The Australian Securities and Investments Commission (ASIC) has launched legal action against two ASX All Ordinaries Index (ASX: XAO) companies, alleging their promotion of certain payment methods was misleading.
Harvey Norman Holdings Limited (ASX: HNV) and Latitude Group Holdings Ltd (ASX: LFS) are facing the regulator's wrath.
It's suing the pair in Federal Court over advertisements promoting "no deposit", "interest free" payment methods over a specified period.
ASIC alleges the companies didn't disclose that consumers could only access the payment method using a Latitude GO Mastercard, which would incur hundreds of dollars worth of fees.
Let's take a closer look at the legal action brought about against the All Ordinaries icons.
All Ordinaries constituents face ASIC's wrath
The securities and investments watchdog is suing Harvey Norman and Latitude over their advertisement of 'zero interest' payment options.
ASIC deputy chair Sarah Court commented on the suit, saying:
ASIC is concerned the advertising did not provide consumers with the full picture, that they could only use the interest free payment method by applying for and using certain Latitude credit cards.
These credit cards, ASIC alleges, attracted substantial fees over the course of the 60-month payment term, and exposed consumers to the risks of incurring further debts and charges, as well as potentially affecting their credit rating.
The regulator states customers who signed up to the GO Mastercard from March 2021 until August 2021 and followed the advertised payment method to tee would face fees of at least $537.
The GO Mastercard is only available from Harvey Norman franchisees' stores and Harvey Norman and Latitude's respective websites. ASIC says the two All Ordinaries companies saw "significant revenues" from the offering.
Latitude responded to the regulator's legal action, saying in a statement:
The allegations relate to historic advertisements that ran between 1 January 2020 and 11 August 2021.
Latitude takes these allegations very seriously and has worked cooperatively with ASIC during its investigation.
Harvey Norman also responded to the allegations:
Harvey Norman intends to defend the proceedings commenced against it by ASIC.
ASIC is seeking declarations, pecuniary penalties, injunctions, and other orders against Latitude and Harvey Norman. The date for the first hearing is yet to be scheduled.
