The decision this week by the Australian Securities and Investment Commission to commence yet another round of legal action against Harvey Norman raises the simple question “Can you actually trust this retailer” and more importantly what consumers are being told by commission hungry Harvey Norman sales executives.
This is a mass retailer who along with their franchisees have a horror track record when it comes to offering deals and responding to customers complaints resulting in millions in fines in the past by Australian authorities who appear to have not slowed down the actions of the mass retailer.
In their latest run in with authorities, Federal Government regulators were forced to act after they received multiple complaints, that consumers were being misled by Latitude Financial Services, and retailer Harvey Norman over advertisements that promoted “no deposit” and “interest-free” payments but allegedly did not say an associated Mastercard was needed to access the deal.
The normally vocal Chairman of Harvey Norman was not immediately available for comment.
The $5.1 billion company claim that they “intend to defend the proceedings commenced against it by ASIC”.
This is not the first time that Harvey Norman or their franchisees have faced the wrath of regulators or the Australian Competition & Consumer Commission and ending up facing action in an Australian court and massive fines.
Back in 2016, a Harvey Norman franchisee was fined $52,000 for repeatedly telling customers with new but problem-plagued computers that it couldn’t help them.
The Federal Court found that a Harvey Norman store on the Gold Coast breached two sections of consumer law by falsely telling customers with malfunctioning computers that it had no obligation to provide a remedy and couldn’t assist any further without payment.
Harvey Norman Holdings Ltd was fined $1.25 million for misleading advertising.
In Justice Collier’s judgment, her Honour described Harvey Norman’s conduct as “seriously misleading and deceptive, on a significant and far-reaching scale.”
In September 2010, Harvey Norman promoted the sale of 3D televisions in the ‘3D Finals Fever’ catalogue.
The court ruled that the catalogue created the misleading and deceptive impression that consumers in all places where the catalogue was distributed could buy and use a 3D television to watch the 2010 AFL and NRL grand finals in 3D format.
In fact, the 3D broadcast was limited to metropolitan Brisbane, Newcastle, Sydney, Melbourne, Adelaide, and Perth.
The catalogue was distributed throughout Australia in places where there was no 3D broadcast of the football grand finals, including after Harvey Norman became aware that the 3D broadcast would be so limited.
It accordingly represented that the 3D televisions had uses and benefits they did not have.
The Court also found that between October 2008 and July 2011, Harvey Norman made misleading representations about the existence of certain conditions in its catalogue and website advertising.
At the time Harvey Norman admitted it had contravened the former Trade Practices Act 1974 and the Australian Consumer Law and consented to the penalties and other orders sought from the Court.
In their latest run in with ASIC it’s alleged that the true cost of using the Latitude GO Mastercard was misrepresented because establishment fees and account service fees were not adequately disclosed, adding some customers were liable for $537 in fees on top of the purchase amount.
Harvey Norman and Latitude signed a fresh five-year deal in 2020 to provide interest-free payments and instalments to shoppers in Australia and New Zealand. The companies have had a three-decade relationship under various previous iterations of Latitude, including GE Money.
ASIC’s action only relates to the ads around the Latitude GO Mastercard in Australia.
“In many of the Harvey Norman ads set to be presented as evidence in the Court case, there’s no reference to a credit card at all, and in many of the ads there’s no reference to Latitude Finance at all.
Some of them contain in very small print some reference to Latitude, but for the majority of consumers, and for many of the ads, there’s just nothing to suggest that a credit card is involved at all.”
The ACCC’s legal battle with Harvey Norman over their retailing practises has in the past seen four Harvey Norman franchisees fined $86,000 for misleading customers.
The retailer’s franchisees have also in the past been slugged with more than $230,000 in penalties for staff behaviour.
Back in 2013, penalties were handed down by the Federal Court after franchisee staff were found to be “making false or misleading representations regarding consumer guarantee rights”.
The penalties were part of an extended legal battle that began in 2013 and resulted in nine Harvey Norman franchisees fined a total of $234,000 in fines.
In each of the cases, the Federal Court found that Harvey Norman sales staff or store managers misled customers about their post-purchase consumer rights.
According to the ACCC, these misrepresentations included assertions that franchisees had “no obligation to provide a remedy” if the product was still under warranty or if the product was bought more than three months prior.
Under Harvey Norman’s franchisee system, a single brick and mortar store is not necessarily run by one franchisee, but rather several operators responsible for different categories such as electrical appliances, computing or furniture.
Back in 2013 the penalties applied to franchisees in Oxley, Queensland (AU$26,000); Gordon, New South Wales (AU$25,000); Mandurah, Western Australia ($25,000); and Albury, Western Australia ($10,000). The Mandurah and Albury franchisees ceased trading in May 2013.
