Our consumer law experts provide an update on a busy start to the year in the consumer law space in both New Zealand and Australia.

Commerce Commission targets misleading sales practices 

In December 2024, the Commerce Commission announced that it would be cracking down on illegal online sales practices including fake reviews, misleading scarcity claims, misleading social proof sales tactics, drip pricing and subscription traps as part of its updated enforcement priorities for 2024/2025 (see here). 

In line with its updated priorities, the Commission has filed criminal charges against HelloFresh New Zealand (HelloFresh) under the Fair Trading Act (FTA) for allegedly misleading consumers during cold calls aimed at reactivating cancelled subscriptions. The Commission alleges that between February 2022 and July 2023, HelloFresh (a meal kit delivery service) offered discount vouchers to former customers without clearly informing them that accepting the voucher would reinstate their HelloFresh subscription and debit their bank account. As charges have just been filed, there is no further information available publicly regarding this prosecution at this stage.  

Misleading pricing practices remain on the radar

The Commerce Commission has also been continuing its focus in recent years on misleading pricing practices.

On 19 February 2025, Walond Limited, trading as Look Sharp, was fined NZD292,500 in the Auckland District Court after pleading guilty to breaching the FTA by engaging in misleading pricing practices and misrepresenting consumers’ rights under the Consumer Guarantees Act 1993 (CGA). 

The breaches included:

• pricing errors that were so prevalent and meant that customers were charged up to 33% more than the advertised shelf prices; and 

• unlawfully restricting return timeframes to seven days and excluding certain product categories from refunds or exchanges. The retailer also incorrectly asserted that COVID-19 restrictions prohibited all returns and exchanges.

The case arose out of a Commerce Commission investigation. Commerce Commission General Manager Vanessa Horne emphasised the importance of accurate pricing, noting that such errors can financially impact consumers and erode their confidence at checkout. The Commerce Commission also acknowledged the company's subsequent steps to enhance compliance systems but stressed that these measures only followed after the Commission's intervention.

Meanwhile, the Commerce Commission has now filed criminal proceedings against the operators of two Pak’nSave supermarkets in the North Island in the Auckland District Court for allegedly promoting inaccurate pricing and misleading specials in breach of the FTA. The Commerce Commission also indicated in late 2024 that charges will be filed against Woolworths NZ for similar conduct. This enforcement action is consistent with the Commission’s updated enforcement priorities which include taking action against consumer law breaches in the grocery sector. 

So what can businesses do to avoid misleading pricing practices? You should ensure that: 

• all pricing on the product and shelf matches pricing at point of sale. Particular care is needed when pricing is changing, such as when moving in and out of promotional campaigns; and 

• returns policies and other relevant terms and conditions do not contradict the rights the consumer has under the CGA. Contracting out of the CGA is permitted only in very limited circumstances set out in the CGA. 

ACCC sweep of online traders reveals issues with returns policies

In a similar fashion, the Australian Competition and Consumer Commission (ACCC), Australia’s version of the Commerce Commission, has recently conducted a comprehensive review of over 2,000 Australian retail websites, uncovering numerous instances of potentially misleading return policies and terms that may violate the Australian Consumer Law (ACL). 

The sweep revealed numerous examples of practices that could potentially mislead or deceive consumers about their rights to an exchange, refund or return. Examples included as setting time limits for returning faulty products, enforcing blanket 'no refund' policies on sale or specialised items, and suggesting that manufacturer warranties were the sole remedy for defective goods. Additionally, some retailers imposed restocking fees or refused to refund delivery costs for faulty items. Some examples included:

• “Items that have been opened and used cannot be exchanged or refunded”

• “Made to order products cannot be returned”

• “Sale items cannot be returned, exchanged or refunded”

• “In the unlikely event that your item arrives damaged or faulty, please notify the store within 30 days of delivery to receive a replacement”

The ACCC issued warning letters to several businesses, prompting most to amend their policies to align with legal requirements. 

Similar to the Look Sharp case above, infringement actions for more serious cases have been brought against Koala & Tree Pty Ltd, trading as Koala Living, which paid penalties of AUD56,340 for making false or misleading statements about consumers' rights to remedies for faulty products. Mazda Australia Pty Ltd was ordered to pay AUD11.5 million in penalties for engaging in misleading and deceptive conduct to nine consumers about their consumer guarantee rights.

The ACCC has been actively advocating for stricter sanctions for businesses that fail to comply with consumer guarantee obligations. The Federal Government has committed to collaborating with state and territory consumer affairs ministers to design proposed civil prohibitions and penalties for breaches of consumer guarantee provisions. These reforms aim to impose financial consequences on companies that unlawfully deny consumers their rights to remedies for faulty products.

What does this increased regulatory scrutiny mean for businesses? 

Given both the ACCC and the New Zealand Commerce Commission have signalled their intention to seek harsher penalties and take more enforcement action, it is becoming even more important that businesses comply with their obligations under the ACL, the FTA and the CGA. This includes avoiding misleading conduct and upholding consumer rights. The Commerce Commission is expected to prioritise enforcement action which aligns with its updated enforcement priorities, including cracking down on illegal online sales practices, investigating any false, misleading and deceptive marketing sales or billing practices by telecommunications providers, consumer law breaches in the grocery sector and unconscionable conduct.  However, the Commission is not precluded from taking action in relation to breaches of the law which falls outside its priorities. 

To ensure compliance, businesses should regularly review and, if necessary, revise their policies and practices to ensure they are not misleading or confusing customers or attempting to contract out of the CGA. Customers may not know what their exact rights are under the law, and it is important that businesses do not mislead customers about their rights to a return, exchange, or refund. If you have any questions about how the recent activity in New Zealand and Australia may impact your business, please contact one of our consumer law experts. 

Right to repair bill will introduce new repair obligations on New Zealand suppliers  

Lastly, the Consumer Guarantees (Right to Repair) Amendment Bill (Right to Repair Bill) has recently passed its first reading and is now open for public submissions to the Economic Development, Science and Innovation Committee. Pulled from the Member’s ballot in April 2024, the Right to Repair Bill seeks to require manufacturers to make repair parts and information available to consumers in order to extend the lifetime of products.

The Right to Repair Bill would amend and replace certain sections of the Consumer Guarantees Act 1993 (CGA) by requiring manufacturers to:

• take reasonable steps to ensure that repair facilities and spare parts for goods remain reasonably available for a reasonable period following their supply; and 

• when requested, and within 20 working days, provide customers with access to relevant information, software, spare parts and other tools necessary for the maintenance and repair of goods. 

Other proposed changes under the Right to Repair Bill include:

• a right to seek redress from manufacturers when goods fail to meet the new guarantee;

• a right to request a repair instead of a replacement when a good is faulty;

• an obligation on suppliers to complete repairs within a reasonable timeframe upon request; and 

• the repeal of section 42 of the CGA, which currently allows suppliers to refuse to provide repair facilities or spare parts if consumers are notified at the time of purchase.

While the proposed reforms are relevant to businesses involved in the manufacture, supply, and retail of consumer goods, it’s worth noting that the Right to Repair Bill is still in the very early stages of the Parliamentary process. As a Member’s bill nominated by the Green Party, we understand that the National and Act parties have already indicated in the First Reading of the Bill that they would not be supporting it in its current form. However, all parties agreed that some form of a right to repair should be discussed, with differing views on the detail. As such, businesses should be aware that there is broader government interest in some form of a ‘right to repair’ regime and regulatory change may be on the way.

Accordingly, we recommend organisations carefully consider the potential implications of this proposed Right to Repair Bill and make submissions on any key areas of concern, particularly where New Zealand suppliers source goods from overseas manufacturers and may have little control over the availability of spare parts. We also suggest as good practice that organisations undertake regular reviews of their returns and repairs policies to ensure compliance with the law, and keep up to date with any evolving developments in the law and/or regulator guidance.  

Submissions on the Right to Repair Bill are open until Thursday, 3 April 2025. If you’d like assistance in submitting on the Right to Repair Bill, or want to update your own consumer policies, get in touch with one of our consumer law experts below.