Dodgy salespeople risk fines of up to $600,000, after changes to Fair Trading Act

Tuesday, 16 August 2022

Commerce Commission's 2020 list of most complained about industries reflects the impact of the Covid-19 pandemic. (First published November 2020)

Dodgy door-to-door salespeople are a key target the Commerce Commission has in its sights with new laws against unfair business practices.

On Tuesday changes to the Fair Trading Act came into force, designed to strengthen protections for businesses and consumers and tackle unfair business practices.

Commission chairperson Anna Rawlings said the changes included a new prohibition against “unconscionable conduct”, which was defined as business activity that substantially departed from standards of business conduct.

Here is what consumers need to know about the changes.

* Unfair terms and conditions still a problem for consumers

* 'No door-to-door sales' signs to be given legal status

New laws mean if salespeople ignore a ‘do not knock’ sign they are breaking the law and can be fined of up to $30,000.

What is the Fair Trading Act?

The Fair Trading Act is designed to protect consumers from misleading and deceptive trader behaviour, and unfair trading practices.

These behaviours can include anything from false claims about what a product is made from or where it comes from, unfair sales practices, and key details being hidden in fine print.

What are the key changes to the act?

The changes to the act that came into effect on Tuesday were designed to tackle unfair business practices in three key areas:

“Unconscionable conduct” in trade (trade which significantly departs from New Zealand values) is prohibited
Consumers will have more rights to tell door-knocking salespeople to leave or not enter their residential property
Unfair contract terms provisions are extended to cover small trade contracts, of under $250,000

What is ‘unconscionable conduct’?

Commerce commission, general manager of fair trading, Vanessa Horne, said unconscionable behaviour was conduct that obviously departed from what was expected from those acting in good commercial conscience.

As this is a brand-new law, the Commission would look to Australia to set legal precedent for the conduct, she said.

In Australia, one case of unconscionable conduct occurred when a salesperson used deception to gain access to older women and sold them expensive vacuum cleaners they did not need by creating a sense of obligation.

Businesses in New Zealand convicted of unconscionable conduct can be fined up to $600,000, and individuals can be fined up to $200,000

The courts can also make a range of other orders, such as requiring businesses to compensate consumers.

Can you stop a salesperson knocking on your door?

Yes, the new rules enable consumers to stop salespeople without being invited.

The rules apply if the goods or services cost more than $100, or if they cost less than $100, but you are not given a price for the goods or services when they are offered to you.

Consumers can verbally tell a salesperson to not enter their residential property, or place a ‘do not knock’ sign at gate. If salespeople do not leave, or ignore a ‘do not knock’ sign they can be fined up to $30,000 for a business or $10,000 for an individual.

A salesperson told to leave a property cannot come back for a minimum of two years.

CORRECTION: The Fair Trading Act is not part of the Commerce Act as reported in an earlier version of this story. (Amended at 4.15pm, August 17, 2022)