New Provisions Come Into Force Tackling Unfair Business Practices

Changes to the Fair Trading Act take effect today strengthening protections for businesses and consumers and tackling unfair business practices in Aotearoa New Zealand.

Commerce Commission Chair Anna Rawlings says the changes include the addition of a new prohibition against ‘unconscionable conduct’ which is business activity that substantially departs from Aotearoa New Zealand’s generally accepted or expected standards of business conduct, for example commercial conduct that goes against good conscience.

“Good business conscience is measured against the values and norms of modern society and expectations of what is right and proper according to those values and norms,” Ms Rawlings says.

“Those values and norms can include acting honestly, fairly and without deception or unfair pressure. This is conduct that is more than just hard commercial bargaining, but is clearly unfair and unreasonable.”

From today, businesses are also protected from unfair terms in standard form small trade contracts – these are ‘take it or leave it’ contracts such as many power or phone service agreements. Many standard commercial supply agreements may also be standard form small trade contacts.

“Terms in standard form small trade contracts can be assessed as unfair under the new law if, at the time the contract is entered into, it forms part of a trading relationship with an actual or expected annual value of less than $250,000.”

Amendments to the Fair Trading Act also offer additional protections for residents approached by door-to-door sellers.

“From today, residents can stop salespeople from coming to their home to sell goods or services without being invited. They can stop the salesperson from visiting without being invited by either telling them not to enter the property, or by asking them to leave when they are already there,” Ms Rawlings says.

“Residents can use a sticker or sign, such as a ‘Do Not Knock’ sticker on their gate or front door which tells salespeople that they cannot enter their property. If residents have a face-to-face conversation with a particular salesperson, and they tell them to not enter the property or to leave, then the salesperson cannot return for two years.”

These new protections for residents strengthen existing protections under the Trespass Act 1980.

The Commission has released guidance on its website for businesses and consumers wanting to know more about the new laws. This is available here.

The Commission encourages businesses to review and adjust their current practices to ensure they are compliant with the new laws, steering clear of conduct which may breach these provisions and cause harm to other businesses or consumers.

“We also encourage consumers and businesses to contact us if they feel that standard form contracts being provided to them contain unfair clauses, or if they feel they are subject to business practices that may be considered unconscionable. This helps us to identify conduct to be prioritised for investigation and helps inform our education and compliance work.”

Complaints to the Commission can be made via the website here.

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