​​Fair Trading Act

Businesses must not mislead or deceive you about the things they sell. This covers anything written or said about products or services, including:

• advertising
• any impressions from images
• information that's left out if this may create a false impression.

It doesn't matter if a trader didn't intend to mislead, and they can't rely on fine print in advertising or contracts to correct a misleading overall impression or hide important conditions.

This includes statements or conduct that's liable to mislead or deceive about:

• the nature, manufacturing process, characteristics, quantity, price, standard, quality, origin or history of a product or service
• suitability for a particular purpose, benefits, endorsements or approval
• the availability, nature, terms or conditions of a job in an offer of employment.

Claiming you’re something you’re not(external link) — Commerce Commission

Quotes and estimates may be considered misleading conduct if the final cost is bigger than you expected.

Quotes and estimates

If a business displays an item with an incorrect price, the trader doesn't usually have to sell it at that price. If the incorrect pricing was a genuine mistake, they have the right to ask you to pay the correct amount. Read about what happens if you're undercharged:

Misleading prices or advertising

Traders can’t make unsubstantiated claims about products or services.

This means a trader needs to have reasonable grounds to make a claim about a product or service at the time they make the claim. They're breaching the Act if they make a claim they can't back up with evidence, even if it later turns out to be true.

This rule doesn't apply if a reasonable person would know the claim was just exaggeration (also known as puffery).

Making accurate claims(external link)  — Commerce Commission

Jargon, exaggerations and puffery(external link) — Commerce Commission

Unfair practices banned by the FTA include:

• Bait advertising (using misleading incentives) — when a trade advertises products and services they can’t supply. These must be available in reasonable quantities for a given period of time (or a reasonable time if no time is set). Any limits on the offers should be clearly stated.
• Harassment and coercion — using threats, physical force or other controlling tactics to sell products, services or land, or to get payment. There can be a fine line with hard-sell techniques where you feel forced to buy.
• Unconscionable conduct - when a trader causes harm by acting in a very harsh or oppressive manner that society views as wrong.
• Pyramid selling — where you get financial rewards for recruiting new people to pay into the scheme. Often these are financial scams with high promised rates of return. Pyramid schemes are illegal, but multi-level marketing schemes are legal. (Multi-level marketing participants earn commission from selling products. Pyramid sellers earn money solely or primarily by introducing other people into the scheme.)
• Referral selling — where you are encouraged to buy something because of a promised reward for giving the names of other potential customers.
• Pro-forma invoicing and inertia selling — when traders bill you for products or services you didn't agree to buy. You don't have to pay if you never agreed to the sale. Your silence does not show agreement.
• Unsolicited products or services — when you receive products or services you didn't ask for or order. The only exceptions are electricity and piped gas.
• Taking payment without intending to supply — or supplying very different products or services from those ordered. Traders must give you what you have agreed to buy, or a reasonable substitute if you agree.
• False or misleading representations about the profitability, risk or other relevant aspect of a "work from home" business activity, or a business activity requiring you to work or invest money.
• Importing products with inaccurate labels.

Selling online(external link)  — Commerce Commission

Pyramid selling and multi-level marketing claims(external link) — Commerce Commission

Buying goods and services(external link) — Commerce Commission

Prohibition on unconscionable conduct(external link) – Fair Trading Act

A standard form consumer contract is a contract you accept on a take it or leave it basis — you can't negotiate the terms. If you think a term is unfair, you can apply to the Commerce Commission under the FTA to have it reviewed.

The Commerce Commission then decides if they will ask the District Court to declare the term unfair. The Court must be satisfied that the term in a contract:

• causes a significant imbalance between you and the business
• is not reasonably necessary to protect the business's legitimate interests
• would cause detriment if enforced.

The contract as a whole is considered, as it might offer benefits that outweigh any unfairness.

Some terms are exempt, and can’t be declared unfair if they:

• define the main subject matter of the contract such as the services or products to be supplied
• set the up-front price payable under the contract
• are expressly allowed by law.

Once a contract is agreed to or signed, cancelling it can be difficult. Early cancellation fees are common. This is considered fair if it is a reasonable estimate of the loss the business will suffer from the cancellation.

For more information on contracts, your rights, cancellations and common tricky words and phrases, see:

Contracts and sales agreements

Unfair contract terms guidelines(external link) — Commerce Commission