Consumer Action, Financial Rights Legal Centre and CHOICE have welcomed the Australian Securities and Investments Commission’s (ASIC) commencing legal action against Latitude Finance Australia and Harvey Norman Holdings for misleading interest free advertising in relation to credit cards promoted in Harvey Norman stores.
Community lawyers and financial counsellors have assisted many clients struggling to pay off high-cost credit cards including fees and interest, usually opened through similar offers from Harvey Norman.
ASIC’s litigation relates to advertisements that ran from January 2020 to August 2021 and prominently claimed to offer ‘no deposit’, ‘interest free’ payment methods for 60 months for purchases at Harvey Norman.
ASIC claims these were misleading because these credit cards came with establishment and monthly account keeping fees that added substantial amounts to the purchase price of goods – details not mentioned in the advertisements. Further, if people used the credit cards later, these purchases could incur interest and additional fees, payable to Latitude.
Retailers like Harvey Norman have promoted high-cost credit cards for years. Individuals can be signed-up for a credit card in store, despite retailers not having a credit licence. This is due to a provision in the national credit laws known as the ‘point-of-sale’ exemption.
“The point-of-sale exemption from our credit laws was supposed to be a temporary arrangement and should have been removed a decade ago,” said Tom Abourizk, Senior Policy Officer, Consumer Action.
“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. Staff are also incentivised to make sure the credit products are approved so they can make the sale. Harvey Norman at Latitude are one of the worst offenders of this,” he said.
“Commissioner Hayne recommended the removal of the point-of-sale exemption in his Banking Royal Commission Final Report. It is long past the time for this loophole to be removed and we are calling on the Government to act,” said CHOICE’s Head of Policy Patrick Veyret.
CHOICE gave Harvey Norman Finance a Shonky Award in 2020 for their ‘toxic partnership’ with Latitude credit cards pushed at the point of sale by showroom staff.
“We welcome ASIC commencing legal action against Harvey Norman and Latitude Finance for alleged misleading interest-free advertising of its loans. We have heard many stories of people walking into Harvey Norman to purchase a household product and walking out with a costly new debt with hidden fees and exorbitant interest rates.” says Mr Veyret.