Fair Trading Act

The Fair Trading Act applies generally in New Zealand. It seeks to:

(a) prohibit conduct in trade that is misleading or deceptive (or likely to mislead or deceive), and to prohibit conduct that is unfair; and

(b) require disclosure of consumer information which relates to the supply of goods and services and which promotes product safety.

There are some generally stated prohibitions against misleading and deceptive conduct in trade and false or misleading misrepresentations in trade. Whether the conduct in question was deliberate or accidental is largely irrelevant to any question of breach.

The Act also prevents businesses from:

(a) making unsubstantiated claims about a product or service. A claim can be unsubstantiated even if that claim is true; and

(b) including unfair contract terms in standard form consumer contracts. Courts will have the power, on application from the Commerce Commission, to make a declaration that a term is unfair. Unfair terms are not enforceable.

There are also specific rules concerning:

(a) employment advertising;


(b) pyramid selling schemes;


(c) bait advertising;


(d) offering gifts and prizes; and


(e) referral selling.

Product safety standards apply to specific products (such as the supply of baby walkers, cots, and bicycles).

The Commerce Commission is responsible for administering the Fair Trading Act. It actively monitors business conduct in New Zealand to check compliance, and has the power to bring proceedings for breach in its own right. Breach carries civil and criminal liability.