The Fair Trading Act 1986
By Sarah Sheppard
The Fair Trading Act 1986 ("FTA") prohibits misleading and deceptive conduct, false representations and unfair practices by people ‘in trade'. It does not cover private sales.
"Misleading and deceptive conduct" is conduct that gives a consumer a false impression about a good or service; for example, advertising jewellery as ‘gold' when it is in fact only gold plated.
A "false representation" is where a consumer is given information about a good or service that is untrue. For example, advertising a product as ‘made in New Zealand', when it was in fact made elsewhere.
"Unfair practices" are selling methods which are misleading or unfair and some of these practices are prohibited by the FTA. For example, pyramid marketing schemes or "bait" advertising.
Failure to comply with the FTA can result in significant penalties. Fines (of up to $60,000 for individuals and $200,000 for companies) can be imposed and court injunctions can be issued against a business to prevent further infringements. A business may also be ordered to publish information or corrective statements, or provide compensation to consumers who have suffered loss.
The Commerce Commission is responsible for enforcement of the FTA but consumers or your business competitors can also complain about alleged breaches. It is important to ensure that your advertising material and statements made to consumers are not misleading, deceptive or false. As an employer you are responsible for actions of your employees, so it is also important that your staff understand what they must do, in order to comply with the FTA.
If you are in doubt as to your obligations under the FTA, contact Fitzherbert Rowe now.
