• Source: Fair Trading Act 1986

      • The Fair Trading Act 1986 is a statute of New Zealand, developed as complementary legislation to the Commerce Act 1986. Its purpose is to encourage competition and to protect consumers/customers from misleading and deceptive conduct and unfair trade practices.
      The Fair Trading Act provides for consumer information standards.
      Under the Act, the Commerce Commission enforces product safety standards on items such as bicycles and flammability of children's night clothing.


      Main rules



      The Act protects customers from unfair conduct. Unfair conduct has been classified in the act as the following:

      Misleading and deceptive conduct: Generally, in relation to goods, in relation to services and in relation to employment
      Unsubstantial representation
      False representations
      Unfair practices: These include but are not limited to Bait advertising, referral selling and trading stamp schemes. Regulation relation to Trading stamp schemes however has been repealed.
      Part 2 of the Act also looks at Consumer information. It defines standards and also compliance requirements.
      A 2015 amendment increased protection against "unfair contracts".
      - Difference between the Fair Trading Act and the Consumer Guarantees Act (CGA): the FTA covers claims on products and services before they are bought while the CGA covers claims after the product or service has been bought.


      Important facts


      The Fair Trading Act 1986 is a significant piece of legislation in New Zealand that is designed to promote fair competition and protect consumers from unfair business practices. Here are some key facts about the Fair Trading Act 1986:


      = Purpose

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      The primary purpose of the Fair Trading Act 1986 is to promote fair competition and to protect consumers and businesses from misleading or deceptive conduct in trade.


      = Enforcement

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      The Act is enforced by the Commerce Commission, an independent Crown entity responsible for enforcing competition, fair trading, and consumer credit contracts laws in New Zealand.


      = Prohibits Misleading Conduct

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      The Act makes it unlawful for businesses to engage in misleading or deceptive conduct in trade. This includes false advertising, false claims about products or services, and any form of misleading communication.


      = Unfair Practices

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      In addition to prohibiting misleading conduct, the Act also addresses other unfair practices, such as bait advertising (where a business advertises a product at a certain price but then refuses to sell it) and pyramid selling schemes.


      = Consumer Guarantees

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      The Act sets out consumer guarantees that products and services must meet. These include guarantees that goods are of acceptable quality, match their description, and are fit for purpose.


      = Product Safety

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      The Fair Trading Act also covers product safety. It is illegal to sell goods that are unsafe, and businesses are required to notify the Commerce Commission if they become aware of a product that could be a danger to consumers.


      = Penalties for Non-Compliance

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      Businesses found to be in breach of the Act can face significant penalties, including fines and other enforcement measures. The penalties are designed to deter businesses from engaging in unfair or deceptive practices.


      = Private Right of Action

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      The Act also allows consumers and businesses to take legal action against traders who engage in misleading or deceptive conduct. This means that individuals or entities affected by a breach of the Act can seek remedies through the courts.


      = Consumer Information

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      The Act requires businesses to provide clear and accurate information to consumers about products and services, including pricing, terms and conditions, and any additional costs.


      = International Trade

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      The Fair Trading Act 1986 applies not only to domestic trade but also to international trade conducted by New Zealand businesses. This ensures that businesses are held to the same standards when dealing with both local and international consumers.


      = Amendments

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      The Act has undergone several amendments since its inception in 1986 to address emerging issues in the marketplace and to align with international best practices in consumer protection. The Fair Trading Act 1986 plays a crucial role in regulating the marketplace in New Zealand, aiming to ensure that businesses operate with honesty, transparency, and integrity, and that consumers are protected from unscrupulous practices. It has been instrumental in creating a fair and competitive trading environment in the country.
      On 11 September 2024, Parliament passed a private member's bill which amended the Fair Trading Act 1986 to ensure that gift cards have a minimum expiry date of three years from their initial purchase. The bill was supported by all parties except ACT.


      Cases


      BONZ Group (Pty) Ltd v Cooke (1994)
      Harvey Corporation Ltd v Barker (2002)
      Hay v Chalmers (1991)
      Mills v United Building Soc (1988)


      See also


      Consumer Guarantees Act 1993
      Fair Go, a New Zealand consumer protection television programme


      References




      External links


      Fair Trading Act 1986
      Article about the Fair Trading Act, Consumer New Zealand website

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