Harvey Norman and Latitude Finance fined $55m for misleading advertising
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The news: The Federal Court has ordered Harvey Norman pay $35 million in penalties and Latitude Finance $20 million after the two companies were found to have engaged in misleading conduct related to a nation-wide advertising campaign.
Handing down orders on Tuesday, Justice O’Bryan concluded both parties were equally responsible for advertising a 60-month interest free and no deposit payment method without disclosing its full terms which included monthly and account service fees.
The advertising campaign ran from January 2020 to August 2021 and canvassed newspapers, radio and television and was likely seen by millions of Australians, the court found.
In handing down the penalties, Justice O’Bryan observed that while the benefit derived by the company was likely around $5 million, he conduct was “serious and extensive” and exposed the compliance procedures of both parties as “wholly inadequate”. The result was a distortion of the consumer market.
He described this as an “extraordinary state of affairs” given the size of the companies, particularly Harvey Norman.
Justice O’Bryan contrasted the response of the two companies, noting Latitude had made changes to its compliance systems as a result and apologised to its customers while Harvey Norman had shown no contrition, singling out comments made by executive chair Gerry Harvey, and had made no such changes to prevent future contraventions. The penalties reflected the difference in response.
Such matters were coming through the court with such regularity, Justice O’Bryan said the penalties also needed to both provide strong deterrence and ensure the consequences beyond the cost of doing business. Both came in under the $50 million and $35 million ASIC had been seeking.
In addition to the fines, both parties were required to publish an adverse publicity notice to their websites, advertising the court’s findings for a period of 90 days.
A further 5-year injunction sought by ASIC was dismissed with Justice O’Bryan saying the court wouldn’t hesitate to order large penalties if the companies made repeated contraventions.
It ends a long running saga with the Federal Court originally ruling in October 2024, and an appeal being dismissed in September last year.
The source: Federal Court Hearing
