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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, eg 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, 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.
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, eg 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, eg 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, eg 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:
- Only send to those who have agreed to receive it, eg they subscribed to your newsletter or asked for a quote.
- Be clear who the message is from and include contact details for your business.
- Include an easy way to stop receiving messages from your business, eg an unsubscribe link or details of who to email to opt out.
So long as you meet these steps, these types of emails and other messages are fine to send:
- Replies if a customer asks for a quote or estimate.
- Confirming a sale the customer has agreed to.
- Progress reports on a current sale, eg confirming dispatch of their order.
- Information about warranties, product recalls, and any safety or security concerns about a product or service bought by the customer.
- Information about the customer’s existing subscription, membership, account, loan or other ongoing relationship.
The Department of Internal Affairs’ website has resources and case studies to help you comply with anti-spam rules.
Spam information for businesses(external link) — Department of Internal Affairs
Report an incident - business and individuals(external link) — CERT NZ
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.
These products are covered by the Fair Trading Act’s product safety standards. Also check for banned products on the Unsafe Goods Notices list, eg toys and candles that contain lead, multipurpose ladders, and chainsaws without chain brakes.
Unsafe goods notices(external link) — Product Safety
Why: To prevent injuries, particularly to very young children.
What you must do:
- Know which products are covered by safety standards.
- Ask for proof these have passed safety tests and check safety certificates.
- Make sure these products meet any labelling requirements.
- Know which products are banned.
Do not:
- Sell, import or supply products that haven’t met safety standards, or are banned.
- Assume these products are safe just because a supplier said so. Get proof.
How these rules are enforced: The public and businesses can report products thought to be unsafe or banned to the Commerce Commission or Trading Standards. The Commission also regularly inspects sellers of goods covered by product safety rules. The Customs Service checks for banned products at the border.
What to do about unsafe or recalled products(external link) — Product Safety
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.
How to use it: It’s a good idea to have a written contract with your delivery service. Together you must discuss and agree terms for when — or if — compensation will be paid for damaged or delayed packages. There are four options:
- Declared value risk: Delivery service will pay up to the maximum amount stated in the contract.
- Owner's risk: You are responsible for any loss or damage, unless it’s intentionally caused.
- Declared terms: What the delivery service will pay depends on agreed terms in the contract, eg amount required for reasonable repairs.
- Limited carrier’s risk: Delivery service will pay up to $2,000 for each unit of goods.
If you don’t have a written contract, limited carrier’s risk applies.
When you can’t make a claim: There are a variety of reasons, including:
- damage due to a product fault
- damage due to inadequate packaging
- package not delivered because of a legal process, eg seized from delivery service by the police or NZ Customs Service.
Note: The Contract and Commercial Law Act came into effect on 1 September 2017. It covers rules previously contained in 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.
Goods sold by weight, volume, length or number must be:
- accurately weighed, measured or counted
- clearly labelled with the correct net quantity — this means the product itself, not product + packaging.
Equipment and processes used to weigh or measure goods must be accurate. The Act also specifies which measuring units, eg kilogram, metre, millilitre, must be used for certain types of goods.
Why: To make sure customers get what they pay for, and businesses sell correct quantities.
What you must do:
- Regularly check accuracy of weighing/measuring equipment.
- Make sure packages contain at least the quantity stated on the label — but not too much more, or you’ll lose money on each sale.
Do not:
- Include the weight of packaging when measuring.
- Use imperial units, eg a pound of cheese, 20 feet of fencing.
How the Act is enforced: Trading Standards officials might visit new businesses to offer advice, or carry out inspections in response to a suspected problem, eg after a complaint. If your weighing or measuring equipment is inaccurate, it may be seized and tested at the nearest Trading Standards laboratory.
Measurement for businesses(external link) — Trading Standards
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.
What you must do:
- Treat people with dignity and respect.
- Make sure no one is treated less favourably because of any personal characteristic.
- You don’t have to name or quote the Act in your terms and conditions — actions speak louder than words.
Do not:
- Refuse a sale, or provide sub-standard products or services, due to someone’s gender, religious belief, race, disability and other factors. This is discrimination and it is illegal.
- Use forced labour, child labour or pay less than the legal minimum — either in your business or in your supply chain.
Why human rights matter to businesses(external link) — Human Rights Commission
How the Act is enforced: If someone feels they have been discriminated against, they can complain to the Human Rights Commission. Some complaints are resolved through mediation.
A few cases end up in the Human Rights Review Tribunal or in court — recent examples include an AV company that dismissed an employee who refused to work Saturdays for religious reasons. It had to pay out a five-figure sum.
Make a complaint(external link) — Human Rights Commission
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.
Who needs to register(external link) — Trading Standards tool
Why: To make sure customers get what they pay for and know what their rights are if there’s a fault with the vehicle.
What you must do:
- Register as a vehicle trader if you intend to be in the business of motor trading, including if you sell more than six — or import more than three — vehicles in any 12 months.
- Comply with consumer laws that apply to all retailers, eg Consumer Guarantees Act and Fair Trading Act.
- If selling second-hand vehicles, display a consumer information notice (CIN) in its window or online listing. A range of information must be included, eg:
- dealer’s name and registration number
- cash price including GST
- make, model, year and engine capacity
- any debts owing — also known as security interests.
- Give each buyer a copy of the sales agreement.
- Keep your copies of sales agreements, either electronic or on paper, for at least six years.
- Auctioneers must tell prospective buyers of any debts owing on the vehicle — also known as security interests.
Do not:
- Sell vehicles if you are not registered.
- Tamper with odometers or other offences.
- Give false or misleading information.
- Sell a second-hand vehicle without a consumer information notice (CIN) — and car market operators must check sellers are doing this.
How the rules are enforced: The Registrar of Motor Vehicle Traders monitors transfers of motor vehicle ownership, in partnership with NZTA and NZ Customs. The Registrar also investigates alleged odometer tampering and unregistered traders. The Commerce Commission handles reports of missing or misleading CINs. Customer complaints that cannot be resolved with the trader, eg through a refund or repair, can go to the Motor Vehicle Disputes Tribunal.
Motor Vehicle Traders Register(external link) — Trading Standards
Motor Vehicle Disputes Tribunal(external link) — Ministry of Justice
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.
How to join the Financial Service Providers Register(external link) — Companies Office
Why: So customers can search an online register for people, businesses and organisations that offer financial services.
What you must do:
- Register as a financial service provider for each relevant category.
- If you provide services to retail clients, join a dispute resolution scheme.
- Comply with consumer laws, eg Consumer Guarantees Act, Fair Trading Act, Anti-Money Laundering and Countering Financial Terrorism Act and fair dealing standards in the Financial Markets Conduct Act.
- Some professions need a licence from the Financial Markets Authority, eg fund managers.
Who needs a licence(external link) — Financial Markets Authority
Fair dealing(external link) — Financial Markets Authority
Do not:
- Offer financial services if you are not registered. This is illegal.
- Apply to be registered if you — or senior people in your business — are disqualified, eg due to fraud conviction or undischarged bankruptcy.
How the rules are enforced: Failing to register can lead to fines or other penalties, including jail time.
Financial Service Providers Register(external link) — Companies Office
Dispute resolution schemes(external link) — Companies Office
