Under the Fair Trading Act, businesses in New Zealand can’t mislead you with false information in advertising or about pricing.
Your rights
Under the Fair Trading Act (FTA), you have the right to clear and accurate prices for products and services, and factual advertising.
A trader or retailer doesn't have to advertise or display their prices but it is illegal for a business to mislead or deceive you about the things they sell.
This includes:
- writing or saying anything false or misleading about products or services, including in advertising.
- making claims about products if they don't have evidence to back them up.
- unfair sales practices like bait advertising, which is when businesses lure you in with cheap items that are unavailable, then offer a more expensive item instead.
Pricing(external link) — Commerce Commission
Misleading advertising
Businesses and traders must not behave in a way that is misleading or false or make misleading or false statements about their products’ or services’ including:
- price, standard, quality, origin or history
- uses or benefits
- endorsements or approvals — for example, from celebrities or sports people using those products.
Misleading or false statements may be found:
- in advertising brochures, signs, newspapers or contracts
- as part of a sales pitch
- on TV, radio, and websites.
Examples of how an advertisement could be misleading include:
- statements about the origin, quality and use of the goods that are not clear and accurate
- comparisons with other competitors about the same products that are not accurate
- special offers or discounts and sales which are not genuine.
Businesses must accurately describe in advertising whether goods are ‘as new’, second-hand or reconditioned.
False or unsupported claims
Businesses and traders must not make claims without reasonable grounds — otherwise, it's called an ‘unsubstantiated representation’.
Businesses are breaching the Fair Trading Act if they make a claim they can't back up with evidence, even if it later turns out to be true.
Businesses making environmental claims about sustainability, recycling, carbon neutrality, energy efficiency, or use of natural products must make sure those claims are accurate and based on solid scientific evidence.
It is acceptable for a business to use exaggeration in a promotion if a reasonable person would know the claim was obviously an exaggeration and that it was unlikely to mislead anyone.
Pricing issues
Incorrect pricing
Incorrect pricing is when an advertised price is different from the actual price the seller intends to charge you for the product. For example, a product could be advertised or displayed at a higher or lower price than its actual price.
A trader or retailer doesn't have to advertise or display their prices but if they do, they can’t charge more than the displayed price. Any price misrepresentation is likely a breach of the Fair Trading Act.
If you have been undercharged, the trader can’t ask you to pay the extra amount after the sale is completed unless you knew:
- there was a genuine mistake about the price
- it was much less than it should have been.
Advertised prices must be genuine, and there must not be extra costs you weren't aware of.
Where there is an extra cost to the seller for providing a payment method, there might be an extra cost passed on to you for using that method. For example, by applying a surcharge when using PayWave or a credit card.
If businesses do apply a surcharge, it must be clearly displayed. For example, adding information to their online shopping cart or placing a sign close to the terminal.
Misleading pricing
Misleading pricing is when a product is promoted in an unclear way, that may cause you to be misled about the true cost of the product. Any representations about price must be clear, accurate and straightforward.
The retailer must be able to justify price comparisons and statements about scarcity, discounts, and sale prices when they are questioned. They must also clearly state any limitations or qualifications to a special offer, such as if there are limits on the number of items per customer or limited stock is available.
Pricing Errors
A business does not have to advertise or display their price. If a price is advertised or displayed incorrectly, and there has been a genuine error, the trader is not obligated to sell at that price.
Consistently advertising products at the wrong price may mislead consumers about the true price, which constitutes a breach of the Fair Trading Act (FTA).
If you have been undercharged, the trader cannot ask you to pay the additional amount after the sale is completed unless you were aware of a genuine mistake regarding the price, and it was significantly lower than it should have been.
Advertised prices must be genuine, and there must not be any extra costs that you were not informed about.
Price Promotions
Retailers often discount products and services, advertising the savings you can make by purchasing at the discounted price compared to the non-sale price. This can be misleading and may breach the FTA if the claimed usual price has never been charged, is inflated, or is outdated.
If a discounted price is frequently used, it may become the usual selling price, making it misleading for a business to continue claiming it is a discount.
Additionally, businesses may mislead consumers about prices if they promote a special price to encourage quick purchases when it is the usual price, or if they state that an advertised price is the total price to pay when it is not.
Price increases
While businesses are free to set their own prices and increasing prices above levels charged previously isn’t illegal in New Zealand, the Fair Trading Act prohibits misleading and deceptive conduct and false representations.
This means that if a business gives a reason for a price increase it must be true or the business risks breaching the law.
Consumers should ask for the reason a price has increased and if they believe the reason that is given is not true, they should make a complaint to the Commerce Commission.
Obligations under the Fair Trading Act
Report a concern(external link) — Commerce Commission
Examples
Pricing mistake
Ahmed is thrilled to see an online advertisement for smart TVs for only $300 from his local appliance store. He rushes to the website to buy one. The price was supposed to be $500, so owner apologises for the mistake in the advertising and has it corrected immediately after Ahmed buys it. Ahmed was undercharged, so the owner can’t ask him to pay the extra amount after the sale is completed unless Ahmed knew there was a genuine mistake about the price, or it was much less than it should have been. Advertised prices must be genuine, and there must not be extra costs Ahmed wasn’t told about.
Misleading descriptions
Hannah decides to buy a car from a private seller on Trade Me. The car is described as in good condition for $2,500 or near offer, with a current WOF. Hannah buys it without doing a mechanical inspection and 3 months later the car breaks down. Her mechanic says the engine needs extensive repairs costing $1,500. Hannah is unhappy with the sale and contacts the seller. He refuses to negotiate, so she makes a claim to the Disputes Tribunal for misleading advertising and breach of the implied warranty as the vehicle did not match its description, under the Contract and Commercial Law Act.
If things go wrong
Contact the seller to try to resolve any dispute about pricing or advertising first. This applies to private sellers as well as businesses.
What you can ask for depends on what's gone wrong. Sometimes it will be a partial refund.
You can cancel a sale or contract and ask for a full refund if:
- the product doesn't match the seller's description
- you only agreed to a service contract because of false or misleading advertising or pricing, and the difference between promise and reality would have a major impact on you
- you wouldn't have bought a product or service if the seller had told the truth.
You could ask for compensation if misleading information resulted in loss or damage, including if you:
- paid extra bills or other costs
- did extra tasks that were unnecessary
- Suffered distress.
Take your complaint further
If you can’t resolve your issue directly with the business, the Disputes Tribunal or District Court may be your next step. Bear in mind, if the seller is overseas, it may be harder to enforce any formal decision.
About the tribunal(external link) — Disputes Tribunal
You can report the business to the Commerce Commission if:
- You think you have been misled.
- The business has said something that is not true.
Commerce Commission can't investigate every complaint or solve your individual problem. But they can warn or prosecute the business. Your information helps them assess which consumer issues are causing the greatest harm.
Make a complaint(external link) — Commerce Commission
More help
Get support at any point from:
- Citizens Advice Bureau (CAB) — a free, independent service, run by volunteers. CAB can advise you on your consumer rights and obligations, in person, by phone, or online.
- Community Law Centre — offers free one-on-one legal advice to people with limited finances. The organisation has 24 community law centres throughout the country. You can find legal information and other resources on its website.
Find a CAB(external link) — Citizens Advice Bureau
Our law centres(external link) — Community Law Centres