The Australian Securities and Investments Commission (ASIC) confirmed on Wednesday it has lodged documents in the Federal Court of Australia and will seek penalties against the companies.
ASIC has taken Latitude and the electronics retailer to task over one of the companies’ interest-free offers.
ASIC claims that between January 2020 and August 2021,ads that promoted “no deposit” and “interest free” payments failed to disclose that consumers could access these benefits only if they applied for a Latitude GO Mastercard.
The claim also alleges that the advertisements did not accurately represent the cost of using that payment method because they did not outline monthly account fees and sign-up fees for the card.
ASIC deputy commissioner Sarah Court saidthe regulator was concerned that the ads misled customers about how they needed to pay if they wanted to secure the interest-free terms.
“Applying for and using a credit card attracts a range of other obligations,” she said.
“It effectively contemplates a continuing source of credit - which in our view is quite different from using a one-off 60-month period.”
ASIC claims that customers who signed up for a GO Mastercard between March and August 2021,made a purchase at Harvey Norman and paid it off over 60 months would be liable for at least $537 in fees on top of the item’s purchase price.
In court documents,ASIC alleged that the advertising campaign “had a tendency to cause a mistaken impression as to the financial and related consequences of taking up that payment method”.
The regulator investigated the ads after receiving complaints about the Latitude Mastercard product,Court said.
The value of penalties the companies could face has not been disclosed,but Court said ASIC would be seeking “significant financial penalties” if successful.
“The penalties for this kind of conduct run into the several millions of dollars,” she said.
Consumer advocates welcomed ASIC’s action,saying that an exemption in national credit laws that lets retailers sign up customers for credit at the point of sale should be axed.
“Use of the point-of-sale exemption has allowed retail store staff to sign people up to unaffordable credit products on the spot,often receiving a commission for doing so,” said Consumer Action senior policy officer Tom Abourizk.
A spokesperson for Harvey Norman said the company intended to defend the proceedings,but could provide no further comment at this stage.
In a statement,Latitude Financial said it took the allegations raised in the case “very seriously” and had worked with ASIC during its investigation.
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