Harvey Norman facing class action after adverse court ruling on interest free promotions

Almost a year after the Federal Court found that Harvey Norman (ASX: HVN) and Latitude Finance misled customers with a “60-month interest-free, no deposit” payment promotion, law firm Carter Capner Law is launching a class action against the national retail group.

The law firm says it is leading the class action on behalf of hundreds of customers who were attracted by the “false promise of interest free loans”.

In October last year, the Federal Court found both companies misled consumers in an advertising campaign for an interest-free payment method. The adverse ruling was subsequently upheld on appeal last week.

The Australian Securities and Investments Commission, which brought the original civil penalty action, alleged that the promotion masked the fact that consumers were required to take out a credit card, such as the Latitude GO Mastercard, to purchase goods.

In its class action, which includes Latitude Finance, Carter Capner Law alleges that customers were slugged with “hefty fees and charges and supplied with credit cards they hadn’t requested, leading them to pay significantly more than they expected”.

Peter Carter, director of Carter Capner Law and a former national president of the Australian Lawyers Alliance, says in-store promotions, radio and TV ads and catalogues spruiking generous terms led consumers to assume they were signing up for monthly instalment deals for an agreed ticket price until the goods had been paid in full.

“The deal being spruiked was vastly different to what Harvey Norman promised, with consumers having to sign up for credit cards and being hit with fees and charges not advertised,” he says.

“When you buy a big screen TV and are told you’re getting ‘five years interest-free’ you should be confident you’ll get your new TV without being charged interest, but that’s not what was happening.”

Carter says one Adelaide customer who bought a TV and PS4 from Harvey Norman was “compelled to sign up for a GO Mastercard with Latitude Finance and to his surprise, he was then hit with a $25 setup fee and a monthly service charge starting at $5.95 and escalating to $8.95”.

“On top of that, he was supplied a $10,000 credit limit he hadn’t requested,” he says.

“Another consumer from Goulburn in NSW who thought he had purchased a laptop on the same ‘interest-free’ terms received a credit card with a $2,500 credit limit and a monthly fee that would total around $550 over five years.”

Carter alleges that consumers weren’t even completing the so-called ‘interest-free’ application themselves.

“Clued-up salespeople were gathering consumers personal information, including bank details, and applying for credit cards with a limit determined by the credit provider after guesstimating each shopper’s financial position,” he says.

Carter Capner Law says its class action aims to recover the financial loss of group members including fees and charges.