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Understanding consumer laws
If you sell products or services on a regular basis, consumer laws cover how and what you can sell, how you advertise, and how to deal with customer complaints.
These laws apply equally to established bricks-and-mortar businesses, internet traders and temporary operations like pop-up shops. And some industries have extra rules to follow, for example, financial services and vehicle sales.
Consumer Guarantees Act (CGA)
Who it applies to: Any person in trade or business that makes, imports and/or sells products — or sells services — for personal or domestic use. This includes auctions, both online and in person, if the seller is “in trade”.
Why: So customers get what they pay for and, if needed, a repair, refund or replacement for a faulty product or sub-standard service.
What you must do:
- Offer products that are:
- of acceptable quality
- fit for purpose
- match the description given
- match any samples or demonstrations given
- sold at a reasonable price, if a price wasn’t agreed beforehand
- able to be legally sold.
- Make sure deliveries arrive at the agreed time and products are in acceptable condition.
- Have spare parts available and a way to offer repairs. This might be through an arrangement with the manufacturer or a trusted repairer. If spare parts and repairs aren’t available, tell the customer before finalising the sale.
- Know when you are legally required to offer a repair, refund or replacement — these are called remedies in consumer law.
- If a customer complains, find out as much as you can before deciding what — if any — remedy to offer.
Do not:
- Knowingly sell faulty products or sub-standard services.
- Simply accept that a product or service is faulty when a customer complains. You are within your rights to investigate before deciding what to do.
- Delay if a customer complains. You must not fob them off or put off looking into it.
- Refuse to deal with complaints about products that arrive damaged after being delivered. If it’s a valid complaint, offer a replacement or refund. Then take it up with the courier, delivery company or insurance company yourself so you’re not left out of pocket.
How the Act is enforced: If you break any of these rules — or you and your customer can’t reach an agreement about a complaint — your customer can choose to take the matter to court or a disputes tribunal.
Obligations under the Consumer Guarantees Act(external link) — Consumer Protection
Small or temporary business, or an online trader? The CGA and FTA apply if you're considered to be in trade.
“In trade” means regularly selling goods 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.
Fair Trading Act (FTA)
Who it applies to: Any person in trade or business selling products or services, including online. You must talk fairly about what you sell — in person, in advertising or online.
The Act covers pricing, advertising, information about the product or service, sales techniques and financing. It also covers product safety, trading practices and employment ads.
Why: To make sure traders don’t oversell or make false promises.
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, for example:
- 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, for example, washing machines, taps, toilets
- consumer information notice (CIN) on used vehicles
- cancellation period for extended warranties, and some door-to-door or telemarketing sales, for example, to switch electricity suppliers.
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, for example, door-to-door or telemarketing.
How the Act is enforced: The 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, for example, the Police.
Fair Trading Act(external link) — Commerce Commission
Obligations under the Fair Trading Act(external link) — Consumer Protection
It's illegal to sell imperial measures.
But a pint of beer is OK — it’s considered a description in New Zealand, not a measure of volume.
Privacy Act
Who it applies to: Any person or business that collects, uses and stores personal information. This might be address information collected online or in person, for sending invoices.
Why: To make sure personal information is kept safe and secure.
What you must do:
- Only collect what you need for business purposes, for example, name and contact details.
- Tell people how, when and why you are collecting their information. This includes using cookies on your website.
- Tell people what will happen if they don’t give you their personal information.
- Keep their personal information safe.
- Only use it if you are reasonably sure it’s accurate and up to date.
- Let people see their information and correct any mistakes.
Do not:
- Ask for more information than you need.
- Let personal information be leaked, hacked or found in any other way.
- Keep information longer than you need it — or are legally required to keep it.
- Pass on someone’s details without their permission.
- Send personal information overseas without checking if it will be protected.
How the Act is enforced: If you break any of these rules, even accidentally, a customer or an employee may make a complaint under the Privacy Act.
Privacy for organisations(external link) — Office of the Privacy Commissioner
How can I avoid a privacy complaint?(external link) — Office of the Privacy Commissioner
Step-by-step
How to avoid spamming customers
Spam can be unwanted emails, text messages, instant messages or faxes. Sending it is illegal. Follow these three steps to make sure what you send to customers isn’t spam:
More consumer laws
Product safety rules
Who these apply to: Sellers and suppliers of cigarette lighters, pedal bikes and these children’s products — both new and second-hand:
- cots
- baby walkers
- children’s toys
- children’s nightwear.
Carriage of goods and your rights
When this might be useful: If deliveries to your customers are damaged or delayed by your courier or other delivery service — but it does not apply to postal services.
Why: For the general public, the Consumer Guarantees Act covers losses if a delivery service doesn’t carry out its duties with reasonable skill or care. Businesses aren’t covered by this law, but may be able to claim under the Contract and Commercial Law Act, which has replaced the Carriage of Goods Act.
Weights and Measures Act
Who it applies to: Businesses that sell, make, process, pack or import goods to be sold by quantity. Examples include:
- apples by kilo
- firewood by cubic metre
- potting mix by litre
- railway sleepers by number.
Human Rights Act
Who it applies to: Everyone. You, your customers, your suppliers, your staff, and others you interact with in your business.
Why: Everyone has the right to be treated fairly.
Rules for motor vehicle sellers
Who it applies to: Any person or business that buys, sells, imports or auctions vehicles, including online sales and vehicles sold at car markets or fairs. As a vehicle trader, you must register and meet other requirements of the Motor Vehicle Sales Act — and other consumer laws.
Rules for financial services
Who it applies to: Individuals and businesses offering services and/or advice on money matters, including financial planning, insurance, investments, or selling products on credit. As a financial service provider, you must register with the Financial Service Providers Register and meet other legal requirements.
