Money & You

Know your rights! The Fair Trading Act Explained

May 6, 2023

In New Zealand, we have plenty of protections that ensure that we’re happy with the things we spend our hard-earned money on. The Fair Trading Act is just one of these protections, but do you know just how far your rights go? Here’s what to keep in mind.

What is the Fair Trading Act?

The Fair Trading Act is a law that makes sure businesses play fair and don't trick customers. It aims to promote healthy competition and protect consumers by stopping businesses from using misleading or deceptive practices. This includes:

  • lying about their products or services, 
  • making false claims, 
  • using bait advertising, or 
  • setting misleading prices. 

The Act also ensures that businesses provide accurate information about their goods and services, so you can make informed choices with your money. The Commerce Commission is responsible for enforcing the Fair Trading Act, and they have the power to investigate and penalise businesses that break the rules.

What behaviour are you protected against?

The Fair Trading Act protects you against a fair number of things. Here are a few of the most common ones.

  • Misleading or deceptive conduct. This is when you’re told things by a business that give you a false impression about the goods or services you’re buying e.g. you’re told a handbag is leather but it ends up actually being vinyl.
  • Unsubstantiated representations. Businesses must be able to back up any claims they make about a product with good evidence. E.g. if a vacuum cleaner is 50% more efficient than another, they have to prove it.
  • False representations. When you buy something, any claims about it must be true. E.g. If you buy a shirt that says “made in New Zealand” but it ends up actually being made in Korea, that’s a false representation.
  • Unfair practices. This is a big one! This is a “selling method” that misleads you. A common one is where a business advertises a product at a discounted price, but then doesn’t actually sell it at that price. They might not even have that product available at all, and were just using a “50% discount!” to get you in the door - hence the name “bait” advertising.

It all boils down to making sure that businesses give you what you paid for. The consumer has a great breakdown of the FTA in more detail.

What to do if you suspect a business isn’t playing fair

You have the right to get correct information and be treated fairly when you shop. If a business breaks the rules, you can ask for your money back or otherwise work with the trader to reach an acceptable solution. 

If that doesn’t work, you can:

  • take civil action and potentially work through the Disputes Tribunal (for small claims up to $30,000), and/or
  • make a complaint to the Commerce Commission.

How to protect yourself while shopping

To avoid being tricked, watch out for deals that seem too good to be true, and always ask questions if something doesn't seem right. By knowing your rights and staying informed, you can protect your money and help make shopping in New Zealand better for everyone.

This was originally posted as an education article on the Money Sweetspot customer portal. If you read this as one of our customers, you would've earned some money off your loan! Do the mahi, get the treats. Find out more.

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