2 weeks Ago By David Richards
What is it about Harvey Norman management when it comes to questionable finance and warranty deals or is it a case of management believing that they can gouge millions out of consumers after they have purchased a product. The Company does not break out the revenues or profits they make, from selling questionable finance deals or extended warranties or how much commission their sales staff make signing consumers up to questionable deals that are now being challenged. The big retailer that has a history of confrontation with the Australian Competition and Consumer Commission over the way that they do business, now has two major legal firms and the ACCC on their back over the way they do business with consumers.
Late yesterday Harvey Norman has been hit with a second-class action over allegations of misleading or deceptive conduct linked to the sale of extended warranties. The second-class action has been brought by Maurice Blackburn on behalf of a group of claimants, with an action filed in the Supreme Court of Victoria, where the lead claimant is based, and the firm can apply for group cost orders (GCO). Twenty-four hours earlier Echo Law announced a similar case, which it has lodged before the Federal Court of Australia in Melbourne.
In the Maurice Blackburn case, the GCO filing allows the legal firm to charge legal costs as a percentage of the amount recovered in the proceeding — either as a fixed percentage or a sliding scale. The firm is confident that they have a strong case. Back in 2022 management at the Sydney based retailer whose Chairman Gerry Harvey has a history of confrontation with the ACCC along with struggling Company Latitude Finance, allegedly signed off on a promotion campaign spruiking no interest and no deposit credit cards, in an advertising blitz that immediately caught the attention of regulators at the ACC.
This resulted in another legal battle for the retailer, whose inhouse lawyers are front and centre in what appears to be questionable approval processes, for warranty and finance deals that end up being challenged in Australian Courts. In the Latitude case prosecutors claimed that Harvey Norman and Latitude aggressively pushed a financing scheme across television, print, and radio advertising but left out of the small print the need to sign on to a potentially high interest credit card vague and often unsaid. The ACCC claims that the two long time partners cooked up the deal that saw consumers loaded up with credit cards they didn’t want and forced to take on a risky form of debt that was likely unsuitable for them.
The campaign, played out over five TV ads, five newspaper ads, and three radio ads, saw Harvey Norman tout up to 60 months interest free. The regulator claims the ad campaign failed to disclose the monthly account service fees tied to the Latitude MasterCard being offered by Harvey Norman in combination with a gift card that grew in size the more a shopper spent. In their latest legal drama Harvey Norman management who are known to lean on media organisations when they want something, using their $60M of advertising spend as leverage have been accused by Maurice Blackburn of deceptive conduct.
Maurice Blackburn principal Jarrah Ekstein claimed, “The class action will allege that if Harvey Norman’s customers knew that product care was offering remedies that they already had for free under the Australian Consumer Law, they would not have bought it,” Maurice Blackburn principal Jarrah Ekstein said. “Those customers should be compensated for being misled into buying a warranty which had no real value to them.” He added “Harvey Norman’s Product Care extended warranties added nothing substantial to those protections.
” Lead plaintiff Peter Singh said he was “duped” into buying Product Care to cover a smart phone and some security cameras he purchased from the retailer. “Product Care was sold to me as adding extra protections. “But it was just a waste of money,” Mr Singh said.
Back in 2016 the Federal Court ordered a Harvey Norman franchisee, Bunavit Pty Ltd (Bunavit), to pay a total of $52,000 in penalties for making false or misleading representations regarding consumer guarantee rights, in proceedings brought by the ACC. The Court found that representatives at the Harvey Norman Superstore in Bundall Queensland, made ten false or misleading representations concerning the existence, exclusion or effect of a guarantee or right, when they made statements to two consumers which represented that Bunavit, the franchise of the Bundall store, had no obligation to provide a remedy and the consumer would need to pursue the manufacturer’s warranty directly with the manufacturer. Management at the Harvey Norman store claimed at the time that could not assist customers further unless the consumer paid for some or all of the cost of the repair.
The ACCC obtained penalty orders totaling $286,000 against ten Harvey Norman franchisees in respect of false or misleading representations regarding consumer guarantees. In New Zealand Harvey Norman is facing legal action from former operators of their stores..
