New Zealand’s much anticipated consumer law reform was realised at the end of last year when five separate amendment Acts and one replacement Act were passed into law.
The relevant Acts are:
- Auctioneers Act 2013
- Carriage of Goods Amendment Act 2013
- Consumer Guarantees Amendment Act 2013
- Fair Trading Amendment Act 2013 (FTA)
- Secondhand Dealers and Pawnbrokers Amendment Act 2013
- Weights and Measures Amendment Act 2013
The new legislation updates New Zealand’s consumer laws to include modern transactions, and to align our laws more closely with Australian laws.
Consumer rights have been strengthened, business compliance has been simplified, and consumer protections are clearer and more accessible.
A number of the changes will have a significant impact on businesses. In particular, the introduction of new obligations and restrictions, including:
- restrictions on unfair contract terms in standard form contracts;
- a requirement for businesses to substantiate representations made to consumers;
- provisions on extended warranties;
- consumer information standards, product safety and product recall requirements; and
- obligations in connection with internet sales,
with significant increases in penalties for breaches.
While some new provisions, such as compulsory interview powers, product safety powers and management banning orders came into effect immediately, most will be implemented within six months.
Laws prohibiting unfair contract terms will come into force 15 months from the date of the law reforms, i.e. 18 March 2015.
The Commerce Commission says it's ready to enforce the changes enacted by the passage of the Fair Trading Amendment Act 2013, and urges businesses to know the new ground rules and ensure they act within the law. Chairman Dr Mark Berry says the changes are a significant modernisation and urges businesses to act now to ensure they comply:
“There are some major changes in the Bill that traders and consumers need to understand because they have consequences for both buyers and sellers. The sanctions for breaching the Act are now more severe, and the Commission has enhanced powers to investigate and enforce the Act. The stakes are higher for traders now that this Act has passed”.
The Commerce Commission is finalising its guidance on each of the new provisions, which it is expected to publish ahead of the changes coming into force.
Some of the key issues which you will need to consider before the transitional periods come to an end are:
- Do your standard form consumer contracts include any "unfair contract terms"?
- This may also cover your business contracts if they relate to goods or services which are also consumer goods or services, as the definition of "consumer contracts" under the FTA is very broad.
- Should you now be adopting a practice of contracting out of the FTA in your business to business contracts?
- Have you updated your extended warranty agreements and materials to comply with the new mandatory requirements for these agreements? (These requirements also apply to applicable insurance contracts.)
- Have you updated your lay-by sales agreements and direct sales agreements (and related practices) to comply with the new mandatory requirements for these agreements?
- Are you dealing in second-hand goods on a routine or promotional/trade-in basis? If so, do you have the applicable licences in place?
- Do you have processes and guidelines to ensure you retain supporting evidence that all representations that you make in trade are substantiated?
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