There can be a free lunch: misleading ads about "60 month interest free" terms and the fine print

A recent case underscores that bold headline claims in marketing messages need to be fully accurate, and disclosing significant qualifications such as additional fees and costs in complex fine print may not be adequate (Latitude Finance Australia v Australian Securities and Investments Commission [2025] FCAFC 124).

The Australian Securities and Investments Commission (ASIC) successfully argued that Latitude Finance Australia's and Harvey Norman's offers of "60 month interest free terms" were misleading or deceptive under the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).

The Full Federal Court also strongly rejected the suggestion that consumers can be expected to take bold claims of an interest free period with a "grain of salt", as puffery, or "too good to be true", and rejected suggestions that consumers could be assumed to infer that such claims must obviously be subject to qualifications such as extra charges.

Background to the Harvey Norman case

The advertisements promoted the purchase of goods from Harvey Norman stores across print, radio, and television on "60 months interest-free" terms with "no deposit" and "60 equal monthly payments". ASIC alleged that the advertisements were misleading because they failed to disclose that:

• customers were required to enter into a continuing credit contract linked to a Latitude credit card; and

• there were additional fees and charges, including an establishment fee and monthly account service fees.

The primary judge found that the advertisements conveyed a misleading promotional message to ordinary and reasonable consumers, in contravention of the ASIC Act.  The marketing conveyed the dominant message that consumers could purchase goods on the stated terms without any additional financial commitments, which in fact was incorrect.

The defence, which the Full Court described as "barely arguable", was that ordinary consumers would assume that the advertisements involved "puffery", and that the "60 months free" could not be taken as literally true as "there is no such thing as a free lunch" and therefore it could not be misleading.

The Court found the ready explanation for the claim of "interest free" being "more than puffery", and believable, was that consumers could easily infer that Harvey Norman as the seller of the appliances would fund the cost of any interest charges, as a form of discount on the headline price.

Therefore the Court held it was not arguable to say the advertised claims offended a widely held assumption by consumers that "there is no such thing as a free lunch". In fact the Court said, there was a rational basis for a consumer to believe that "interest free" meant "interest free" and the "lunch" would be paid for by Harvey Norman.

The Full Court agreed with the primary judge. The statements including "60 months interest-free" and "no deposit" conveyed a clear and attractive promotional message that was not adequately qualified by the ancillary statements, fine print, or disclaimers. Ordinary and reasonable consumers would not have understood that additional fees and a credit card were required.

The Full Court also rejected the appellants' suggestion that the Court should assume that the ordinary and reasonable consumer is cautious about interest free claims made in advertisements, and thus was unlikely to be mislead by the advertisements. The Court argued that the advertisements were clear and attractive and thus the ordinary and reasonable consumer would have assumed that the advertisements were accurate, particularly in light of Australia's strong consumer protection laws.

In this case there was a disclosure in small print that "fees and charges" apply but this was held to be inadequate to modify the dominant message of the headline.

Radio gabble not adequate

Similarly the Full Court was not impressed with the radio advertisements in which the main message was conveyed in a measured and clear voice following by a rushed disclaimer spoken by a different speaker that "fees and charges" apply. 

It held that the radio advertisements were not adequate to disclose these additional qualifications because the attention of an ordinary and reasonable consumer would not have been "arrested by the words of the [disclaimer], given the pace and tone in which the words were spoken". Even if the ordinary and reasonable consumer noticed those words, they "would not have placed significance on them as an intended qualification of the banner statements having regard to the pace and tone of the ancillary statements".

Key takeaways for your business

The decision affirms that businesses and marketing managers that design mass market marketing claims and promotions must ensure that the bold headline claims are true and accurate, and must not try to introduce significant qualifications through the use of fine print or rapid and soft spoken radio gabble that is easily overlooked.

Secondly, the decision confirms that the use of the term "free" in marketing claims is legally risky if not literally correct and can render the claims misleading where in fact additional charges will apply.