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What does the Fair Trading Act mean for Trade Me members?
The key aspect of the Fair Trading Act is that it prohibits false or misleading representations about goods or services.10 February 2021
“The Fair Trading Act exists to promote fair competition and in this way it contributes to the economic wellbeing of all New Zealanders.
It prohibits certain conduct in trade, provides for the disclosure of consumer information relating to the supply of goods and services and promotes product safety...”
That’s the FTA in a nutshell according to the Commerce Commission who is responsible for enforcing the act.
The key principle of the Act is that it prohibits false or misleading representations about goods or services. What does this mean for Trade Me members?
It means all members who are ‘in trade’ need to conduct their business according to that principle. Listings must be honest, factual and not claim to be something they are not. The Consumer Protection website has some pretty good advice for businesses that’s worth bearing in mind.
Where Trade Me identifies that listings are potentially in breach of the FTA, two things could happen. Listings might be edited or they may be withdrawn. This is done at Trade Me’s discretion.
Gross breaches of the Fair Trading Act will conclude in memberships being permanently closed. A few years back there was a big issue with a motor vehicle trader who made misrepresentations as to the true price of their vehicles. They no longer have a Trade Me account, went into liquidation as a result and are subject to a formal investigation by the Commerce Commission.
It’s worth pointing out that making untrue claims about consumer rights can also be a breach under the FTA. The Commerce Commission has a good example highlighting this. A business using Trade Me cannot opt out of their obligations under the Consumer Guarantees Act.
The Commission states that “a 'No Refunds' sign statement [in a listing, for example], with no explanation of what situations this may apply to, amounts to an illegal attempt to deprive customers of their rights. A customer might well be entitled to a refund if the goods have a fault which they could not have known about when purchasing, or if the business has misrepresented the goods.”
Another example is making misleading claims about warranties. We’ve recently covered the difference between personal and manufacturer warranties to highlight the issue.
You can read about how Trade Me expects members to meet their regulatory obligations on product safety issues here.