Now the law is sold on consumers' rights

RICHARD MEADOWS
Last updated 05:00 04/06/2014

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In December, Sue Chetwin was given an early Christmas present.

The chief executive of Consumer NZ and her team have spent years fighting for an overhaul of consumer law - "I think we've been through about six Ministers of Consumer Affairs," she says.

Now, a total of 10 individual pieces of legislation, including the two most important laws for consumers, have received a long-awaited makeover. Political parties managed to stop their petty bickering long enough to push the reform through with bipartisan support late last year.

Six months later, many of the new provisions are about to come into force.

As at June 17, here is how your rights will have changed for the better:

Buying online Until now there were weird gaps in your rights when buying online, whether it be through Trade Me, a direct retailer, or a mobile app, because the Consumer Guarantees Act (CGA), which is one of the strongest pieces of protection, did not always apply. For example, auctions were exempt from the rules, while fixed price offers gave buyers all the usual protections.

Now, professional online sellers will have to clearly identify themselves as "traders" and comply with the CGA - no matter which sales channel they use.

Trade Me spokesman Paul Ford says it is all good news from a consumer's point of view and something the company has supported for years. It is about to launch a campaign to explain the changes to its members.

"The guts is we've made it easy for members to disclose on Trade Me that they are selling in trade by creating a fancy label that they can choose to have appear in the ‘About the seller' section on their listings."

There is also increased liability for traders if your goods do not arrive on time or are damaged.

Finally, the rules around "shill bidding", in which traders try to drive up prices on their own auctions, have been clarified to make it a specific offence. "From our point of view, we've always regarded shill bidding as illegal and a breach of our terms and conditions, but we reckon the clarity is great news," Ford says.

Extended warranties For years, retailers have sold us protection that we are already entitled to by law, and while there are situations where an extended warranty makes sense (for example, if the item is to be used for business purposes), for the most part, extended warranties rarely provide any extra benefits over the CGA.

The law already says goods must be of acceptable quality, last for a reasonable time, and be fit for purpose, with no time limit attached. The amendment will force retailers to provide a comparison of what additional "guarantees" or benefits their extended warranty actually has. You will also now have five working days to cancel the warranty, or can do it at any time if the retailer did not disclose the differences to you in the first place.

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Unsubstantiated claims "All it takes is three minutes a day on the Ab-Buster 3000 to get ripped six-pack abs in four weeks!"

It's a made-up example, but these sorts of outlandish marketing gimmicks are all too common. They're also about to come under some serious scrutiny.

An update to the Fair Trading Act (FTA) means businesses will not be able to make claims about a product or service if they do not have evidence or "reasonable grounds" to do so.

The Commerce Commission says there is some leeway when it comes to "puffery" (descriptions which are so obviously exaggerated that no-one would be misled).

Leigh Hart's irreverent Wakachangi beer marketing - "Established more or less in 1648 . . . legend has it the first batch was brewed by nymphomaniac monks in Portugal" - is unlikely to land him in hot water, for instance.

But serious claims, which could be as simple as "all bikes half-price", have to stack up.

Even the subtler, implied claims need concrete facts behind them.

If a business says it can sell you barbecues "at factory prices", it has to prove it is charging the same as the manufacturer, if challenged.

In the same vein, a dishwashing liquid vaguely branded as "Eco-protect" must actually be environmentally friendly.

The difference is, it will be much easier for the Commerce Commission to prosecute from here on in, Chetwin says.

Previously, the onus was on the regulator to prove the claim was wrong, which was not only difficult but often took forever.

Now, businesses have to provide the proof to back up their marketing claims.

Uninvited sales Have you ever been fooled into buying a vacuum cleaner by a silver-tongued door-to-door salesman? From here on in, you will have five working days to cancel any uninvited direct sale made at home or work - it does not matter whether the sale is over the phone or in person; if you did not ask for it, you can back out.

You can also cancel at any time if the salesperson has not made the deal in writing, with the right to cancel, name, and contact details all spelled out.

The new rules only apply to sales of $100 or more, so you cannot get back the $5 you spent on Girl Guide cookies.

Unsolicited goods Bizarrely, until now it was possible for companies to demand payment for goods or services which you had never even asked for. Now you are under no obligation to pay, unless you deliberately damage or lose the goods.

Let's say you get a book in the mail, and then are invoiced for payment. You have to make the book available to be picked up for 10 days, say by leaving it in your mailbox. The bonus is that if the company does not pick it up during that period, it is yours to keep as an unconditional gift.

However, you cannot keep something if you know it was not intended for you - for example, a parcel addressed to someone else.

Tougher penalties Those who breach the rules will receive more than a slap on the wrist, with fines for misleading and deceptive conduct having been increased by at least 300 per cent under the reformed laws.

Individuals now face fines as high as $200,000 per offence, while companies could be penalised up to $600,000, and slow learners who repeatedly break the law may be banned for up to 10 years.

Taking action "Our consumer law is really good, but it is self-policing," Chetwin says.

"For your own benefit, it does pay to have some knowledge of what your consumer rights are."

There is no-one who will go into bat for you over CGA breaches, which means you have to unleash your inner bush-lawyer.

And if complaints to the company or trader do not work out, you will have to go to the Disputes Tribunal.

The FTA is slightly better in that the Commerce Commission actively polices it. While it is always good to file a complaint, do not rely on the regulator solving your problems.

"Because they're not resourced well enough, they've really got to pick and choose," Chetwin says. "Some of the small things may get missed while they chase the bigger fish."

If you need help with taking action, talk to Consumer NZ or visit the Ministry of Consumer Affairs, which has a whole website page dedicated to how to complain effectively.

Most importantly, you won't even know you are being conned in the first place if you do not have a basic understanding of your rights under the CGA and FTA.

Those rights are about to become stronger than ever, so be sure you spread the word and put them to good use.

- Stuff

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