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Lender found to have engaged in misleading conduct

Lender found to have engaged in misleading conduct
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The Federal Court has ruled that Latitude Finance Australia made misleading representations over credit card advertisements.

Latitude Finance Australia (Latitude), along with Harvey Norman Holdings Ltd (Harvey Norman), has been found to have engaged in misleading conduct and made false or misleading representations in regard to an advertising campaign for a 60-month interest-free and no deposit method, the Federal Court has found.

According to the Australian Securities and Investments Commission (ASIC), it was concerned that the advertisements “masked” that consumers had to take out a credit card, which included the Latitude GO Mastercard, in order to purchase goods.

Between January 2020 and August 2021, the regulator alleged that the lender and Harvey Norman contravened sections 12DA, 12DB, and 12DF of the ASIC Act by undertaking a nationwide advertising campaign through various media outlets (newspapers, radio, and TV stations) and failed to adequately disclose the true cost and scope of the promoted payment method.

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ASIC deputy chair Sarah Court said: “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.

“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.”

The Federal Court said that the advertisements’ statements of the payment method were shown as “a complete statement, when it was far from complete”.

Furthermore, Justice Yates said that “consumers who wished to make such a purchase had to enter into a fundamentally different financial arrangement than the one promoted – namely, 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.”

The regulator has said that it will be seeking relief including pecuniary penalties against both Latitude and Harvey Norman.

[RELATED: 2 banks in court over alleged multimillion-dollar car dealer overpayments]

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