3.1 Fair Trading Act 1986

The Fair Trading Act defines rules for a fair and well-functioning business environment and establishes consumer protections related to the pre-sale period (before a purchase is made) and at the point of sale. The Act requires that all trading activities are based on accurate and honest information. Although the Act does not oblige businesses to provide information to consumers in all circumstances, businesses are obliged to ensure that the information they do provide is accurate, and that important information is not withheld. This enables consumers to make informed choices about goods and services. As well, honest businesses are disadvantaged when consumers are misled into buying competitors’ goods or services through inaccurate information or false representations about these goods or services.
The Act also allows for bans and recalls of unsafe products and the imposition of mandatory standards if necessary. It complements the Commerce Act 1986 which emphasises the competition aspects of a well-functioning market place. Combined, the Fair Trading Act and the Commerce Act promote dynamic markets – markets in which New Zealanders benefit from competitive prices, better quality and greater choice.

Part 1 of the Fair Trading Act establishes a regulatory framework which applies market controls with respect to the point of sale. It has the objective of protecting consumers and businesses from unfair business practices.

It covers prohibitions against:

• misleading and deceptive conduct generally (section 9)
• false or misleading representations (section 13)
• offering gifts and prizes (and not providing them) (section 17)
• bait advertising (section 19)
• referral selling (section 20)
• demanding or accepting payment without intending to supply as ordered (section 21)
• misleading representations about certain business activities (section 22)
• harassment and coercion (section 23)
• pyramid selling schemes (section 24), and
• importation of goods bearing false trade description (section 26).

Part 2 provides for the making of regulations to provide for consumer information. Under Parts 3 and 4, the Minister of Consumer Affairs can recommend mandatory standards for products or services, ban the sale of unsafe products or order a compulsory recall of an unsafe product. These measures are generally used only when attempts to have the product amended or withdrawn voluntarily fail.

Additionally, section 51 of the Fair Trading Act provides that for goods exported from New Zealand for supply in China under the Conformity Cooperation Agreement , sections 10 (misleading conduct in relation to goods) and section 13 (false or misleading representations) apply. Any contravention of these sections is an offence and may authorise a warrant being issued in New Zealand to search a place in New Zealand if it is related to goods exported from New Zealand for supply in China.

Enforcement

The Commerce Commission is responsible for monitoring and enforcement of the Fair Trading Act. Businesses and consumers can also seek their own remedies under the Act when its provisions are breached.

The Ministry of Consumer Affairs Measurement and Product Safety Service also has a general product safety monitoring role, particularly for goods where the safety risk is new and therefore no product safety standards exist.

New Zealand Customs Service controls the importation of goods subject to an unsafe goods notice. These are regarded as prohibited imports.
 

Footnotes

4. Agreement between the Government of New Zealand and the Government of the People's Republic of China on Cooperation in the Field of Conformity Assessment in Relation to Electrical and Electronic Equipment and Components, which is Annex 14 of the Free Trade Agreement between the Government of New Zealand and the Government of the People's Republic of China 2008.