Harvey Norman (ASX:HVN) has confirmed it’s been hit by a second class action this week over allegedly dodgy warranty cover – and the stock is up +1.23 at 11.15am Sydney time.
Earlier this week, Mr. H Norman was slapped with a class action from Echo Law.
The one-sentence-version: HVN is being accused of selling warranties to customers they already had access to under Australian Consumer Law (ACL) for free.
Under ACL, sort of poetically, that’s illegal.
Echo Law led that first class action. But now there’s another one coming from Maurice Blackburn, confirmed in the surprisingly diverse ecosystem that is law industry trade publications.
Maurice Blackburn principal Jarrah Ekstein told Lawyers Weekly – in his own words – Harvey Norman has been misleading customers, straight up, no doubt about it.
So why the hell are shares going up? Well, the answer isn’t really too surprising.
The company is obviously the beneficiary of improved consumer sector sentiment, given the chunky US rate cuts we’ve just seen from the Fed of -50bps. So that’s perhaps unsurprising.
There’s also the “cost of doing business” aspect, if you’re cynical.
Harvey Norman is a multi-billion dollar market cap company and the still-not-hugely-clear compensatory amounts being sought after are, according to one industry publication, limited to the “hundreds of millions [of dollars].”
Try telling someone without hundreds of millions of dollars that it isn’t “that much” money. But you get what I mean – HVN has survived any kind of shock sell-off (think about the recent Four Corners effect on Steadfast’s share price.)
HVN last traded at $4.94/sh.