11 August 2021

Bill cracking down on unfair commercial practices passes third reading

Legislation to protect New Zealand consumers and business against unfair commercial practices has passed its third reading in Parliament today.

The Fair Trading Amendment Bill targets the use of pressure tactics, deception, one-sided contract terms and practices that exploit the vulnerabilities of a consumer or small business.

“With the passing of this Bill we have made clear that business practices in New Zealand should be conducted fairly and reasonably. The majority of businesses already operate honestly and should have no cause for concern about these new changes,” David Clark said

“We are tightening the screws on unfair and dishonest business activity, which has no place at any point in time, but especially as our economy recovers from the impact of COVID-19.”

The Bill adds to the existing protections put in place under the Fair Trading Act 1986 by;

  • Prohibiting unconscionable conduct in trade
  • Extending unfair contract term protections to include small trade contracts worth $250,000 a year or less.
  • Legally empowering consumers and businesses to demand uninvited sellers, such as door-to-door salespeople, to leave their property, including through the use of “do not knock” stickers.

“When I say unconscionable conduct, I’m talking about business practices that go beyond what can be deemed commercially necessary. Put simply, these amendments seek to stop big and powerful firms using their position to bully smaller businesses and consumers.

“Gone are the days where small firms have to either grin and bear unfair contract terms or walk away from valuable business without redress,” David Clark said.

Businesses that are found to act unconscionably will face fines of up to $600,000, and those breaching the rules around uninvited direct sales could face penalties of up to $30,000.