Definitions now the key to consumer protection

MIKE O'DONNELL

Last updated 05:00 15/10/2012

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OPINION: It's seldom that I feel sorry for politicians, but I found myself feeling that way last week for the nine members of the commerce select committee, and Consumer Affairs Minister Simon Bridges.

After a three-year policy gestation period that chewed up and spat out five ministers, and a submission process in which 90 organisations vented their spleens, the final form of the Consumer Law Reform Bill was returned to the House last week.

The bill proposes changes to six acts and knocks another three on the head as it seeks to ensure New Zealand's basket of consumer laws is still fit for purpose.

The jewel in the crown is the Consumer Guarantees Act (CGA), the first line of defence if we get ripped off with crappy products or poor service. This act, and that well-known bodiceripper the Fair Trading Act (FTA), have had a thorough spruce-up to ensure they remain relevant in an online age. The end result is nothing less than breathtaking in its potency.

The CGA will apply to all transactions between professional traders and consumers, anywhere and any time. It doesn't matter if you buy your widget at a high street store, online venue, or farmer's market - if you buy from a trader you are covered. And you will be covered from start to finish - including all seven specific guarantees within the CGA covering acceptable quality and fit for purpose.

Rather than leaving the online world a Wild West of shonky sellers, the bill delivers an online-only requirement that traders must identify themselves as such. Given that knowledge of a trader's status is the trigger point to knowing you are protected, this new state of affairs means consumers will be better protected online than offline (where no such requirement exists).

Put together - comprehensive CGA protection in any venue and the requirement for online traders to identify themselves - it's hard to see how such fundamental benefits could be anything but good for consumers, and a recipe for economic confidence. But despite this, the good news got drowned in a chorus of confusion.

Some of the confusion came off the new requirement for online traders to identify themselves online as bringing supposed new tax obligations. This is simply incorrect. And the idea that the IRD doesn't already make full use of the giant indexation and caching machine that Google provides them is laughable.

There have also been grim warnings about the emergence of a black market among car dealers, where car dealers will offload worn cars to unregistered traders because they don't want the responsibility of honouring far-reaching guarantees. Again this is doing the proposals a disservice.

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The acceptable quality guarantee must be a contextual one, relative to what is reasonable to the age and history of the item.

The select committee's job was to iron out any wrinkles in the draft bill and stand strong on behalf of consumers while it was subjected to a withering barrage of submissions and lobbying by everyone from power companies to direct marketers: basically, everyone who reckoned they had an irresistibly good reason to create an exception to the principles of the CGA. The good news is that the committee appears to have done its job.

Consumers will benefit from full CGA protection whenever and wherever they buy stuff from professional traders. It's a simple concept to understand, and a worthy outcome in its own right. Ethical traders will benefit from the "flushing out" and removal of dodgy traders who have tried to fly under the radar by not declaring their trader status, or used legal auction loopholes to knowingly sell poor quality items to consumers, knowing they wouldn't be held accountable.

The bill contains a few other choice nuggets. Auctions will be given an up-to-date definition and auctioneers will need to meet minimum standards and be registered - no-brainers really.

The land's most reachable court, the Disputes Tribunal, will have its mandate extended to consider a broader range of complaints, including deceptive conduct. While the committee gave up trying to rework the Carriage of Goods Act, suppliers will now be responsible for goods bought under the CGA that are shipped until they are delivered to the consumer. Meanwhile, the liability ceiling rises from $1500 to $2000.

What's missing right now are good crunchy definitions - both in respect of exactly who qualifies as a professional trader and what is acceptable quality for a second-hand good.

The second of these is particularly vital for car dealers. A 20-year-old Peugeot shouldn't be held to the same standards as a 2-year-old Corolla.

Definitions of quality when it comes to old worn cars will need to be highly operational.

The old CGA enjoyed rich awareness but poor understanding. The simplicity of the new act means it now has the ability to be well understood, but successful implementation will pivot on meaningful definitions.

- Mike “MOD” O'Donnell is a professional director, author and eCommerce manager. Disclosure of interest - MOD participated in the CLR submission process.

- © Fairfax NZ News

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