Morgan Tait

Morgan Tait is the NZ Herald's consumer affairs reporter.

Law reforms give buyers more power, protection

More protections for consumers and hefty penalties for traders who breach the rules

Genna Shaw is looking forward to the change in consumer law after the recent purchase of a fridge-freezer turned sour. Photo / Greg Bowker
Genna Shaw is looking forward to the change in consumer law after the recent purchase of a fridge-freezer turned sour. Photo / Greg Bowker

A reform of New Zealand's consumer laws comes into force on Tuesday, bringing protections that have been lacking here for decades.

The overhauled laws give consumers more protections and introduce hefty penalties for traders who breach them.

One of the biggest reforms means that goods bought online will be covered by the Consumers Guarantees Act, giving buyers the same protections as they would have shopping in a store.

Reforms also crack down on extended warranties, telemarketers and door-to-door sales, as well as holding businesses accountable for any claims, allowing consumers to back out of contracts and changing rules around laybys.

Individuals now face penalties of up to $200,000 and companies up to $600,000 for misleading or deceiving consumers, or for participating in a pyramid scheme.

There are fines up to $2000 for not identifying yourself as online trader, not complying with suspension notice and publishing misleading information.

Consumer NZ researcher Jessica Wilson said the reforms brought the country's consumer protection laws "into the 21st century" and aligned us more closely with Australia, a champion for consumer rights.

Trade Me chief operating office Michael O'Donnell said the company had informed its more than 2 million users that "the loophole has gone".

"We've been a vocal supporter of consumer law reform and we're rapt that the changes are now coming into play," he said.

"It's also good news for all ecommerce in New Zealand ..."

Ms Wilson said the institute would have liked to see more protections for online traders, broader powers for the Commerce Commission to address breaches and mandatory pricing transparency and that New Zealand was still lagging behind Australia, where maximum penalties reached over $1 million.

Commerce Minister Craig Foss said consumer legislation was overdue for an update.

"We've modernised all consumer legislation so it doesn't matter how the transaction occurs, whether it be in a shop or online or at an auction, it just matters that there are the rules around how that transaction must happen."

Labour's consumer rights spokeswoman Carol Beaumont said the reforms were good news for consumers, but questioned the time they had taken to be introduced.

Commerce Commission competition branch general manager Kate Morrison said the changes gave the agency more power and was the second wave of three.

A first wave of changes were introduced in December and included giving the commission the power to force companies to attend interviews that formed part of their investigations.

The final instalment of the reforms, a ban on unfair contract terms, comes into play on March 17.

Online trader gives unhappy buyer the cold shoulder

Auckland woman Genna Shaw spent a month chasing down a solution for a faulty fridge-freezer purchased on Trade Me.

The 29-year-old spent $400 on a new fridge-freezer from a trader who used the online marketplace to sell goods from their South Auckland-based business.

"They were pretty helpful and delivered it to me all fine, but then after about three months the seal on the freezer came loose.

"It was leaking so I rang and asked them and asked if I could get a replacement seal."

She was told she could get a replacement, but she would have to pay for the manual labour involved and the cost of shipping the new seal from overseas.

"I'd only had it three months so was quite annoyed," she said.

Ms Shaw also phoned around other businesses looking for a replacement seal, but could not find one.

"It wasn't a standard model so no one could get the seal."

She lodged a complaint with the Disputes Tribunal, and despite forewarning the business of her intentions, they did not act until receiving a letter about the claim.

"As soon as they got the correspondence they came and picked up the fridge and gave me a direct deposit."

If Ms Shaw had purchased the fridge-freezer on or after Tuesday, she would get the same protections under the Consumer Guarantees Act as anyone purchasing in a bricks and mortar store, and the business would have been legally bound to fixing the seal, replacing her fridge or refunding her.

- NZ Herald

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