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Door-to-door sales are a selling technique that your business may employ to gain new customers. These are sales where your staff will go onto your customers’ property and offer your goods or services at your customers’ door. Businesses are allowed to do this in New Zealand. However, any contracts you enter into using this sales tactic are only valid if they comply with their relevant legal requirements. Door-to-door sales contracts are only enforceable if your staff complied with the necessary disclosure requirements. Likewise, you are responsible for making sure you comply with the law in this way. This article will explain how you can sell door-to-door in NZ and how the law regulates this area.

Selling Door-to-Door 

Under the Fair Trading Act, the law classifies most door-to-door sales as “uninvited direct sales.” This includes all uninvited salespeople who approach customers, regardless of whether they did so face-to-face or through a telephone. Specifically, an uninvited direct sale is when:

  • your business or its agents approaches or calls customers uninvited at their home or workplace to offer goods or services; and
  • you sell them consumer goods or services valued above $100 or for an unspecified price at the time of sale.

The law also classifies these scenarios as uninvited direct sales, if you sell goods or services when a consumer has:

  • given you their contact details for another purpose, such as for a competition entry;
  • called you back after an unsuccessful attempt by your business to contact them; or
  • begun negotiations with you after you have sent them an unsolicited quote or estimate.

Uninvited direct sales do not include renewal agreements, where a customer has an existing contractual relationship with you. If you continue this relationship by contacting them without prompting, this is not an uninvited direct sale. An example of this is calling them to ask if they want to renew their current cell phone plan.

What You Need to Tell Customers

If you sell to customers in this way, you have specific disclosure requirements you must abide by. When negotiating the sale, you must verbally tell consumers of their right to cancel the contract and how they can start this process. You must also draft up the sale in a written agreement and give a copy of this to your customer. This agreement needs to be legible and in plain language so that the customer can easily understand it.

You must date any written agreement of this nature and outline the total price that the customer is paying. On the front page of the contract, you must detail:

  • a complete description of the products you are offering;
  • a summary of the customer’s right to cancel;
  • your name, address, phone number and email; and
  • the customer’s name and address.

If you fail to meet these disclosure requirements, your contract is not valid. You would not be able to enforce it unless the lapse was only minor, such as providing a written copy a day later than you agreed.

You may also face financial penalties if you do not disclose this information, ranging from $10,000 to $30,000. If you mislead or deceive customers at all regarding the sale, you can face further penalties ranging from $100,000 to $600,000.

For example, if you sell a vacuum cleaner to a customer via a door-to-door sale and the written contract is not legible, the contract is invalid and you may face financial penalties. If you mislead a customer about their right to cancel a contract, you will face more severe penalties.

Customer’s Right to Cancel

With all contractual agreements negotiated through an uninvited direct sale, customers have a five day “cooling-off period.” This means they have five working days to cancel the contract for any reason. This right exists regardless of whether they paid in cash or credit. You cannot enforce the contract until the cooling-off period ends.

A customer also has the right to cancel if you failed to disclose everything you need to.

For example, suppose you failed to note any applicable interest rates or extra fees in the total price noted in the written agreement. In that case, a customer is entitled to cancel at any time because the contract is not enforceable.

If they decide to exercise this option:

  • you must give them a full refund; and
  • the customer must return any products they purchased.

If you are in the process of providing services, customers are legally entitled to ask you to stop those services and return their property to its original state. They do not have to compensate you for any services you have already provided.

Key Takeaways

If your business sells door-to-door in New Zealand, it is imperative that you know the legal requirements attached to those sales. On top of the ones mentioned in this article, there will also be consumer law requirements and extra responsibilities attached to consumer credit contracts. If you would like more information or help with your door-to-door sales, contact LegalVision’s regulatory and compliance lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

Is it illegal sell door-to-door in NZ?

In NZ, businesses are able to sell goods and services door-to-door. This means that they can send staff to a customer’s home or workplace, and offer goods or services for sale.

What is an uninvited direct sale?

An uninvited direct sale is where a business approaches a customer uninvited at their home, workplace, or via telephone, offering goods or services for sale. The goods or services must be valued at over $100 (or do not have a confirmed price at the time of sale) to classify as this kind of sale.

Is door to door selling effective?

Door to door sales may be an effective method for widening your customer base and approaching potential customers who do not respond to other outreach methods. However, customers may be suspicious of door to door salespeople, and less likely to listen to your sales pitch.

What is a “cooling off period”?

The phrase “cooling off period” refers to the five day period customers have to cancel a contract for a door-to-door sale. This allows a customer to “cool off” and change their mind if they wish.

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