Australia’s corporate regulator is taking financial services company Latitude and electronics retailer Harvey Norman to court over allegations that advertisements for interest-free payment methods didn’t give customers the full picture of the costs involved.

The Australian Securities and Investments Commission (ASIC) confirmed on Wednesday it has lodged documents in the Federal Court of Australia and will seek penalties against the companies.

ASIC claims that between January 2020 and August 2021, ads that promoted ‘no deposit’ and ‘interest free’ payments didn’t disclose that consumers could only access these benefits if they applied for a Latitude GO Mastercard.

The claim also alleges that the advertisements did not accurately represent the cost of using that payment method because it didn’t outline monthly account fees and sign-up fees for the card.

ASIC deputy commissioner Sarah Court told The Sydney Morning Herald and The Age the regulator was concerned that the ads misled customers about how they needed to pay if they wanted to secure the interest free terms.

“Applying for and using a credit card attracts a range of other obligations,” she said.

“It effectively contemplates a continuing source of credit - which in our view is quite different from using a one off 60-month period.”

ASIC claims that customers who signed up for a GO Mastercard between March and August 2021, made a purchase at Harvey Norman and paid it off over a 60-month period would be liable at least $537 in fees on top of the purchase price of their item.

In court documents, ASIC alleged that the advertising campaign “had a tendency to cause a mistaken impression as to the financial and related consequences of taking up that payment method.”