fully informed so that they can consider their current financial position and decide if a credit card is the appropriate product for them."

ASIC will seek relief including pecuniary penalties against Latitude and Harvey Norman.