13. Enforcement

The first objective of the Consumer Law Reform review is:

• To have in place principles-based consumer law that:
• enables consumers to transact with confidence;
• protects reputable suppliers and consumers from inappropriate market conduct;
• is up to date and relevant now and into the future;
• is easily accessible to those who are affected by it;
• is in line with international best practice, as appropriate; and
• is effective and enforceable.

Importantly, in order to achieve the outcomes of effective law that enables consumers to transact with confidence and that protects reputable suppliers and consumers from inappropriate market conduct, the law needs to be both enforceable and enforced. Accordingly, it is important that there are appropriate enforcement provisions in place
Consumer laws in New Zealand are either “self-enforcing” in the sense that they create legal rights enforceable by consumers, or they are enforced by government agencies carrying out investigation and prosecution functions. The self-enforcing laws include the Consumer Guarantees Act, Layby Sales Act, Door to Door Sales Act and parts of the Fair Trading Act. The remedies available to individuals or other private parties generally provide for breaches to be stopped, or for damages or losses to be compensated. These types of remedies are available through the courts (including the Disputes Tribunal) in their civil jurisdiction.
The Commerce Commission is the primary government enforcement agency for consumer law, especially under the Fair Trading Act. The Ministry of Consumer Affairs Measurement and Product Safety Service also has an enforcement role. Public enforcement involves punitive sanctions (fines) where there is a perceived public harm or an offence, rather than individual “private” harms. There is usually some moral wrongdoing underpinning offences enforceable by regulators under consumer laws, and enforcement is technically through the courts’ criminal jurisdiction.
The Commerce Commission has a well-established reputation as an enforcement agency and a quick look at its website indicates that it regularly takes prosecutions, obtains settlement agreements or gives warnings for breaches and possible breaches, in particular, of the Fair Trading Act but also other consumer law. Both the Commerce Commission and the Ministry of Consumer Affairs actively monitor compliance with consumer legislation and work with industry, for example, by providing guidelines and through audit checks of weights and measures accredited persons.
In 2005-2006, the Ministry of Consumer Affairs initiated work reviewing the effectiveness of the enforcement and redress provisions in the Fair Trading Act. An Initial Think Piece review was published by the Ministry in July 2005, and an International Comparison Discussion Paper was published in May 2006⁸⁰. The latter paper identified some additional enforcement powers under the Fair Trading Act that could allow for more effective enforcement of the Act by the Commerce Commission. As a result of this initial work two additional provisions are proposed for the Fair Trading Act: court enforceable undertakings and banning orders. These are in the following sections.