Electronics retailer Harvey Norman and payment provider Lattitude have been ordered to pay a combined $55 million in penalties following a decision by the Federal Court.

The Australian Securities and Investments Commission (Asic) launched a probe into the two companies in 2024 over their interest-free payment plans. These plans promoted a 60-month-long payment method that didn’t require a deposit or accrue interest. The promotion ran from January 2020 to August 2021, and was promoted “thousands of times”.

Asic felt that the advertisements of this promotion did not clearly communicate that consumers were required to take out a credit card, such as the Latitude Go Mastercard, to purchase goods. This would’ve led to customers being liable to pay monthly account fees and establishment fees.

Harvey Norman Holdings Ltd was issued $35 million in penalties by the Federal Court, while Latitude Finance Australia was handed $20 million in penalties. The court said this was on the grounds of “false or misleading” representations. It is the highest combined penalty obtained by Asic for such breaches.

“The substantial penalties and the corrective advertising orders imposed on Harvey Norman and Latitude is a significant outcome for consumers and sends a strong warning to the market about the importance of truthful and transparent advertising,” Asic chair Sarah Court said.

“Consumers were entitled to know that this offer involved more than simply paying for their purchase in 60 instalments. The advertising encouraged consumers into an ongoing credit arrangement that carried additional costs and obligations.”

Justice O’Bryan told the court that the two companies “put sales and their commercial interests above the interests of consumers”. He also called it an “extraordinary state of affairs”.

Both Harvey Norman and Latitude have been ordered to publish immediately visible corrective advertising on their respective website home pages for 90 days.