Your rights under the Fair Trading Act, including banned trading conduct and special protection for certain consumer sales.
Fair trading and your rights
The Fair Trading Act (FTA)(external link) promotes accurate consumer information before you buy products and services, and product safety, amongst other purposes. What a business says about its products or services in advertising or tells you is important for consumer protection.
Who does the FTA apply to?
The FTA applies to anyone in trade, including all commercial activities, trades, professions and any undertaking relating to the supply of or acquiring products and services (all businesses). It incudes overseas businesses that supply goods, services or grant interests in land within New Zealand.
The Commerce Commission enforces the FTA, and provides guidance as to who is "in trade" including whether sellers:
- regularly or habitually offer to sell products or services online
- make, buy or obtain products with the intention of selling them
- are GST registered or have staff to manage their sales
- have a company structure or another type of trading entity.
NOTE: All online sellers who operate as traders must make it clear to potential buyers that they are traders. This includes when they sell through an intermediary website like Trade Me. The website administrators must also take reasonable steps to ensure that sellers who are traders comply with this rule.
Read the Commerce Commission’s factsheet on Buying and selling online(external link) to find out more.
Prohibited trading conduct
The FTA prohibits traders from:
- misleading and deceptive conduct generally
- unsubstantiated claims
- false representations
- unfair practices
- unfair contract terms.
> Read more about Prohibited trading conduct
Special protection for certain consumer sales
The FTA gives you special protection for particular consumer sales:
- layby sales
- door-to-door and telemarketing sales (uninvited direct sales)
- extended warranties that you buy from retailers
- conduct at auctions.
> Read more about Special protection for certain consumer sales
No contracting out of the FTA
Traders can’t get you to agree that the rules against misleading or unfair trading won’t apply to you even if you sign a contract with a clause to that effect. It is illegal and the clause is not enforceable.
Except for business to business transactions where you are both “in trade” and the following requirements are met:
- you have agreed in writing to contract out of certain provisions of the FTA
- the products or services are supplied and acquired in trade
- it is fair and reasonable that the parties are bound by the contracting out provision.
In determining whether it is fair and reasonable to contract out of the relevant FTA provisions, the court will take into account the circumstances of the agreement, which include:
- the subject matter of the agreement
- the value of the products and services
- whether either party obtained legal advice before signing the agreement
- the respective bargaining power of the parties, including the extent of their ability to negotiate the terms of the agreement.
Read the Commerce Commission’s factsheets on:
Remedies for breaches of the FTA
The Commerce Commission may decide to take enforcement actions which may be either criminal or civil, or both. In a criminal action, the person or business is charged with a breach of the Act and is liable to a substantial fine up to $200,000 for an individual and $600,000 for a company.
For lower level infringements the Commerce Commission has the power to issue infringement notices, eg incorrect disclosure.
Civil remedies include injunctions, orders for corrective advertising (only available to the Commerce Commission), private actions and other compensatory orders, depending on the jurisdiction of the Court.
If you bring a claim in the Disputes Tribunal or the District Court they may grant a number of orders, including:
- the trader pay damages to you if you have suffered some loss or damage
- a contract be altered or made void
- money be refunded
- products be repaired or services supplied.
Read the Commerce Commission’s factsheet on Enforcement of the Fair Trading Act(external link).
Product safety standards
Products that are unsafe are substantially faulty. You can reject them immediately under the Consumer Guarantees Act and choose a repair, replacement, or a full refund plus compensation for any reasonably foreseeable loss, eg you have to pay to get the carpet dried out after your new washing machine floods.
The Commerce Commission enforces product safety standards and product bans made under the Fair Trading Act. They investigate complaints about products that have a product safety standard or have an unsafe goods notice attached to them. The Ministry of Business, Innovation and Employment's (MBIE) Trading Standards administers product safety standards.
Product safety standards: may be issued by MBIE for the purpose of ‘preventing or reducing the risk of injury.
Unsafe goods notices (product bans): may be issued by the Minister of Consumer Affairs (MBIE) to stop the sale of ‘unsafe goods’, which will or may cause injury. A ban stays in force for 18 months, unless withdrawn earlier by the Minister. At this point it can be imposed indefinitely or for a further specified time.
See Product safety and recalls for more information.
Consumer information standards
Consumer information standards are regulations requiring disclosure of information to a specified standard for certain consumer products and services. They include:
- Care labelling
- Clothing and footwear country of origin labelling
- Fibre content labelling
- Used motor vehicles
- Water efficiency labelling scheme.
See Information standards for consumers for more information.
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