New Zealand: New Zealand Fair Trading Act – 2006 In Review

Last Updated: 20 April 2007
Article by Daniel Gill

The Commerce Commission (Commission) monitors compliance with the Fair Trading Act, which is our principal consumer protection legislation. 2006 was a busy year for the Commission as it focused on product advertising and on generating fraud awareness amongst consumers. The year also saw the Commission pursue a number of high profile cases in relation to misleading pricing, particularly in the banking and air travel industries.

January/February

Fuel costs

The Commission commenced 2006 with a stern warning for businesses – fuel charges must be incorporated into the price, not added as a surcharge or additional charge. The Commission’s warning followed a District Court ruling the previous year concerning Air New Zealand’s advertising. In that ruling, the Court held that fuel costs are a normal operating cost of business and need to be included in prices. Since that judgment, the Commission has contacted over 70 businesses, finding 32 of those to be imposing additional fuel charges.

March/April

March: ‘Fraud Awareness Month’

As part of Fraud Awareness Month, the Commission warned New Zealanders to be wary of scams promising great wealth for little input. They suggested consumers look out for certain characteristics which typically identify a scam. Scam identifiers include that the proposition comes out of the blue, sounds like a quick and easy way to make money, suggests there is almost no effort or risk, asks you to give personal information such as your banking details, and sounds too good to be true. The Commission drew consumers’ attention to the following scams:

Lottery and prize scams

The Commission warned consumers to be aware of lottery and prize scams. In particular, consumers were warned of lottery scams initiated by a letter or email to a consumer alleging the consumer had won a significant prize in an overseas lottery. These emails often seek contact details and, if replied to, are followed by requests for bank account and identity information. The Commission urged consumers who receive such an email to, ‘Check it, delete it, and destroy it.’

Phishing emails or calls

The Commission also warned consumers of the new intensity and technical sophistication of phishing scams. These scams include sending consumers emails, which are typically alleged to be from a New Zealand or Australian retail bank and include a link to an apparently authentic website. These emails aim to fool consumers into disclosing their personal banking information and passwords. The Commission provided tips to help consumers protect themselves from such scams, including keeping your computer secure, only using the official website of your financial institution, avoiding using computers at public places (such as internet cafes and libraries) for online banking, and never clicking on a link within an email from an unknown source.

Avoid get rich quick schemes

The Commission recommends consumers protect themselves from pyramid selling and 'work at home' scams by never entering into investment schemes without independent financial advice, never accepting offers from strangers and, if you become suspicious of a scam, checking with the Commission.

Non-disclosure of credit card fees

In March, ANZ National Bank was fined $1.325 million after pleading guilty to charges of failing to disclose properly the fees charged for overseas currency transactions on its credit cards. This was the highest total fine ever imposed under the Fair Trading Act in a single case. The bank also agreed to refund $10 million to ANZ and National Bank customers who had made foreign currency transactions on their credit cards. The Commission believed that disclosing the fees correctly would generate greater competitive pressure on banks, ultimately reducing the fees charged to consumers. In July, BNZ also pleaded guilty to similar charges. BNZ was fined $550,000 and agreed to pay $5 million in compensation to customers who had made foreign currency transactions on their cards. In September, Westpac admitted it had also breached the Fair Trading Act. The bank was fined $570,000 and agreed to pay $4.5 million in compensation to customers.

May/June

Organic food must be labelled correctly

May saw a first for the Commission when it fined a butcher for falsely labelling products as ‘certified organic’. Jason Arthars and Clark’s Organic Butchery Limited were fined $10,000 when the company falsely labelled products as ‘certified organic’ and ‘allergy free’. The company also claimed to be certified by New Zealand’s principal certification agencies when it was not.

In June, Ron Ross and Ross’s Super Meat Store Limited were also fined when they falsely labelled products as ‘certified organic’. Together, they were found guilty of falsely advertising chicken as ‘certified organic chicken’ when the chicken (although sourced from certified organic farms) was processed at a butcher which was not a certified organic producer. Additionally, the butcher falsely advertised chicken nibbles as ‘organic’ and falsely sold turkeys as ‘fresh’. The turkeys had been supplied to the butcher frozen and were then thawed.

Following the court decisions, the Commission has stressed that organic and fresh products command a premium price and consumers must be able to trust the integrity of the labels. The fines imposed by the court should send a strong message to those involved in the organic food industry that they should be careful in the labelling of their products.

July/August

Body Enhancer

In 2005, Zenith Corporation was found guilty of breaching the Fair Trading Act by misrepresenting that its Body Enhancer liquid would promote fatburning, assist muscle growth, detoxify the liver and prevent collagen depletion. In July 2006, Zenith Corporation was sentenced for these offences and ordered to undertake a nationwide corrective advertising campaign and pay a fine of $632,000.

Misleading pie labels

In August, the Commission warned Australian pie maker Mrs Mac’s when testing revealed that the company’s meat pies did not have as much meat as its packaging claimed.

Rights to choose a windscreen repairer

Motor vehicle insurer IAG (the parent company of State Insurance) was fined $127,000 for allegedly misleading its customers about their right to choose a windscreen repairer when making an insurance claim. Although State Insurance’s brochures indicated policy holders could choose any company to carry out the repairs, many customers were told by staff members that they had to use a certain company. The large fine imposed by the Court arguably reflects the large number of people that may have been affected by the statements.

September/October

Qantas engages in misleading advertising

In October, Qantas was found guilty of breaching the Fair Trading Act after misleading the public through its advertising. Some Qantas advertisements failed to disclose extra charges, while others imposed additional charges to cover operating costs, such as fuel charges, which should have been incorporated into the price. This prosecution followed the Commission’s prosecution of Air New Zealand for similar behaviour earlier in the year.

The Commission indicated that the Court’s ruling reinforces New Zealanders’ right to get accurate information about prices. Qantas and Air New Zealand are now using all-inclusive prices in their advertising.

Falsely labelled timber

In October, Carter Holt Harvey was fined $900,000 for breaching the Fair Trading Act by selling timber that did not meet the grade claimed on the packaging. Carter Holt Harvey was investigated by the Commission after concerns were raised by the New Zealand Timber Industry Federation. An internal Carter Holt Harvey report indicated that since 2001, the company knew that its timber was not consistently meeting the grade claimed, but felt that to stop labelling it as the higher grade would be ‘financial suicide’.

Misrepresentation of quality of insulation products

In October, two manufacturers of insulation products, Tasman Insulation New Zealand Limited (the manufacturer of Pink Batts) and Autex Industries New Zealand Limited (manufacturer of Greenstuff), were warned that they may have breached the Fair Trading Act when their packaging misrepresented the quality level of their products. As both companies acted quickly, taking corrective action to prevent misrepresentations in the future, no further action was taken by the Commission.

November/December

Supplier Information Notices

In December, Harpers’ for Cars Limited admitted breaching the Fair Trading Act by failing to supply Supplier Information Notices with the used cars it sold on Trade Me. Supplier Information Notices must be provided with all sales of used motor vehicles. They provide information such as the make and model of the vehicle, odometer reading and whether the vehicle has a security interest registered against it. The Commission commented that a Supplier Information Notice is vital for online car purchasers who cannot visually inspect the vehicle and must rely solely on the information provided by the trader.

Children’s wear labelling

Children’s wear retailer Tian En Trading Company, trading as Bobbe Children’s Wear, together with its director, were fined $7,000 after admitting to breaching the Fair Trading Act when it failed to attach country of origin, fibre content or care details to a large amount of clothing and footwear it was selling.

Misleading liquor flyer

The Mill Liquorsave Limited was fined $10,000 after its use of a misleading promotional flyer. The flyer gave the impression consumers would receive a free windbreaker if they purchased an 18 bottle pack of beer. However, customers were required to buy up to six 18 bottle packs before they were eligible to receive a windbreaker.

What’s next?

In 2007, the Commission is likely to continue to focus on misleading pricing, packaging and promotions. We have already seen the results of the Commission's investigation into the Vitamin C content of Ribena.

Phillips Fox has changed its name to DLA Phillips Fox because the firm entered into an exclusive alliance with DLA Piper, one of the largest legal services organisations in the world. We will retain our offices in every major commercial centre in Australia and New Zealand, with no operational change to your relationship with the firm. DLA Phillips Fox can now take your business one step further − by connecting you to a global network of legal experience, talent and knowledge.

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions