Representative Advertisement 1
374 Starting with ASIC's payment method case, I am satisfied that ordinary and reasonable consumers who saw Representative Advertisement 1 would have included those who understood the advertisement to mean that they could purchase eligible goods from a Harvey Norman store at the advertised price of the goods, without paying a deposit, provided they paid that price by 60 equal monthly payments. They would have understood the words "Minimum financed amount $1000" to mean that the instalment offer only applied where the price of the goods was $1,000 or more.
375 I am satisfied that such consumers would have understood that, provided they paid the 60 equal monthly payments, they would not be charged interest in respect of their purchases. I am also satisfied that such consumers would have understood that, provided they paid the 60 equal monthly payments, they would not be required to make any other payment in respect of their purchases or undertake any other financial commitment beyond the payment of the equal monthly instalments.
376 I reach this finding because of the prominence of Statement A, Statement B, and Statement C, in combination, throughout the advertisement; the clear meaning of those statements; and the absence of any appropriate qualification to them.
377 In this latter connection, I am satisfied that ordinary and reasonable consumers would have included those who would not have been cognisant of Statement D given the small lettering in which it appears. For many, it would have been effectively eclipsed by the prominence given to the banner statements.
378 I am also satisfied that ordinary and reasonable consumers would have included those who did see the small lettering of Statement D, but who immediately dismissed it in the reasonable expectation that, because it was in such small lettering, it must have been addressing subsidiary or unrelated matters that did not meaningfully qualify the banner statements.
379 I am satisfied that ordinary and reasonable consumers would also have included those who did see and read Statement D. However, such consumers would have included those who would not have been alerted to the prospect that there was any material qualification to the banner statements. The statement "Approved applicants only" makes no such qualification. Nor does the statement "Interest applies if you do not comply with terms and conditions", because the assumption underlying the banner statements is that the consumer is complying with the terms and conditions by paying the 60 equal monthly payments.
380 The statement "Fees and charges apply", which is also part of Statement D, is, largely, uninformative - in fact, cryptic. It does not identify what the fees and charges are, or how or when they "apply". The lack of prominence given to this part of Statement D, even if read, would not have dispelled for many ordinary and reasonable consumers the clear and inviting message of the banner statements. For many, it is likely that this part of Statement D would have been taken as relevant only to occasions of non-compliance, in much the same way as the companion statement "Interest applies if you do not comply with terms and conditions". I do not accept that ordinary and reasonable consumers would have thought that the fees and charges were those that applied to a continuing credit contract linked to a credit card.
381 On close inspection, Statement A in the advertisement is qualified by an asterisk and the numeral 1, as "*1". I am satisfied that ordinary and reasonable consumers would have included those who would have been oblivious to that device. For many reasonable but casual readers - those giving perfunctory attention to the advertisement - its depiction would not have been conspicuous.
382 I am also satisfied that ordinary and reasonable consumers would have included those who did see the "*1" device, but who would not have been sufficiently directed by it to the bottom of the last page of the four-page advertisement, where the shortened terms appear. For such consumers, the device would not have made them any more informed about Statement A.
383 Turning to the shortened terms, I am satisfied that ordinary and reasonable consumers responding to the advertisement would have included those who did not even get to the last page. They would have been captured by the earlier statements in the advertisement - in particular the banner statements - and oblivious to the existence of the shortened terms.
384 I am satisfied that there would have been ordinary and reasonable consumers who saw the shortened terms at the bottom of the last page of the advertisement as a block of very fine print, but who would not have engaged with it. A determination not to engage with the shortened terms, in the form in which they were presented in the advertisement, is within the range of reasonable responses. The shortened terms are presented as a mass of barely legible, and not readily digestible, material. This is an example of an advertisement selecting some words for emphasis (the banner statements) and relegating the balance to relative obscurity: TPG at 51. Ordinary and reasonable consumers are not expected to undertake works of supererogation to prospect for information that might falsify that which is otherwise clearly and prominently stated in the advertisement.
385 I doubt that there would have been many consumers who read the shortened terms intently. For those who would have been motivated to do so, they would not have been alerted to the prospect that there was any material qualification to the banner statements. Much of the "fine print" has nothing to do with the financial terms of the proposed offer. The shortened terms include the statement "Conditions, fees and charges apply". This statement, like the words "Fees and charges apply", in Statement D, is uninformative. It does not identify what the conditions, fees and charges are, or how or when they "apply". Once again, the lack of prominence of this statement within the shortened terms, and within the advertisement as a whole, would not have dispelled for many ordinary and reasonable consumers the clear and inviting message of the banner statements themselves.
386 Moreover, the shortened terms also include the statement "Refer to product websites for conditions, fees and charges". This statement is made after a series of statements that exclude certain products and brands from the promotion. Because of the repetition of the words "conditions, fees and charges" in each statement, there would have been ordinary and reasonable consumers who would have perceived an apparent link between the statement "Conditions, fees and charges apply" and "Refer to product websites for conditions, fees and charges". The direction given to consumers to refer to product websites (i.e., not Harvey Norman's website) reveals nothing about a qualification to the banner statements messaged in a Harvey Norman advertisement.
387 The shortened terms include the statement "Credit is provided by Latitude Finance Australia (ABN 42 008 583 588)". The relevance of this statement to consumers reading these terms is not apparent. It does not necessarily denote that finance would be provided directly to the consumer by Latitude. In any event, it does not qualify the banner statements.
388 I am satisfied that there was no statement in Representative Advertisement 1 that directly and materially qualified the banner statements. However, the truth of the matter is that, contrary to what was stated in the advertisement, consumers could not simply purchase eligible goods from a Harvey Norman store at the advertised price of those goods on no deposit terms, provided they paid the price by 60 equal monthly payments. Purchase on those terms, and those terms alone, was not available. Rather, 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.
389 Plainly, Representative Advertisement 1 did not disclose that financial arrangement. The non‑disclosure was not trivial. As ASIC's example demonstrates, if a consumer making a $1,000 eligible purchase were to pay the 60 monthly instalments on time, he or she would pay a minimum total of $1,537 over the period (with $537 being the component for account‑keeping fees, assuming a constant fee of $8.95 per month). Obviously, the amount of that component in relation to the purchase price of the goods will vary depending on the price, but that it is not an answer to the point that ASIC makes.
390 Furthermore, it is not to the point that consumers were not required to activate, let alone use, the GO Mastercard. The point is that a continuing credit contract with a linked credit card that was subject to the payment of an establishment fee and ongoing monthly account service fees was not advertised. What was advertised was a simple arrangement whereby the purchase price of the goods could be paid over 60 months by equal monthly payments without paying interest and a deposit.
391 For these reasons, I am satisfied that Representative Advertisement 1 was misleading or deceptive, or likely to mislead or deceive, and that Latitude and Harvey Norman contravened s 12DA(1) of the ASIC Act. I am also satisfied that Latitude and Harvey Norman engaged in conduct that was liable to mislead the public as to the nature or characteristics of the financial services offered, in contravention of s 12DF(1) of the ASIC Act.
392 This result is reached regardless of whether the assessment is carried out: (a) on the theory that consumers were, or were likely to have been, misled or deceived into the mistaken belief that the banner statements constituted a complete statement of the method of paying for the goods; or (b) on the theory that the advertisement did not disclose an important qualifying fact that consumers would reasonably have expected to have been disclosed in the circumstances.
393 As to the former theory, the advertisement's statement of the payment method was presented as a complete statement. In truth, it was far from complete. The advertisement promoted one of Latitude's 0% interest payment plans that was available to holders of a GO Mastercard, but failed to disclose the necessity of establishing and maintaining a GO Mastercard account.
394 As to the latter theory, I accept that consumers would have had a reasonable expectation that they would have been informed of the necessity of establishing and maintaining a GO Mastercard account, not because (as ASIC contends) credit cards are "risky", but because, for ordinary and reasonable consumers, entering a financial arrangement for the purchase of goods of $1,000 or more is not a trivial matter. Ordinary and reasonable consumers have a real and legitimate interest in knowing the fundamental terms and conditions of the arrangement they are being invited to enter, so that they know the financial responsibilities they must undertake. Their interest in that regard is matched by a corresponding and commensurate expectation that the person extending the invitation will inform them of those fundamental terms and conditions. The position is no more complicated than that.
395 Absent a direct statement that qualified the banner statements, I am also satisfied that Representative Advertisement 1 represented impliedly, through omission, that the material terms of the payment method were only those contained in those statements. That representation was plainly false.
396 I note that there is no dispute that, if such a representation were to have been made, it was one in connection with the supply or possible supply of financial services or in connection with the promotion by any means of the supply or use of financial services, namely, a credit facility or dealing in a credit facility.
397 In these circumstances, I am satisfied that the representation was: (a) a false or misleading representation that the financial services offered were of a particular standard, quality, value or grade, and (b) a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy, and that Latitude and Harvey Norman each contravened s 12DB(1)(a) and s 12DB(1)(i) of the ASIC Act, respectively.
398 I turn now to ASIC's fees and charges case in respect of Representative Advertisement 1. As I have noted, ASIC advances alternative contentions. The primary contention was that the advertisements conveyed the impression, or represented, that a consumer taking up the payment method would only be liable to pay the price of the goods by way of 60 equal monthly payments. On ASIC's case, the advertisements did not convey the impression, or represent, that fees or charges would be payable.
399 I do not accept this aspect of ASIC's case in its entirety.
400 As I have explained, I am satisfied that ordinary and reasonable consumers who read Representative Advertisement 1 would have included: (a) those who would not have been cognisant of Statement D or, if they saw it, would simply have dismissed it; (b) those who would have been oblivious to the "*1" device or insufficiently directed by it to the shortened terms; (c) those who were captured by the earlier presentation of the banner statements and never got to the back page of the advertisement; and (d) those who saw the shortened terms on the back page of the advertisement but, justifiably, did not engage with them.
401 For those ordinary and reasonable consumers, Representative Advertisement 1 did convey the impression, or represent, contrary to the true position, that a consumer taking up the promotion would only be liable to pay the price of the goods by way of 60 equal monthly payments. To this extent, I accept ASIC's fees and charges case.
402 However, as I have also explained, I am satisfied that ordinary and reasonable consumers who read Representative Advertisement 1 would also have included: (a) those who did see and read Statement D; and (b) those who did see and read the shortened terms. Those who did see and read Statement D or the shortened terms would have known that fees and charges applied. However, many of these consumers would have understood that fees and charges only applied in circumstances where there had been non-compliance in making the 60 equal monthly payments; otherwise fees and charges would not apply. To this extent, I also accept ASIC's fees and charges case.
403 On these findings, I am satisfied that Representative Advertisement 1 was misleading or deceptive, or likely to mislead or deceive, and that Latitude and Harvey Norman contravened s 12DA(1) of the ASIC Act. However, this contravention arises as an aspect of the contravention I have already found of the same provision.
404 Once again, this result is reached regardless of whether the assessment is carried out: (a) on the theory that consumers were, or were likely to have been, misled or deceived into the mistaken belief that their liability to pay the price of the goods by way of 60 equal monthly payments was a complete statement of their liability provided they complied with that arrangement; or (b) on the theory that the advertisement did not disclose an important qualifying fact that consumers would reasonably have expected to have been disclosed in the circumstances.
405 I am also satisfied that Representative Advertisement 1 impliedly represented that the extent of the consumer's liability in taking up the payment method to buy Harvey Norman goods was to pay the price of the goods by 60 equal monthly payments, provided the consumer complied with that arrangement. The advertisement was silent on the need for consumers, in taking up the payment method, to pay an establishment fee (when applicable) and ongoing monthly account service fees in respect of a continuing credit account with Latitude that was linked to a GO Mastercard.
406 To that extent, Representative Advertisement 1 made a representation that was: (a) a false or misleading representation that the financial services offered were of a particular standard, quality, value or grade, and that Latitude and Harvey Norman contravened s 12DB(1)(a) of the ASIC Act; and (b) a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy, and that, as a result, Latitude and Harvey Norman contravened s 12DB(1)(i) of the ASIC Act. However, once again, these contraventions arise as an aspect of the contraventions I have already found of these provisions.
407 Further, as the representation concerned the price of financial services, I am satisfied that Representative Advertisement 1 made a representation that was false or misleading with respect to the price of services and that, as a result, Latitude and Harvey Norman contravened s 12DB(1)(g).
408 I am not satisfied that ASIC has established its alternative contention that Representative Advertisement 1 made a representation that fees or charges applicable to the promotion would be "relatively insubstantial". I do not see any basis for such a finding. In these circumstances, it is not necessary for me to address ASIC's submissions on the substantiality of fees and charges associated with the GO Mastercard. I should record, nevertheless, that I do not consider that this question is informed by the quantum of the amounts that Latitude has charged, over time, in respect of establishment fees or monthly account service fees.