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Commerce Commission Consumer Issues Report

October 06, 2017

Contacts

Partners Peter Stubbs
Senior Associates Gwendoline Keel, Sarah Lee

Consumer law

Last month, the New Zealand Commerce Commission (Commission) released its 2016/2017 Consumer Issues Report (Report).

The statistics

The Report reviews three main areas of law enforcement undertaken by the Commission - the Fair Trading Act 1986 (FTA), the Credit Contracts and Consumer Finance Act 2003, and the Commerce Act 1986.

According to the Commission consumer spending reached record highs in the first quarter of 2017 and growing technologies continue to transform the way we shop. Comparatively, there has only been a moderate increase across the 2016/17 financial year in the number of complaints made to the Commission.

Fair Trading Act complaints

In the FTA space, the breakdown of complaints was as follows:

 

See below for a more detailed review.

Unfair pricing

Pricing practices were the most complained about FTA issue in the 2016/2017 financial year. The majority of complaints related to supermarkets and telecommunication providers.

In particular, consumers complained about being misled by recommended retail prices and subsequent discounts offered during sales periods, not being charged the advertised price, and being misled about the total cost of a purchase made online where additional charges are drip-fed into the final price as the customer moves through the sales portal.

In May 2017, the Commission published an open letter to all retailers about pricing practices. The letter gave guidance on how to avoid misleading pricing practices following recent enforcement action taken by the Commission. You can read more about that letter here.

Online traders

Forty-two percent of complaints received by the Commission in the relevant period related to online consumer experiences. Eighty-five percent of those complaints related to online traders based in New Zealand.

Among the common issues identified in relation to online consumers were complaints about low quality services or goods offered by traders marketing on social media platforms, including those who did not supply the goods at all. Coupon and one-day deal sites were noted in relation to inadequate after sales support.

Interestingly, one of the key issues identified among the complaints related to overseas traders operating with co.nz web addresses - giving consumers the impression they were dealing with a New Zealand-based trader. The Commission reported that approximately 20% of .co.nz websites are registered to foreign individuals.

You can access the Commission's full report along with a summary infographic here.

Warranty and guarantee complaints

Complaints about warranties and guarantees increased by 160% in the 2016/17 financial year. Largely these complaints relate to industries trading in high value, technical goods such as domestic appliances and motor vehicles.

The Commission is not responsible for the enforcement of the Consumer Guarantees Act 1993 (CGA) - however, the relevance of the CGA to the Commission stems from a provision in the FTA that prevents traders misleading consumers as to their rights under the CGA (including the statutory guarantees enshrined there). Many consumers reported difficulty in getting traders to provide refunds, repairs or replacements for faulty goods as required under the CGA.

What can your business learn from this Report?

All businesses should use the Report as an opportunity to check their policies and consumer facing agreements to make sure they are compliant with the current law.

If you would like advice about your existing policies or consumer facing agreements, give us a call. We are always happy to help.

In particular, if you are unsure of whether your online return and exchange policies are compliant, or are concerned about the content you are publishing on your website, we can help to identify your business' exposure to key risks with our 'Online Sweep' service - just ask us how.

Follow us on LinkedIn and Twitter to stay up to date on the latest developments in sales and marketing law.

 

Contributors fiona.ryan@simpsongrierson.com, hana-rae.seifert@simpsongrierson.com