Positive signs emerge from consumer law review

Positive signs emerge from consumer law review

Minister of Consumer Affairs Heather Roy promised us a review of New Zealand’s consumer law and now it is out, with submissions due by 30 July 2010. The bad news is the review document is 118 pages long. The good news is the Ministry has adopted a principled approach to consumer law.

Our key consumer law statutes are the Fair Trading Act 1986 and the Consumer Guarantees Act 1993. The Ministry is not intending to do a lot of tinkering with either of these Acts.

The Fair Trading Act’s guiding principle is the prohibition of misleading or deceptive conduct in trade. The Commerce Commission can take criminal enforcement action (fines of up to $200,000 for a corporate or $60,000 for an individual) but its real strength is that misled plaintiffs (whether consumers or businesses) can claim remedies against traders in Disputes Tribunals or courts. The Fair Trading Act is almost identical to its Australian counterpart (no surprise there, we copied the Aussies).

The Consumer Guarantees Act is special. When the Ministry claims that it is world-leading consumer legislation, it is not exaggerating. The Act’s guiding principle is that consumers are entitled to get the goods and services that they reasonably expect from traders – and if they don’t, they are entitled to a remedy. That is pretty flexible. It doesn’t say everything has to be perfect, and it doesn’t say that consumers are entitled to have their unreasonable expectations filled. What drives the Consumer Guarantees Act is its clear remedies that are unique in the consumer law world. And it appears that we will be returning the compliment to Australia by letting them copy our Consumer Guarantees Act in the near future.

The review also addresses door-to-door selling, layby sales, carriage of goods and weights and measures. The Ministry is also seeking submissions on unfair contract terms and claims that cannot be substantiated.

As for other matters that might affect resellers: the Ministry is seeking submissions on bonds required before faulty goods are assessed, even if they are refundable when fault is found (rather than damage).

If you charge a bond to assess someone’s cellphone or laptop, be aware – this may affect you. Yes, the Ministry does understand why you would do this for cellphones, but it is concerned about bonds in inappropriate circumstances or inappropriate amounts.

There is also an indication that restrictions may be placed on extended warranties - possibly a consumer information standard requiring sellers of extended warranties to supply detailed information as to what they offer over and above Consumer Guarantees Act rights available to a consumer, and a cooling off period during which a consumer can cancel the extended warranty without penalty. It is time to make submissions if you offer extended warranties.

If you sell goods on TradeMe and think those goods are not covered by the Consumer Guarantees Act because it is an “auction”, then you are probably wrong if your customer uses the “Buy Now” button. There is strong support for a proposal to remove the exception for internet-based auction or tender sales. If you do any business through TradeMe, the Consumer Guarantees Act is likely to apply in the near future.

So this long-overdue look at our consumer law is one of the rare law reform cases where I don’t think it is going to make our job harder – as long as we make sure we tell the Ministry what is practical and what is not.

The Consumer Law Reform paper is available on

Rae Nield is a solicitor specialising in marketing law. This article is intended for general information, and should not be relied on as specific legal advice. You should consult a lawyer for advice relating to your own specific legal problems. Rae Nield can be contacted at

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