Proposed legislation partly aimed at protecting Trade Me users from rogue professional traders has moved a step closer to becoming law.

The Consumer Law Reform Bill - the first major update of consumer law in two decades - has been opened for submissions.

The bill passed its first reading in Parliament this month and is now being considered by the commerce select committee.

It is a key element of the Government's 120-point Economic Development Plan, and will amend several acts, including the Consumer Guarantees Act, Fair Trading Act and Carriage of Goods Act.


"Strengthening and building our economy requires a series of good policy decisions and reforms, and this is one of them," said Consumer Affairs Minister Chris Tremain this month.

One of the bill's objectives is to align New Zealand and Australian consumer law, which the Government says will help it achieve its aim of having a single economic market with Australia.

It has said the bill will close holes in layby agreements that have left buyers at risk of losing their money or receiving poor-quality products.

Under the new law, a written agreement will be required to clarify the terms of layby sales and buyers will be able to cancel without being penalised.

It would also bring professional Trade Me traders under the umbrella of the Consumer Guarantees Act, giving buyers the same rights as they would have if they bought products from a bricks-and-mortar store.

The law would not apply to one-off and casual traders on the website.

The bill will also mean couriers will be unable to avoid providing guarantees when dealing with consumers, and may increase their cap on liability from $1500 to $2000.

Chris Dann, of law firm Chapman Tripp, said the new laws would also clamp down on false advertising.

"[Businesses] will have to have an evidential basis for their assertions that relate to their goods and services.

"That's something that's going to cause a lot of businesses to ... really sit down and think about what they are claiming in their marketing."

Retailers Association chief executive John Albertson said the proposed reforms were a step in the right direction, and the bill's aim to repeal small pieces of legislation - such as the Door to Door Sales Act and the Layby Sales Act - was a good idea.

Dann said the committee would deliver a report on the bill after submissions were received.

The bill enjoyed strong cross-party support and was likely to be passed into law this year, he said.

The closing date for submissions is March 29.

Proposed changes to consumer law:
* Mandatory formal agreements for laybys.
* Ensuring the seller keeps the goods in good condition.
* Allowing cancellation without penalty.
* Bring professional Trade Me sellers into the realm of the Consumer Guarantees Act.
* More powers to enforce the Fair Trading Act.
* Make it more difficult for firms to make false claims in advertisements.