Know your rights
Businesses and traders aren’t allowed to behave in a way that is misleading or false. They also can’t make misleading or false statements about their products or services. In particular, misleading advertising or claims related to:
- price, standard, quality, origin or history
- particular uses or benefits
- endorsements or approvals eg from celebrities or sports people using those products.
Misleading or false statements can be made:
- in advertising brochures, signs, newspapers, and contracts
- as part of a sales pitch
- on TV, radio and websites.
Some examples of how an advertisement could be misleading are:
- statements about the origin, quality and use of the goods that are not clear and accurate
- comparisons with other competitors about the same products that are not accurate.
Misleading advertising includes special offers or discounts and sales, which are not genuine.
Businesses must be accurate when they describe in advertising whether goods are ‘as new’, second-hand or reconditioned.
False or unsubstantiated claims
Businesses and traders may not make claims without reasonable grounds, eg evidence to back them up otherwise it’s an unsubstantiated representation. This rule is particularly relevant for health, nutrition and environmental claims.
Similarly, businesses making environmental claims about sustainability, recycling, carbon neutrality, energy efficiency, or use of natural products must make sure those claims are accurate and based on solid scientific evidence.
For more information about unsubstantiated claims and what isn’t allowed, read the Commerce Commission’s factsheet on Unsubstantiated representations.(external link)
Unfair sales practices by businesses
Many different unfair sales practices are illegal under the Fair Trading Act (FTA). These practices include pyramid-selling schemes(external link), referral selling, bait advertising(external link), false offers of gifts and prizes, taking payment without intending to supply, pro-forma invoicing, using force or coercion to pressure customers, importing goods with inaccurate labels and much more.
The Commerce Commission is responsible for enforcing the rules that apply to businesses under the FTA, including the ban on unfair sales practices.
Contracting out of the Fair Trading Act
Businesses and traders are not allowed to contract out of the FTA when they are supplying products or services to you. This means they can’t try to get around the FTA or tell you that it does not apply to them.
But if the buyer is a business, a trader can contract out of the FTA, but only where this is agreed in writing by both parties and it is fair and reasonable to rely on this agreement.
For more information see the Commerce Commission’s factsheet on Contracting Out of the Fair Trading Act(external link).
Private sales and false advertising
The FTA does not apply to private individuals but the Contract and Commercial Law Act (CCLA) may help you. If you have a problem with products or services because the seller misled you, you may be able to cancel the contract and get compensation. You have to show that:
- you were persuaded to buy the products or services by the seller’s untrue statements
- these statements caused you to lose money.
Compensation would be based on the difference between what you paid and what the item would have been worth if the seller’s statements had been true or to cover the cost of repairs.
Also under the CCLA, if products sold by description don’t match that description, you can reject them.