Be Clear And Upfront About Surcharges This Easter Holiday

As Easter approaches the Commerce Commission is reminding businesses that any surcharges added must be clearly disclosed and the reasons for the surcharge accurately described to avoid breaching the Fair Trading Act 1986.

Commission Chair Anna Rawlings said “Businesses can set their own prices for products and services, including charging a surcharge. However, if they do apply a surcharge it must be clearly disclosed, for example, by adding information to their website for online sales or placing a sign outside. Customers should be aware that a surcharge will be payable before they make a decision to purchase or engage the service, so they can decide whether to pay the surcharge or go elsewhere”.

“In addition, the reason for any surcharge must be accurately described and must not be capable of misleading consumers,” said Ms Rawlings.

For example, businesses sometimes use surcharges to recover additional costs such as staff wages, because employees get a higher pay rate and an alternative day off under the Holidays Act when they work a public holiday if it’s a usual working day for them. However, if a business says a surcharge covers those additional costs, the surcharge should not exceed those costs, and the costs should actually be incurred by the business.

Over Easter Good Friday and Easter Monday are public holidays. Some businesses may face additional costs on Good Friday (2 April), others on Easter Monday (5 April) and some may face additional costs on both days (for example, if they have some staff who usually work on Friday and some who usually work on Monday). It is likely to be misleading and a breach of the Fair Trading Act for businesses to charge a public holiday surcharge on days when they do not actually incur additional costs. Working out which day is a public holiday over a long weekend can be confusing, which is why the Commission is reminding businesses that they must be upfront about surcharges and check that they are applying them on the right days.

Consumers who consider they have been misled about the reason for a surcharge, or the amount of a surcharge, or who believe that the surcharge has not been adequately disclosed, can make a complaint to the Commerce Commission.

Background

Breach of the Fair Trading Act
Only the Courts can decide if there has been a breach of the Fair Trading Act and can impose penalties where it finds the law has been broken. A company that breaches the Fair Trading Act can be fined up to $600,000 and an individual up to $200,000 per offence.

New Zealand’s public holidays in 2021
Public holidays and anniversary days can be found on govt.nz.
 

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