Gerry Harvey’s tough year has become even harder, with the Federal Court in Brisbane slapping a $1.25 million fine on Harvey Norman for “seriously misleading and deceptive, on a significant and far-reaching scale” over a 3D television promotion it ran in September 2010.
The fine, which came after an investigation by the Australian Competition and Consumer Commission, comes as the chain battles sagging retail sales and tries to get its fledgling online retail store off the ground.
The consumer watchdog’s investigation concerned a promotion run in 2010, when 3D televisions were just coming on the Australian market. Harvey Norman’s 3D TV catalogue was distributed around Australia and told consumers that if they bought a new TV they could watch the 2010 AFL and NRL grand finals in 3D.
But there was a problem – the rollout of 3D services had only reached metropolitan Brisbane, Newcastle, Sydney, Melbourne, Adelaide and Perth at that stage. Viewers outside those areas could not get a 3D broadcast of the big finals.
The Court also found that Harvey Norman’s website and catalogues gave consumers the impression that offers contained within were available at all stores, when the fine print actually said that the offers were made at just one store in a state or territory.
Federal Court judge Justice Berna Collier was scathing of Harvey Norman’s conduct, dubbing it “seriously misleading and deceptive, on a significant and far-reaching scale”.
Collier said Harvey Norman’s conduct painted “a picture of an expensive, misleading and calculated campaign of sizable proportions, characterised by blatant and deliberate disregard of the truth, cynical strategies to capitalise on contemporary sporting events (in the case of the 3D Conduct) and the contemptuous manipulation of the expectations of ordinary consumers in respect of so-called “fine print” (in relation to the Catalogues).
“The conduct of [Harvey Norman] appeared intended to reach as many Australian consumers as possible, in all parts of the country, through such diverse media as internet, newspaper and letterbox drop.”
Collier also slammed Harvey Norman’s polices for ensuring promotions did not contravene trade practices regulations.
“The inference available to the Court is that this is yet another unfortunate example of a corporation with a compliance policy to which mere lip-service is paid. Another inference available is that the compliance policy in the organisation was woefully inadequate.”
Harvey Norman has agreed to publish corrective advertisements in newspapers around the country and pay part of the ACCC costs.
ACCC chair Rod Sims said the case say should send a message that companies cannot use fine print as an “antidote” to misleading advertising.
“Harvey Norman knew the facts; it should have got it right, and the Court agreed,” Sims said in a statement.
“A headline representation cannot be contradicted or turned on its head by fine print conditions or requiring consumers to navigate through terms and conditions to discover the truth.”
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
