Days after being hit with a $35 million Federal Court fine for misleading consumers, and a stinging rebuke of executive chairman Gerry Harvey from the bench, Harvey Norman is now facing a major class action that could cost the retailer millions more.

Federal Court Justice Michael O’Bryan this week ordered Harvey Norman to pay $35 million and its long-time finance partner Latitude Finance Australia $20 million, a combined $55 million penalty, over a national 60-month interest-free advertising campaign that the court found misled consumers. The campaign ran across TV, radio and newspapers between January 2020 and August 2021 and was likely seen by millions of Australians.

ChannelNews can now reveal that Brisbane legal firm Carter Capner Law is running a class action on behalf of consumers stung by the Harvey Norman and Latitude promotion.

Judge Singles Out Gerry Harvey

While Justice O’Bryan found both companies were equally responsible for the misleading advertising, Harvey Norman copped the larger penalty, and the judge made clear why.

Latitude had overhauled its compliance systems and apologised to customers. Harvey Norman had done neither, with Justice O’Bryan finding the two defendants had “exhibited a different level of contrition” and singling out the retailer’s billionaire chairman.

“Public statements made by Harvey Norman’s chairman show a disregard for the potential harm suffered by consumers from Harvey Norman’s misleading conduct,” the judge said, adding that “a higher penalty is warranted to deter repetition and to motivate Harvey Norman to improve its compliance processes”.

Justice O’Bryan said the pair “put sales and their commercial interests above the interests of consumers, and also distorted the markets in which competing goods and finance are offered”, describing the companies’ compliance processes as wholly inadequate.

Fine Doesn’t Compensate Victims, Class Action Does

Peter Carter, director of Carter Capner Law, said the Federal Court decision “sends a very clear message: Australians are entitled to trust what they are being told when they respond to an advertised offer”.

“Customers were told by Harvey Norman and Latitude Finance that they could purchase household items through a simple ’60-month interest-free’ offer. Many of these people, understandably, took this to mean they could spread their repayments across the interest-free period without paying credit charges, only to discover they had signed up to a credit product with fees and ongoing charges attached,” Carter said.

“The court has now confirmed that Australians were entitled to take the ‘interest-free’ message at face value. The $55 million penalty reflects the seriousness and scale of what occurred, with millions of Australians exposed to a widespread misleading retail finance promotion. The penalty though does not compensate the affected consumers.”

That, Carter said, is what the class action, filed in December last year, is designed to achieve. The lawsuit is focused on ensuring consumers misled by the promotion are recompensed for the fees and charges billed to them through the credit card arrangement they were issued.

According to ASIC, consumers who signed up to the GO Mastercard between March and August 2021 and paid off a purchase over the full 60 months were liable for at least $537 in fees on top of their purchase price.

Who Can Register

Consumers who purchased goods from Harvey Norman or Domayne between 1 January 2020 and 11 August 2021 under the “60 months interest free” promotion and were issued a Latitude GO Mastercard can register for the class action at cartercapner.com.au/class-action.