Obligations under the Fair Trading Act

The Fair Trading Act (FTA) says you must talk fairly about what you sell — in person, in print or online. This is to make sure traders don’t oversell or make false promises.

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

Fair Trading Act(external link) — Commerce Commission

Who it applies to

Any person in trade or business selling products or services, including online.

But these activities are included whether or not you are in trade:

• employment ads
• advertising
• pyramid selling
• supplying goods covered by product safety and consumer information rules.

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.

Selling goods and services(external link)  — Commerce Commission

Read more about Understanding product safety

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, e.g. door-to-door or telemarketing.
• Do not ignore general or standing directions if sellers are uninvited.
• Sell using unfair practices or unfair contract terms.

"In trade" means regularly selling products 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.

Contracting out

Contracting out means a written agreement that a business does not have to meet the requirements of a specified Act.

Businesses can only contract out of certain sections of the FTA, and only if:

• dealing with another business or person in trade
• both sides agree these sections won’t apply
• this agreement is in writing
• it’s fair and reasonable to both sides to contract out.

If it’s only done verbally — or contracting out is not mentioned — the FTA applies.

Contracting out of the FTA(external link) — Commerce Commission

How the FTA is enforced

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.

Customers who believe a business has breached the FTA can also take the case to court.