No agreement on Consumer Law Reform

No agreement on Consumer Law Reform at MTA Conference

At its annual conference in Nelson yesterday, Motor Trade Association (MTA) held a forum to discuss the Consumer Law Reform, which included representatives from Trade Me, NZ Retailers Association (NZRA) and Auckland University School of Business.

Although no agreement was reached, and there was varying opinion among industry professionals, there was general support from MTA members on the range of ideas discussed.

Mike O’Donnell, Head of Operations at Trade Me, held a strong position in favour of the Consumer Guarantees Act (CGA) applying to all online auctions for traders, although agreed with MTA, that there may be a case for some exemptions for older or higher mileage cars. O’Donnell suggested that just like Australia, New Zealand should consider allowing traders to contract out of the CGA when selling older used vehicles with more than 160,000km or more than 10 years old.

“We believe motor vehicles are a unique item and there is justification for an exemption for older and worn vehicles to be excluded from the CGA.”

Although MTA was aligned with Trade Me’s view of exempting old cars from CGA coverage they also sought reinstatement of minimum statutory warranties. MTA opposed introducing the added protection of CGA for buyers using auctions. MTA believes this would be in conflict with the rationale behind the auction system, and may mean trade-in values could decline, forcing consumers to sell or dispose of their own vehicles privately.

MTA’s Dealer Services and Mediation Manager, Tony Everett said MTA had observed that the average age of the New Zealand fleet was at nearly 13 years old, with the average retail value at around the $5,000 to $6,000 mark. “It is difficult for dealers to operate in the price bracket for older cars, because they can’t maintain sufficient margins to then meet the requirements of consumer legislation.”

“Rather than trying to bring auctions under coverage of the CGA, MTA would like to see mandatory disclosure of terms of sale clearly defined in online auctions, so that consumers are fully informed of their rights at the time of sale, and can then make their own judgements.”

MTA would also like to see fairer, clearer contract agreements and want the inclusion of a prohibition on unfair contract terms provisions within the Fair Trading Act, with application to the business to business sector.

Everett said, “The existence of unfair contract terms has a negative impact on New Zealand businesses. New Zealand is mostly made up of small businesses, and they are more likely to be taken advantage of by larger organisations when unfair contract provisions exist.”

Leading academic Gehan Gunasekara, a Law Lecturer at Auckland University School of Business, agreed and said that the current terms were unfair and that New Zealand needed to advance its position in this area. “There is an information imbalance between large business and small business. Consumer Law as it applies to small businesses has some weaknesses such as standard form contracts and franchise agreements.” he said.

Gunasekara said that while accepting that those entering into such agreements or contracts needed to carry out appropriate due diligence, he felt that in too many cases this did not help, as key conditions are often buried in the small print.

“Reviewing unfair contract terms, unconscionable conduct, and good faith provisions will all help address these issues – and these are all on the agenda for the review.”

John Albertson, CEO NZRA, agreed with Trade Me’s view of extending the CGA coverage to apply to online auctions, and said that it was unfortunate that the Sales of Goods Act wasn’t included in the review.

Albertson also said that motor vehicle dealers were similar to retailers, however he said that franchises did not require special protection, as most people would more than likely do their homework prior to setting up their business.

He also added that it wasn’t all about introducing and changing the law. “Business operators also needed to get their behaviour right to encourage repeat business.”
ends

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