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Disclaimer: Educational purposes only. Not legal advice. Consult a qualified NZ legal practitioner for your specific circumstances.

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consumer

Facebook Marketplace scams and consumer protection

Key Takeaway

In New Zealand, consumer protections under the Consumer Guarantees Act 1993 and Fair Trading Act 1986 typically apply to transactions where the seller is 'in trade'. These Acts may not cover private sales on platforms like Facebook Marketplace, meaning rights and remedies depend on whether the seller is acting as a business.

Facebook Marketplace Scams and Consumer Protection in New Zealand

Online marketplaces such as Facebook Marketplace facilitate transactions between individuals and businesses. When engaging in these transactions, understanding your rights and obligations under New Zealand consumer law is essential, particularly regarding scams or faulty products. The applicability of key consumer protection legislation depends significantly on whether the seller is acting 'in trade' or as a private individual.

Consumer Guarantees Act 1993

The Consumer Guarantees Act 1993 (CGA) provides guarantees for goods and services supplied to consumers by a person in trade. A 'consumer' is generally defined as a person who acquires goods or services of a kind ordinarily acquired for personal, domestic, or household use or consumption, and not for the purpose of resupplying them in trade, consuming them in the course of a process of production or manufacture, or repairing or treating other goods or fixtures on land [Source: Consumer Guarantees Act 1993, s 2, s 3]. A 'supplier' means a person who supplies goods or services in trade [Source: Consumer Guarantees Act 1993, s 2].

If the CGA applies, goods and services must meet certain standards, including:

  • Acceptable quality: Goods must be fit for all the purposes for which goods of that type are commonly supplied, acceptable in appearance and finish, free from minor defects, safe, and durable [Source: Consumer Guarantees Act 1993, s 6].
  • Fitness for a particular purpose: If the consumer makes known a particular purpose for which the goods are being acquired, and relies on the supplier's skill or judgment, the goods must be reasonably fit for that purpose [Source: Consumer Guarantees Act 1993, s 7].
  • Match description: Goods must correspond with any description given [Source: Consumer Guarantees Act 1993, s 9].

If goods fail to meet these guarantees, consumers may be entitled to 'remedies', which can include repair, replacement, or a refund, depending on whether the failure is minor or substantial [Source: Consumer Guarantees Act 1993, s 18, s 21, s 23].

Crucially, the CGA generally does not apply to sales between two private individuals. For instance, if one person sells a used item from their home to another person for personal use, without acting 'in trade', the CGA typically does not provide protection [Source: Consumer Guarantees Act 1993, s 2 (definition of 'supplier')].

Fair Trading Act 1986

The Fair Trading Act 1986 (FTA) aims to protect consumers from misleading and deceptive conduct by any person in trade. This Act has a broader scope than the CGA and can apply to a wider range of activities, including advertising and sales practices.

Key provisions include:

  • Misleading and deceptive conduct: No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive [Source: Fair Trading Act 1986, s 9]. 'Misleading and deceptive conduct' refers to actions, statements, or omissions that could lead a reasonable person to form a false impression or understanding.
  • False representations: Prohibits false or misleading representations about goods or services, such as their quality, standard, history, or price [Source: Fair Trading Act 1986, s 13]. A 'false representation' is a statement or claim that is untrue or inaccurate.

The definition of 'in trade' for the FTA means engaging in a trade, business, industry, profession, occupation, or activity relating to the supply of goods or services [Source: Fair Trading Act 1986, s 2 (definition of 'in trade')]. This can include individuals who regularly sell items for profit, even if they don't operate a registered company.

Breaches of the FTA can result in substantial 'pecuniary penalties', which are financial penalties imposed by a court [Source: Fair Trading Act 1986, s 40]. The Commerce Commission is responsible for enforcing the FTA [Source: Fair Trading Act 1986, s 36A].

Applicability to Facebook Marketplace Transactions

The key factor in determining whether the CGA or FTA applies to a Facebook Marketplace transaction is whether the seller is acting 'in trade'.

  • Seller 'in trade': If a seller on Facebook Marketplace is operating a business, even if informally, or regularly selling items for profit (i.e., 'in trade'), both the CGA and FTA generally apply. This means consumers have rights regarding the quality of goods and protection against misleading claims.
  • Private seller: If the seller is a private individual selling personal items (e.g., decluttering their home) and not acting 'in trade', the CGA typically does not apply. While the FTA's section 9 (misleading or deceptive conduct) explicitly applies 'in trade', other sections like section 13 (false representations) also specify 'in trade'. Therefore, consumer protection under these Acts is significantly reduced in private sales.

Reporting Scams and Issues

If a transaction involves a seller acting 'in trade' and there's a potential breach of the CGA or FTA, the Commerce Commission can be contacted. For general scams, particularly those involving fraud or theft regardless of whether the seller is 'in trade', victims should contact the New Zealand Police.

When to Seek Independent Legal Advice

Individuals facing complex consumer disputes, particularly those involving significant financial loss, uncertainty about whether a seller is 'in trade', or difficulties in obtaining remedies, are advised to seek independent legal advice. Information and assistance can also be obtained from Consumer Protection (a part of the Ministry of Business, Innovation and Employment) or free legal guidance from Community Law Centres.

Key Resources