The FAIR TRADING ACT 1986 protects consumers by prohibiting misleading or deceptive conduct in trade. It also:
The Act applies to anyone engaged in trade. "Trade" is given a wide definition and includes any business, industry, profession, occupation, commercial activity, or undertaking relating to the supply or acquisition of goods or services. It also includes the sale or purchase, or other disposition or acquisition, of any interest in land.
The Act covers all aspects of business, including advertising, pricing, sales techniques and finance agreements.
The FAIR TRADING ACT 1986 prohibits people in trade from engaging in misleading or deceptive conduct, or conduct that is likely to mislead or deceive. Usually conduct that breaches this rule will qualify both as misleading conduct and as deceptive conduct, and therefore the person or business in question will be liable under both headings.
For there to be a breach of the Act it is irrelevant whether there was an intention to deceive or mislead: the question is whether the conduct could mislead or deceive. Similarly, it is not necessary for someone to have suffered a loss or to have been directly affected by the conduct in question in order for there to be a breach of the Act.
As well as this general rule against misleading or deceptive conduct, the Act also specifically prohibits certain types of behaviour, including:
The Act also prohibits certain unfair trading practices, such as:
In the FAIR TRADING ACT 1986, "goods" means:
"Goods" also specifically includes:
In the FAIR TRADING ACT 1986, the term "services" includes any rights, benefits, privileges or facilities that are (or are supposed to be) provided, granted or conferred.
Without limiting the general definition just given, specifically includes rights, benefits, privileges or facilities that are (or are supposed to be) provided, granted or conferred under any of the following types of contract:
But "services" does not include:
Regulations made under the Act set standards for information provided to consumers. Currently there are information standards dealing with the country of origin of goods, the fibre content of textile goods, and the correct way to care for textile goods.
Regulations also set down product safety standards. There are currently standards for bicycles, children's night clothes, and toys.
A person who fails to comply with these information or safety standards breaches the Act.
The protection provided by the FAIR TRADING ACT 1986 is available to consumers and also to rival competitors.
In advertising and selling goods or services a person running a business should take into account the fact that some people will be more easily misled and deceived than others. The courts have clearly stated that the Act is available to all people, regardless of their level of intelligence or naiveté.
In general the FAIR TRADING ACT 1986 is policed by the Commerce Commission. However, in addition to an action by the Commerce Commission, any consumer or competitor who believes there has been a breach of the Act may take legal action under the Act independently.
Actions taken under the Act may be either criminal or civil, or both (although action under section 9, which is the general rule against misleading or deceptive conduct, and under several other provisions of the Act can only be civil). In a criminal action, the person or business is charged with a breach of the Act and is liable to a substantial fine - up to $60,000 for an individual and $200,000 for a company. In a civil action, the person may be ordered, among other things, to pay damages to a consumer or competitor who has suffered some loss or damage.
Both individuals and companies, equally, may be prosecuted under the Act. If action is taken against a company, it will be the directors, managers and employees that may be held liable. Similarly, any other person who may have assisted, helped or encouraged the breach may also be held liable.
If you are an employer you must take extra care to ensure that your employees are fully aware of what is acceptable conduct under the Act, of what constitutes a breach, and of what the consequences are of breaching the Act. As an employer you are responsible for the actions of your employees.