The Fair Trading Act prohibits misleading and deceptive conduct, false representations and unfair practices by people in trade. The Act covers all advertising and selling of goods and services. It does not cover private sales.

The Act is administered by the Ministry of Consumer Affairs and is enforced by the Commerce Commission.

Misleading or deceptive conduct

You have been misled or deceived if the information you receive about goods or a service gives you a false impression.

Examples

You see an advertisement in the paper for brass bedheads. When you inspect them at the shop you find they are only brass plated.

The advertisement misled you about what the bedhead was made of.

A real estate agent takes you to look at a plot of land. You like the plot and tell the agent that you would put a shed on the spot where you are standing. When you buy the plot you find that the spot where you want to put the shed belongs to your neighbours.

The real estate agent allowed you to be misled by not telling you that the land you were standing on was not part of the plot.

You apply for a job vacancy advertised in the newspaper, but you find it was placed by an employment agency to expand its pool of clients.

You have been given the impression that there was a particular job available.

False Representations

You have had a false representation made to you when the information you receive about goods (or services) is not true.

Examples

You see bananas advertised at $1.99 for a 1 kilogram bag so you buy them. The bar code at the checkout gives the price as $2.25.

The supermarket claimed the goods were cheaper than they really were.

You ask a home tuning company to call and tune your car because they offer city-wide service. A week later you ask them to come back because the car is not tuned properly. They won' come back because you live on the other side of the city and the job isn' worth the trip.

The company offered a city-wide service which they then refused to provide.

You buy a ring which the trader tells you is an antique diamond ring. You find out later that the ring is new and the stones are not real diamonds.

The ring was not as old as was claimed, nor was it a diamond ring as claimed.

You buy clothes labelled 'Made in France' but find they were made somewhere else.

The goods were not made where the label claimed they were made.

Unfair trading practices

An unfair practice is a selling method which is misleading or unfair. Some of these practices are illegal under the Fair Trading Act. They include:

Offering prizes and gifts without intending to supply them or not supplying them as offered

eg, you go to a timeshare resort promotion, because, by attending, you may win a free trip to Fiji. You win the trip, but when you receive the details you find that the 'free' trip does not include airfares! The prize is not the same as the one they offered.

Bait advertising

Advertising at a specified price goods or services without intending to supply them at that price, in reasonable quantities and for a reasonable time.

eg, you hear on the radio about a special offer on beds. You immediately go to the shop to buy one and find that there were only two 'on special' and they have been sold. The trader won' get another bed at the advertised price for you, and tries to sell you a more expensive bed.

Note: A retailer can offer you a 'raincheck'. This means the shop will get more of the product they ran out of or a product of similar quality and value and sell it to you at the special advertised price. It's a good idea to ask for a raincheck.

Work from home claims

Making misleading claims to others about certain details of businesses which can be carried out from home.

You send for information about a business making kites at home. The pamphlet says that you can earn $550 a week, making kites. It turns out that it is not possible to reasonably earn this amount in a week.

Demanding or accepting payment without intending to supply

Or intending to supply different goods or services to those you ordered; or accepting payment without believing the goods or services can be supplied in a specified time

eg, you have photographs taken and pay for them. You are told they will be ready in 3 weeks. They do not arrive and, unbeknown to you, the photographer has no intention of meeting the deadline.

Pyramid selling schemes

These schemes are prohibited under the Fair Trading Act. More information on pyramid selling schemes is available in our Scamwatch section.

Consumer Information and Safety Standards

The Fair Trading Act also specifies a number of Information and Safety Standards that sellers must adhere to.

The current Consumer Information Standards are:

Fibre content labelling
Care labelling
Country of origin labelling.

More information on these standards are available from the Commerce Commission and Standards New Zealand.

The current Consumer Safety Standards are:

Baby Walkers
Bicycles
Children's Nightwear
Cigarette Lighters
Household Cots
Toys for Children up to 3 years old.

More information on these standards is available in our Consumer and Product Safety section.

Enforcing the Fair Trading Act

The Ministry of Consumer Affairs administers the Fair Trading Act. This means that we have the responsibility to report to Government on the need for changes to the current law and other policy matters. The Minister also has the power to order compulsory recall of goods which fail to meet a product safety standard or which may cause injury.

The Commerce Commission enforces the Fair Trading Act.

The Commerce Commission can:

apply for a court order to stop the offence continuing
prosecute the trader - there is a fine of up to $60,000 per offence for individuals and $200,000 per offence for a company. In the case of pyramid selling schemes the maximum fine for both individuals and companies is $200,000. Offenders can also be required to pay an extra penalty based on the amount they have gained commercially from their involvement in the scheme
ask the court to order compensation for consumers who have suffered loss
ask the court to require traders to publish advertisements correcting false or misleading statements.

The Commission does not take civil actions on behalf of the public. It is interested in Fair Trading issues, but only investigates those that meet set criteria. Consumers or traders seeking compensation for a breach of the Act can take a civil action through the Disputes Tribunal or the District Court.

Making a claim for compensation

If you have suffered a loss as a result of being misled you may take your own action to seek compensation. You may wish to take action through a claim to the Disputes Tribunal.

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