My assignment is on The Fair Trading Act.
What the Fair Trading Act does The Fair Trading Act makes it illegal for businesses to mislead consumers, give them false information, or use unfair trading practices. It also promotes product safety and ensures consumers receive information they need when they buy goods and services. It also sets out when information about certain products must be disclosed to consumers, and helps ensure products are safe. The Act applies to everyone in trade. As well as traders and shops, the Act covers government agencies and state-owned enterprises. Most of the Act does not cover private sales.
How it effects making purchases over the internet The internet has changed the way consumers purchase goods and services, letting them buy anything from groceries to a flight to Vanuatu at the click of a button. It is very important today because of how easy it is to purchase almost anything online from animals to devices and to family holidays. So if this Fair Trading Act wasn’t put in place people could be misled hugely. For example someone could advertise an I phone 5 on trade me but actually be selling an I phone 4. That would be breaching the Fair Trading Act.
Examples of the Fair Trading Act Here are some examples of the fair trading act being breached: An advertisement says a jumper is made from angora wool, when it is actually 90% synthetic and only 10% angora. A shop that sells new TVs sells you a TV without telling you it is second-hand. A job advertisement turns out to be an employment agency looking for new clients. You tell a mobile phone salesperson that you are looking forward to using wireless internet on the mobile phone, but he doesn’t tell you that the mobile phone doesn’t have that function.
Examples of misleading or false information The price is different then was advertised or on the sticker price. A product labelled “Made in New Zealand” was actually made somewhere else. A business tells you that the store doesn’t give refunds under any circumstances. You are offered a free gift for buying a certain item but the cost of the item being sold is inflated to cover part or all of the cost of the ‘gift’. You buy a product which claims to cure baldness. After using it for some time, you remain bald as a snooker ball. You talk to your doctor and she tells you that this type of product cannot ‘cure’ baldness. A business is using an unfair trading practice if they use one of the following methods.
Offering free gifts or prizes without any intention of giving out a prize, or giving something different to what was advertised. Advertising an item really cheaply to get people into the store, but only having a very small number of these items to sell. Selling you a business or franchise with false claims about how much you can earn. Pyramid selling schemes – a selling scheme where most of the money comes from joining more people up to the scheme, rather than from sales. Demanding or accepting money when the business has no intention of supplying the goods or services, or doesn’t intend to supply them on time, or doesn’t intend to supply the same goods or services that were ordered. General information and some issues about the fair trading act If an item is advertised for sale at a particular price, but you get to the shop only to be told that there has been a mistake and the item is actually more expensive, the trader doesn’t have to sell you the item for the advertised price. They’re entitled to claim a genuine mistake was made.
The Fair Trading Act basically protects us from being ripped off or mislead. The Fair Trading Act is extremely important in today because of internet purchases. So if this rule wasn’t put in place many people would be being scammed, because it is so easy to mislead someone into buying something that is different from what they thought they were buying. When information given to you about goods and services is not true, then a false claim has been made. For example, if you buy a shirt with a “Made in New Zealand” label and find it actually came from a sweat shop in Korea.
Delivery of goods
If a business can’t supply goods or services within a specified time or a reasonable time then they must not accept payment. What is reasonable depends on the specific circumstances. Generally what is normal practice for that industry or situation is considered to be the reasonable standard.
Unfair practices Unfair practices are selling methods that mislead you. Unfair practices which are illegal under the Fair Trading Act include: Offering prizes or gifts without intending to supply them, or not supplying them as offered. Bait advertising – when a seller advertises particular goods or services at a particular price, and doesn’t intend supplying or selling reasonable quantities at that price. Making misleading claims about business activities. For example, claiming you can make $1000 a week selling cosmetics from home, in circumstances where you would have to work about 20 hours a day, 7 days a week to make that sort of money. Pyramid selling schemes
Demanding or accepting payment without intending to supply the goods or services, or without believing they’ll be ready at a specified time, or intending to supply different goods or services. Demanding payment for unsolicited goods or services
Using physical force, harassment or coercion when supplying goods or services.
Product safety The Fair Trading Act gives the Minister of Consumer Affairs the power to ban unsafe products or order their recall. A trader can also be instructed to inform the public why and how the goods are unsafe, offer to repair or replace the goods, or provide refunds. When a trader voluntarily recalls a product, within 2 working days they must report the recall to the Ministry of Business, Innovation and Employment. The ministry is responsible for publishing the recall notice on its website. Quotes and estimates
A supplier must be careful when providing quotes or estimates and customers are entitled to rely on the prices given. A quote is an offer to do a job for a certain price. If a quote is accepted, the work must be done for that price, unless the parties agree to change it. An estimate is the closest price or range of prices that can be given, based on past experience. If the final price is going to be significantly different from the estimate then the business should make this very clear to the customer. In our opinion anything more than 20 percent is significant. If a business is going to charge you for giving a quote or estimate they must tell you this before agreeing to provide it. GST extra in the fair trading act
If GST is not included in a quote or advertised price, this must be made clear. If it isn’t, you can argue that you should just pay the figure quoted. Companies that didn’t make it clear their advertised prices didn’t include GST have been prosecuted and fined. It is still common for tradespeople to exclude GST. When you first ask for a quote, check the GST status. Price comparisons with the fair trading act
You see an ad saying “was $199, now just $99 – save $100!” But you bought one before the sale started and the price was only $129. Price comparisons like this must be based on actual market prices. In this case, for example, the item should have been on sale for $199 for a reasonable time before reduction. 30 days is regarded as a “reasonable time” for many goods by the Commerce Commission, which enforces the Fair Trading Act. If the earlier price was in fact $129 then the comparison was misleading and the Act may have been broken. Packaging with the fair trading act
Packaging must not be misleading or deceive you about the nature, quantity or size of the product. If packaging might be deceptive there should be a clear description of the goods on the package and a clear statement about the volume or weight of the product.