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Sales & Marketing

22 Nov 2010

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Consumer Law Reform: Is There a Need for Review?

In June 2010, the Ministry of Consumer Affairs (MCA) released a discussion paper (Discussion Paper) outlining a review of our consumer laws. This FYI identifies general problems with the Discussion Paper, and why you need to make your views heard. Our next FYI will look at the specific problems suggested by the Discussion Paper, and the additional discussion papers recently released by the MCA.

The Discussion Paper outlines a review of our main consumer laws. The consumer protection laws being reviewed are the:

Consumer Guarantees Act 1993;
Fair Trading Act 1986;
Weights and Measures Act 1987; and

to a lesser extent, the:

Auctioneers Act 1928;
Door to Door Sales Act 1967;
Layby Sales Act 1971; and
Unsolicited Goods and Services Act 1975.

The review began, as bad things often do, with a good idea. The Minister of Consumer Affairs initiated the review with two principles in mind: one law, one door. One law refers to the goal of a principles-based piece of consumer legislation. One door means that consumers have one place to go when consumer transactions do not go as planned.

With the one law, one door principles in mind, the objectives of the review were to:

reduce the burden imposed by poorly implemented legislation to help unshackle the economy;
improve the quality of regulation;
support better, and less, regulation; and
achieve simplification and consolidation of the existing law.

These are commendable objectives, and it is hard not to support these objectives. But the review itself has been inconsistent with these objectives. In short, the review could see over 30 new laws added - and no existing laws removed.

General problems with the Discussion Paper

Flawed logic

There are a number of problems with the review. Most importantly, the Discussion Paper proceeds upon two points of flawed logic.

The first point of flawed logic is that there is a need to conduct a wide scale review. The Discussion Paper states that a review is needed because consumer laws have not been reviewed recently, or previous reviews have not resulted in any changes. The MCA acknowledges in the Discussion Paper that there are no concerns with the effectiveness of the current consumer laws. This indicates that there is not a need for a wide scale review.

The second point of flawed logic relates to a table set out in the Discussion Paper. The table contains what the MCA describes as the "essential elements that consumer law must cover". These "essential elements" include:

prohibiting "unfair" contract terms;
prohibiting "unconscionable" conduct;
the Commerce Commission having the power to order people to substantiate claims; and
the Commerce Commission having the power to issue banning orders and court enforceable undertakings.

The claims in this table are put forward without reference or justification, and therefore are without basis. Who says that consumer law must cover these points? Why does the MCA state these elements are "essential" to consumer law, when the MCA states that there have been no concerns about the effectiveness of the current consumer laws?