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Understanding consumer laws

If you sell products or services on a regular basis, consumer laws cover how and what you can sell, how you advertise, and how to deal with customer complaints.

These laws apply equally to established bricks-and-mortar businesses, internet traders and temporary operations like pop-up shops. And some industries have extra rules to follow, eg financial services and vehicle sales.

Consumer Guarantees Act (CGA)

Who it applies to: Any person in trade or business that makes, imports and/or sells products — or sells services — for personal or domestic use. This includes auctions, both online and in person, if the seller is “in trade”.

Why: So customers get what they pay for and, if needed, a repair, refund or replacement for a faulty product or sub-standard service.

What you must do:

  • Offer products that are:
    • of acceptable quality
    • fit for purpose
    • match the description given 
    • match any samples or demonstrations given
    • sold at a reasonable price, if a price wasn’t agreed beforehand
    • able to be legally sold.
  • Make sure deliveries arrive at the agreed time and products are in acceptable condition. 
  • Have spare parts available and a way to offer repairs. This might be through an arrangement with the manufacturer or a trusted repairer. If spare parts and repairs aren’t available, tell the customer before finalising the sale.
  • Know when you are legally required to offer a repair, refund or replacement — these are called remedies in consumer law.
  • If a customer complains, find out as much as you can before deciding what — if any — remedy to offer.

Do not:

  • Knowingly sell faulty products or sub-standard services.
  • Simply accept that a product or service is faulty when a customer complains. You are within your rights to investigate before deciding what to do. 
  • Delay if a customer complains. You must not fob them off or put off looking into it. 
  • Refuse to deal with complaints about products that arrive damaged after being delivered. If it’s a valid complaint, offer a replacement or refund. Then take it up with the courier, delivery company or insurance company yourself so you’re not left out of pocket.

How the Act is enforced: If you break any of these rules — or you and your customer can’t reach an agreement about a complaint — your customer can choose to take the matter to court or a disputes tribunal.

Obligations under the Consumer Guarantees Act (external link) — Consumer Protection

Small or temporary business, or an online trader? The CGA and FTA apply if you're considered to be in trade.

Small or temporary business, or an online trader? The CGA and FTA apply if you're considered to be in trade.

“In trade” means regularly selling goods or services, or regularly buying to sell on. You might be GST registered and/or have staff. Or you might not. Frequency is a deciding factor.

Fair Trading Act (FTA)

Who it applies to: Any person in trade or business selling products or services, including online. You must talk fairly about what you sell — in person, in advertising or online.

The Act covers pricing, advertising, information about the product or service, sales techniques and financing. It also covers product safety, trading practices and employment ads.

Why: To make sure traders don’t oversell or make false promises.

What you must do:

  • Accurately represent your product or service.
  • Make sure you — and any staff — are familiar with what you sell, and what it can and can’t do.
  • Meet product safety rules.
  • Give required information, eg:
    • if the price tag includes GST
    • any extra fees
    • country of origin label on new clothing and new footwear
    • water efficiency rating label on certain appliances, eg washing machines, taps, toilets
    • consumer information notice (CIN) on used vehicles
    • cancellation period for extended warranties, and some door-to-door or telemarketing sales, eg to switch electricity suppliers.

Add-ons and hidden fees (external link) — Commerce Commission

Do not:

  • Oversell or otherwise mislead customers about a product or service. Even if you don’t mean to mislead, you could break this law. 
  • Fail to tell customers important information.
  • Fix prices with other businesses or suppliers.
  • Sell extended warranties as a “no hassle” option against any and all future issues.
  • Refuse to collect unwanted products if it’s an unsolicited sale, eg door-to-door or telemarketing.

How the Act is enforced: The Commerce Commission carries out its own monitoring, and may investigate if a customer or another business makes a complaint. If there’s evidence of a breach, the case may go to court — or it may be referred to another agency, eg the Police.

Fair Trading Act (external link) — Commerce Commission

Obligations under the Fair Trading Act (external link) — Consumer Protection

It's illegal to sell imperial measures.

It's illegal to sell imperial measures.

But a pint of beer is OK — it’s considered a description in New Zealand, not a measure of volume.

Weights and Measures Act

Who it applies to: Any person or business that collects, uses and stores personal information. This might be online via your website, or in person to send invoices.

Why: To make sure personal information is kept safe and secure.

What you must do:

  • Only collect what you need for business purposes, eg name and contact details. 
  • Tell people how, when and why you are collecting their information. This includes using cookies on your website.
  • Tell people what will happen if they don’t give you their personal information. 
  • Keep their personal information safe.
  • Only use it if you are reasonably sure it’s accurate and up to date.
  • Let people see their information and correct any mistakes.

Do not:

  • Ask for more information than you need.
  • Let personal information be leaked, hacked or found in any other way.
  • Keep information longer than you need it — or are legally required to keep it.
  • Pass someone’s details without their permission.

How the Act is enforced: If you break any of these rules, even accidentally, a customer may make a complaint under the Privacy Act.

How to avoid a complaint (external link) — Privacy Commissioner

Information privacy principles (external link) — Privacy Commissioner

casestudy making contact

Step-by-step

How to avoid spamming customers

Spam can be unwanted emails, text messages, instant messages or faxes. Sending it is illegal. Follow these three steps to make sure what you send to customers isn’t spam:

  1. Only send to those who have agreed to receive it, eg they subscribed to your newsletter or asked for a quote.
  2. Be clear who the message is from and include contact details for your business. 
  3. Include an easy way to stop receiving messages from your business, eg an unsubscribe link or details of who to email to opt out.

So long as you meet these steps, these types of emails and other messages are fine to send:

  • Replies if a customer asks for a quote or estimate.
  • Confirming a sale the customer has agreed to.
  • Progress reports on a current sale, eg confirming dispatch of their order.
  • Information about warranties, product recalls, and any safety or security concerns about a product or service bought by the customer.
  • Information about the customer’s existing subscription, membership, account, loan or other ongoing relationship.

Check out the resources and case studies on the Department of Internal Affairs’ website. These help New Zealand businesses comply with anti-spam rules.

Spam information for businesses (external link) — Department of Internal Affairs

Report a cyber security problem (external link) — CERT NZ

More consumer laws

accordion ProductSafety

Product safety rules

Who these apply to: Sellers and suppliers of cigarette lighters, pedal bikes and these children’s products — both new and second-hand:

  • cots
  • baby walkers
  • children’s toys
  • children’s nightwear.

These products are covered by the Fair Trading Act’s product safety standards. Also check for banned products on the Unsafe Goods Notices list, eg toys and candles that contain lead, multipurpose ladders, and chainsaws without chain brakes.

Unsafe Goods Notices (external link) — Consumer Protection

Why: To prevent injuries, particularly to very young children.

What you must do:

  • Know which products are covered by safety standards.
  • Ask for proof these have passed safety tests and check safety certificates. 
  • Make sure these products meet any labeling requirements.
  • Know which products are banned.

Do not:

  • Sell, import or supply products that haven’t met safety standards, or are banned.
  • Assume these products are safe just because a supplier said so. Get proof.

How these rules are enforced: The public and businesses can report products thought to be unsafe or banned to the Commerce Commission or Trading Standards. The Commission also regularly inspects sellers of goods covered by product safety rules. The Customs Service checks for banned products at the border.

What to do about unsafe or recalled products (external link) — Trading Standards

accordion CarriageOfGoodAct

Carriage of Goods Act

When this might be useful: If deliveries to your customers are damaged or delayed by your courier or other delivery service — but it does not apply to postal services.

Why: For the general public, the Consumer Guarantees Act covers losses if a delivery service doesn’t carry out its duties with reasonable skill or care. Businesses aren’t covered by this law, but may be able to claim under the Carriage of Goods Act.

How to use it: It’s a good idea to have a written contract with your delivery service. Together you must discuss and agree terms for when — or if — compensation will be paid for damaged or delayed packages. There are four options:

  • Declared value risk: Delivery service will pay up to the maximum amount stated in the contract.
  • Owner's risk: You are responsible for any loss or damage, unless it’s intentionally caused.
  • Declared terms: What the delivery service will pay depends on agreed terms in the contract, eg amount required for reasonable repairs. 
  • Limited carrier’s risk: Delivery service will pay up to $2,000 for each unit of goods.

If you don’t have a written contract, limited carrier’s risk applies.

When you can’t make a claim: There are a variety of reasons, including:

  • damage due to a product fault
  • damage due to inadequate packaging
  • package not delivered because of a legal process, eg seized from delivery service by the police or NZ Customs Service.
PayingPieceRateWorkersFairly Orchard

Weights and Measures Act

Who it applies to: Businesses that sell, make, process, pack or import goods to be sold by quantity. Examples include:

  • apples by kilo 
  • firewood by cubic metre 
  • potting mix by litre
  • railway sleepers by number.

Goods sold by weight, volume, length or number must be:

  • accurately weighed, measured or counted
  • clearly labeled with the correct net quantity — this means the product itself, not product + packaging.

Equipment and processes used to weigh or measure goods must be accurate. The Act also specifies which measuring units, eg kilogram, metre, millilitre, must be used for certain types of goods.

Why: To make sure customers get what they pay for, and businesses sell correct quantities.

What you must do:

  • Regularly check accuracy of weighing/measuring equipment.
  • Make sure packages contain at least the quantity stated on the label — but not too much more, or you’ll lose money on each sale.

Do not:

  • Include the weight of packaging when measuring.
  • Use imperial units, eg a pound of cheese, 20 feet of fencing.

How the Act is enforced: Trading Standards officials might visit new businesses to offer advice, or carry out inspections in response to a suspected problem, eg after a complaint. If your weighing or measuring equipment is inaccurate, it may be seized and tested at the nearest Trading Standards laboratory.

Measurement for businesses (external link) — Consumer Protection

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Human Rights Act

Who it applies to: Everyone. You, your customers, your suppliers, your staff, and others you interact with in your business.

Why: Everyone has the right to be treated fairly.

What you must do:

  • Treat people with dignity and respect.
  • Make sure no one is treated less favourably because of any personal characteristic.
  • You don’t have to name or quote the Act in your terms and conditions — actions speak louder than words.

Do not:

  • Refuse a sale, or provide sub-standard products or services, due to someone’s gender, religious belief, race, disability and other factors. This is discrimination and it is illegal.
  • Use forced labour, child labour or pay less than the legal minimum — either in your business or in your supply chain.

Why human rights matter to businesses (external link) — Human Rights Commission

How the Act is enforced: If someone feels they have been discriminated against, they can complain to the Human Rights Commission. Some complaints are resolved through mediation.

A few cases end up in the Human Rights Review Tribunal or in court — recent examples include an AV company that dismissed an employee who refused to work Saturdays for religious reasons. It had to pay out a five-figure sum. Examples outside New Zealand include Christian bakers in Colorado who refused to make a cake with a gay marriage slogan. They also lost their case.

How to make a complaint (external link) — Human Rights Commission

casestudy CarCosts

Rules for motor vehicle sellers

Who it applies to: Any person or business that buys, sells, imports or auctions vehicles, including online sales and vehicles sold at car markets or fairs. As a vehicle trader, you must register and meet other requirements of the Motor Vehicle Sales Act — and other consumer laws.

Who needs to register (external link) — Trading Standards tool

Why: To make sure customers get what they pay for and know what their rights are if there’s a fault with the vehicle.

What you must do:

  • Register as a vehicle trader if you intend to be in the business of motor trading, including if you sell more than six — or import more than three — vehicles in any 12 months.
  • Comply with consumer laws that apply to all retailers, eg Consumer Guarantees Act and Fair Trading Act.
  • If selling second-hand vehicles, display a consumer information notice (CIN) in its window or online listing. A range of information must be included, eg:
    • dealer’s name and registration number 
    • cash price including GST 
    • make, model, year and engine capacity 
    • any debts owing — also known as security interests.
  • Give each buyer a copy of the sales agreement.
  • Keep your copies of sales agreements, either electronic or on paper, for at least six years.
  • Auctioneers must tell prospective buyers of any debts owing on the vehicle — also known as security interests.

Do not:

  • Sell vehicles if you are not registered.
  • Tamper with odometers or other offences.
  • Give false or misleading information.
  • Sell a second-hand vehicle without a consumer information notice (CIN) — and car market operators must check sellers are doing this.

How the rules are enforced: The Registrar of Motor Vehicle Traders monitors transfers of motor vehicle ownership, in partnership with NZTA and NZ Customs. The Registrar also investigates alleged odometer tampering and unregistered traders. The Commerce Commission handles reports of missing or misleading CINs. Customer complaints that cannot be resolved with the trader, eg through a refund or repair, can go to the Motor Vehicle Disputes Tribunal.

Motor Vehicle Traders Register (external link) — Trading Standards

Motor Vehicle Disputes Tribunal (external link) — Ministry of Justice

BeautyOfEmail

Rules for financial services

Who it applies to: Individuals and businesses offering services and/or advice on money matters, including financial planning, insurance, investments, or selling products on credit. As a financial service provider, you must register and meet other legal requirements. 

How to join the Financial Service Providers Register (external link) — Companies Office

Why: So customers can search an online register for people, businesses and organisations that offer financial services.

What you must do:

  • Register as a financial service provider.
  • If you provide services to the public, join a dispute resolution scheme.
  • Comply with consumer laws, eg Consumer Guarantees Act, Fair Trading Act, and fair dealing standards in the Financial Markets Conduct Act.
  • Some professions need a licence from the Financial Markets Authority, eg fund managers and investment planners.

Who needs a licence (external link) — Financial Markets Authority

Fair dealing (external link) — Financial Markets Authority

Do not:

  • Offer financial services if you are not registered. This is illegal.
  • Apply to be registered if you — or senior people in your business — are disqualified, eg due to fraud conviction or undischarged bankruptcy.

How the rules are enforced: Failing to register can lead to fines or other penalties, including jail time.

Financial Service Providers Register (external link) — Companies Office

Dispute resolution schemes (external link) — Companies Office