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Consumer Law Reform

  • June 9, 2014

Consumer law is changing in New Zealand and some of the changes have already taken effect. In early December 2013, the long awaited Consumer Law Reform Bill went through its final reading in Parliament and on 17 December 2013 was passed into law by way of six separate amendment Acts.

The law reform has been designed to update consumer law in New Zealand and harmonise it with Australian law to further the Government’s agenda of a single economic market. The widespread changes are intended to provide stronger consumer protections in order to enable consumers to transact with greater confidence and promote competition, innovation and growth.

What is changing?

The most significant changes are the amendments to the Fair Trading Act 1986 and Consumer Guarantees Act 1993. There are also changes to other enactments, such as the Carriage of Goods Act, Weights and Measures Act, Secondhand Dealers and Pawnbrokers Act as well as a new Auctioneers Act.

Consumer Guarantees Act 1993 (CGA) – the CGA protects consumers by providing certain guarantees from suppliers and manufacturers when goods are acquired. The amendments to the CGA introduce new guarantees for the delivery of goods, as well as for the supply of electricity and gas. The CGA will also be extended to cover goods ordered over the internet or by telephone, and goods sold at auction or tender.

Fair Trading Act 1986 (FTA) – the FTA protects consumers by prohibiting unfair conduct and trade practices. It provides for the disclosure of information relating to goods and services, and promotes product safety. The changes to the FTA introduce new restrictions relating to unfair contract terms, unsubstantiated representations, extended warranties, unsolicited goods, product safety and recalls, and internet sales and auctions. The Commerce Commission has also been granted extended powers.

When do these changes take effect?

Some of the changes took effect from 18 December 2013. These include changes to new product safety requirements and the increased powers of the Commerce Commission. Changes to collateral credit contracts are also now in effect. Most of the key changes however, only come into effect on 17 June 2014. The six month delay is intended to give businesses the time to change their practices. Changes that will come into effect at that time will include those relating to unsubstantiated representations, extended warranties, unsolicited goods, internet sales, and delivery guarantees. Further changes relating to unfair contract terms will not come into force until March 2015.

Can you contract out of the FTA and CGA?

No, not if you are in the business of providing goods or services to consumers. The amendments to the FTA and the CGA now make that clear. The only exception to this rule, which the amendments to both Acts seek to align, is where one business is contracting with another. To successfully exclude the requirements both parties must be in trade, they must agree in writing, and the exclusion must be fair and reasonable. What is fair and reasonable in the circumstances will depend on a number of different factors.

What should you do now?

If you are a consumer you can learn more about the new protections the changes will bring by browsing The Commerce Commission and Consumer Affairs websites.  If you have a particular issue to discuss, consult your with your lawyer.

Individuals and businesses in trade are particularly advised to consult with their lawyer before 17 June 2014 in order to assess the impact the changes to the law may have on their current business practices. The changes are widespread and significant, which is why the six month lead-in time has been put in place.