{"id":1450,"date":"2020-12-16T20:35:20","date_gmt":"2020-12-16T20:35:20","guid":{"rendered":"http:\/\/nz.legalvision.com.au\/?p=1450"},"modified":"2025-06-04T12:46:12","modified_gmt":"2025-06-03T23:46:12","slug":"what-is-the-fair-trading-act-in-new-zealand","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/regulatory-and-compliance\/what-is-the-fair-trading-act-in-new-zealand\/","title":{"rendered":"What is the Fair Trading Act?"},"content":{"rendered":"\n<p>The <em>Fair Trading Act 1986<\/em> (FTA) prohibits businesses from misleading consumers, providing false information about their products or services, or engaging in unfair practices. All traders and businesses operating in New Zealand must comply with the <em>Fair Trading Act<\/em> (FTA), which sets out rules to protect consumers from misleading or unfair conduct. It also enforces product safety standards and states when a business must disclose information about certain products to consumers. This article unpacks key considerations to help your business comply with these rules.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Deceptive or Misleading Conduct<\/h2>\n\n\n\n<p>Consumers must be able to rely on the information businesses provide them regarding goods and services. As a trader or business, you must ensure that the information you provide consumers is accurate and not withhold important information.&nbsp;In particular, the FTA prohibits&nbsp;<a href=\"https:\/\/legalvision.co.nz\/regulatory-and-compliance\/what-is-misleading-or-deceptive-conduct-in-new-zealand\/\">deceptive or misleading conduct<\/a>, including statements about:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>the standard, quality, price, quantity, style, place of origin, history or previous use of a product or service;<\/li>\n\n\n\n<li>the suitability for a particular purpose;<\/li>\n\n\n\n<li>sponsorship, approval, endorsement or benefits; and<\/li>\n\n\n\n<li>the availability, nature, terms or conditions of a job offer.<\/li>\n<\/ul>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>Any written or spoken statements related to your products or services can be considered deceptive or misleading conduct, including:<\/p>\n<ul>\n<li>advertising;<\/li>\n<li>any impressions from images; and<\/li>\n<li>information you leave out, if this creates a false impression.<\/li>\n<\/ul>\n<\/div>\n\n\n\n<p>It is irrelevant whether or not you intended to mislead or deceive consumers. Therefore, you must ensure that the information you share about your products or services is accurate. You cannot rely on fine print to correct a misleading impression.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Unsubstantial or False Representations<\/h2>\n\n\n\n<p>Your business cannot make claims about products or services you cannot prove or that you know to be inaccurate. Whenever you make a claim about a product, you must have good reason to believe it is true. Your justification can come from:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>information you hold;&nbsp;<\/li>\n\n\n\n<li>a reputable manufacturer or supplier; or&nbsp;<\/li>\n\n\n\n<li>other credible sources, such as scientific evidence or medical studies.&nbsp;<\/li>\n<\/ul>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>For example, suppose a shop runs an offer claiming 30% off all kitchenware. The shop should have sufficient pricing and sales data proving the price of the kitchenware items during the offer period is 30% less than their cost before the sale.<\/p>\n<\/div>\n\n\n\n<p>Additionally, you can make a claim verbally or in writing, which can be expressed or implied. You do not need to back up a claim or representation if a reasonable person would know that it is exaggerated (known as puffery). The claim must be so obvious that it is unlikely to mislead consumers.&nbsp;<\/p>\n\n\n\n<p>The FTA requires businesses to disclose specific information about products or services when selling them. For example, you cannot hide from a customer that the\u00a0<a href=\"https:\/\/legalvision.co.nz\/business-structures\/what-is-gst-in-new-zealand\/\">price of a product excludes GST<\/a>.<\/p>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+64800005570\" class=\"not-prose\">0800 005 570<\/a> for urgent assistance.\n                <br>\n                Otherwise, complete this form, and we will contact you within one business day.\n                    <\/span>\n    <\/div>\n\n    \n\n<div 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aria-invalid=\"false\"  \/>\n                        <\/div><\/div><div id=\"field_2452_3\" class=\"gfield gfield--type-phone gfield--input-type-phone gf_right_half gfield--width-half gfield_contains_required field_sublabel_below gfield--no-description field_description_below field_validation_below gfield_visibility_visible\"  ><label class='gfield_label gform-field-label' for='input_2452_3'>Phone<span class=\"gfield_required\"><span class=\"gfield_required gfield_required_text\">(Required)<\/span><\/span><\/label><div class='ginput_container ginput_container_phone'><input name='input_3' id='input_2452_3' type='tel' value='' class='medium'   aria-required=\"true\" aria-invalid=\"false\"   \/><\/div><\/div><div id=\"field_2452_14\" class=\"gfield gfield--type-select gfield--input-type-select gfield--width-full custom-select gfield_contains_required field_sublabel_below gfield--no-description field_description_below field_validation_below gfield_visibility_visible\"  ><label class='gfield_label gform-field-label' for='input_2452_14'>Number of Employees in Your Business<span class=\"gfield_required\"><span class=\"gfield_required gfield_required_text\">(Required)<\/span><\/span><\/label><div class='ginput_container ginput_container_select'><select name='input_14' id='input_2452_14' class='large gfield_select'    aria-required=\"true\" aria-invalid=\"false\" ><option value='' ><\/option><option value='0' >0<\/option><option value='1' >1-5<\/option><option value='6' >6-20<\/option><option value='21' >21-50<\/option><option value='51' >51-250<\/option><option value='250' >250+<\/option><\/select><\/div><\/div><div id=\"field_2452_4\" class=\"gfield gfield--type-textarea gfield--input-type-textarea gfield_contains_required field_sublabel_below gfield--no-description field_description_below field_validation_below gfield_visibility_visible\"  ><label class='gfield_label gform-field-label' for='input_2452_4'>Tell us about your enquiry<span 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The table below provides some examples.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table><tbody><tr><td><strong>Unfair Practice<\/strong><\/td><td><strong>Description<\/strong><\/td><\/tr><tr><td>Falsely Providing Free Items<\/td><td>You cannot offer gifts, prizes, or other free items if you do not intend to provide them or not provide them as offered.<\/td><\/tr><tr><td>Bait Advertising<\/td><td>Advertising products or services that you cannot supply is prohibited. This is known as bait advertising. You should only advertise products or services at the specified price and quantity that you can offer and for the period as stated in the advert (or as reasonable if not stated).<\/td><\/tr><tr><td>Referral Selling<\/td><td>You cannot induce another person to buy products or services on the basis that they will receive some form of benefit, such as a rebate or commission, in return for providing the names of prospective customers. This is known as referral selling.<\/td><\/tr><tr><td>Providing Incorrect Products<\/td><td>Demanding or accepting payment without intending to supply the product or service is prohibited if you provide a product or service that is very different from the one the consumer ordered.<\/td><\/tr><tr><td>Unsolicited Requests<\/td><td>You cannot request payment for unsolicited products or services where a consumer did not ask for them. An exception is the provision of gas and electricity.<\/td><\/tr><tr><td>False Statements<\/td><td>You cannot make false or misleading statements about the profitability or risk of a business activity that involves working from home or requires someone to work or invest money.<\/td><\/tr><tr><td>Force and Harassment<\/td><td>You cannot use physical force or harassment to supply products or services or to collect payment for products or services.<\/td><\/tr><tr><td>Importation<\/td><td>Importing goods into New Zealand with inaccurate labels is prohibited.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Product Safety Standards<\/h2>\n\n\n\n<p>Products must comply with specific safety standards. If they do not, they might be recalled or banned. If that happens, you may be required to:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>inform consumers why and how a product is unsafe;<\/li>\n\n\n\n<li>offer to repair or replace it; or<\/li>\n\n\n\n<li><a href=\"https:\/\/legalvision.co.nz\/regulatory-and-compliance\/when-is-a-customer-eligible-for-a-refund-or-exchange-in-nz\/\">provide a refund<\/a>.<\/li>\n<\/ul>\n\n\n\n<p>Additionally, there are minimum safety standards for certain products, such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>cigarette lighters;<\/li>\n\n\n\n<li>bikes;<\/li>\n\n\n\n<li>toys;&nbsp;<\/li>\n\n\n\n<li>cots;<\/li>\n\n\n\n<li>baby walkers; and&nbsp;<\/li>\n\n\n\n<li>children\u2019s night clothing.<\/li>\n<\/ul>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>Suppliers and manufacturers of these products must notify consumers of their product&#8217;s safety information. The FTA imposes similar safety requirements for the performance of certain services. <span style=\"font-weight: 400\">If you are intending on selling goods in this area, you should ensure you are meeting the minimum safety standards imposed.\u00a0 <\/span><\/p>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\">When Does the Fair Trading Act Apply?<\/h2>\n\n\n\n<p>The FTA applies to all businesses supplying services or products to consumers in New Zealand, including overseas businesses that supply services or products in New Zealand and online sales.\u00a0This ensures that consumers are protected from misleading or deceptive conduct, unfair trading practices, and false representations, regardless of the supplier&#8217;s location. The FTA is broad in scope, covering transactions involving goods, digital products, and services.<\/p>\n\n\n\n<p>Where you are a business supplying services or products to other businesses, you can contract out of the FTA, provided that:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>both parties operate as a business;<\/li>\n\n\n\n<li>the parties agree to contract out of the FTA;<\/li>\n\n\n\n<li>the agreement is in writing; and<\/li>\n\n\n\n<li>it is fair and reasonable for them to agree to contract out of the FTA.<\/li>\n<\/ul>\n\n\n    <div class=\"my-7 lg:my-10 border-y-2 border-gray-100 py-7 lg:py-10 flex flex-col sm:flex-row items-start gap-10\">\n                    <img decoding=\"async\" class=\"w-52 mx-auto my-0! rounded\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/2\/2023\/05\/22210201\/guide-to-resolve-business-disputes-560x792-1.jpg\" alt=\"Front page of publication\"\n                 loading=\"lazy\" width=\"208\" height=\"298\">\n                <section>\n            <div class=\"text-2xl font-bold\">Guide to Resolving NZ Business Disputes<\/div>\n            <div class=\"body-text\">\n                <p>Commercial disputes are costly, stressful and can damage your business reputation. LegalVision\u2019s free Guide to Resolving NZ Business Disputes can help.<\/p>\n            <\/div>\n            \n\n<a href=\"https:\/\/go.legalvision.co.nz\/guide-resolving-nz-business-disputes.html\" class=\" block px-5 py-3.5 max-w-fit bg-orange button__hover transition rounded text-white font-bold text-lg no-underline uppercase leading-tight text-center\" target=\"\" rel=\"\">Download Now<\/a>        <\/section>\n    <\/div>\n\n\n\n\n<p>In such cases, the court will assess what is \u201cfair and reasonable\u201d based on the nature of the goods or services, the bargaining power of each party, and whether legal advice was obtained before entering the agreement. You should document this clearly to avoid disputes.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Key Takeaways<\/h2>\n\n\n\n<p>Under the FTA, you must always provide consumers with accurate information about your products or services. You must avoid withholding important information and ensure that you can support all claims about your products and services. Finally, inform consumers of the safety standards for your products, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>how a product may be unsafe; and&nbsp;<\/li>\n\n\n\n<li>how a consumer can get their product repaired, replaced or receive a refund.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>There are significant financial and criminal penalties if you fail to comply with the <em>Fair Trading Act<\/em>. If you have questions about your rights and obligations under the <em>Fair Trading Act<\/em>, our experienced <a href=\"https:\/\/legalvision.co.nz\/business-lawyers-lp-new-zealand\">business lawyers<\/a>&nbsp;can assist as part of our LegalVision membership. You will have unlimited access to lawyers who can answer your questions and draft and review your documents for a low monthly fee. Call us today at <a href=\"tel:+64800005570\" class=\"AVANSERnumber dynamic-number\">0800 005 570<\/a> or visit our <a href=\"https:\/\/legalvision.co.nz\/membership\/\">membership page<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Frequently Asked Questions<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1692925266829\"><strong class=\"schema-faq-question\"><strong>What is the <em>Fair Trading Act<\/em>?<\/strong><\/strong> <p class=\"schema-faq-answer\">The <em>Fair Trading Act 1986<\/em> sets rules to protect consumers from misleading or unfair conduct. It also enforces product safety standards and states when a business must disclose information about certain products to consumers.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1692925274112\"><strong class=\"schema-faq-question\"><strong>How do I comply with the FTA?<\/strong><\/strong> <p class=\"schema-faq-answer\">You can ensure you follow the FTA by being upfront about your products and services and only making claims that you can back up with facts or evidence.\u00a0<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1692925281290\"><strong class=\"schema-faq-question\"><strong>When does the FTA apply?<\/strong><\/strong> <p class=\"schema-faq-answer\">The FTA almost always applies, including to overseas businesses that supply New Zealand with services or products, as well as online sales. You cannot contract out of the FTA unless it is agreed upon by businesses engaging in trade and is fair and reasonable to do so.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1692925302786\"><strong class=\"schema-faq-question\"><strong>What are the consequences of breaching the F<\/strong>TA<strong>?<\/strong><\/strong> <p class=\"schema-faq-answer\">You could face significant financial and criminal penalties if you fail to comply with the FTA. The maximum penalty is $200,000 for an individual and $600,000 for a business for each offence.<\/p> <\/div> <\/div>\n\n\n\n\n","protected":false},"excerpt":{"rendered":"<p>The Fair Trading Act 1986 (FTA) prohibits businesses from misleading consumers, providing false information about their products or services, or engaging in unfair practices. All traders and businesses operating in New Zealand must comply with the Fair Trading Act (FTA), which sets out rules to protect consumers from misleading or unfair conduct. It also enforces<a href=\"https:\/\/legalvision.co.nz\/regulatory-and-compliance\/what-is-the-fair-trading-act-in-new-zealand\/\">Continue reading <span class=\"sr-only\">&#8220;What is the Fair Trading Act?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13496,"featured_media":915,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"219097,1654,625,218374,1639,219316","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[8],"tags":[24,25,54,209,667],"class_list":["post-1450","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-regulatory-and-compliance","tag-startup","tag-small-business","tag-medium-business","tag-fair-trading","tag-fair-trading-act"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What is the Fair Trading Act? | LegalVision New Zealand<\/title>\n<meta name=\"description\" content=\"Are you a New Zealand trader or business? 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