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consumer

False representation: Lying about a product's origin

Key Takeaway

In New Zealand, businesses must not make false or misleading claims about a product's origin. The Fair Trading Act 1986 prohibits such representations, while the Consumer Guarantees Act 1993 ensures goods match their description and are of acceptable quality. Consumers have rights to remedies if product origin is misrepresented, impacting quality or description.

False Representation of Product Origin in New Zealand Consumer Law

New Zealand consumer law provides protections against businesses that make false or misleading claims about the origin of products. This area is primarily governed by the Fair Trading Act 1986 (FTA) and the Consumer Guarantees Act 1993 (CGA), which aim to ensure fair trading practices and protect consumers' rights regarding the quality and description of goods.

The Fair Trading Act 1986 and False Origin Claims

The Fair Trading Act 1986 (FTA) is a key piece of legislation designed to protect consumers from misleading and deceptive conduct by businesses. It prohibits false representations about goods and services, including their place of origin.

Misleading and Deceptive Conduct

Section 9 of the FTA broadly prohibits any person in trade from engaging in conduct that is misleading or deceptive, or is likely to mislead or deceive [Source: Fair Trading Act 1986, s 9]. This general prohibition covers a wide range of activities, including making false claims about a product's origin, even if not explicitly listed elsewhere in the Act.

Specific False Representations About Origin

More specifically, the FTA addresses false representations directly. A person in trade must not, in trade, make a false or misleading representation:

  • concerning the place of origin of goods [Source: Fair Trading Act 1986, s 13(i)].

Additionally, false representations about a product's characteristics, which could be implied by its origin, are also prohibited. This includes claims:

  • that goods are of a particular standard, quality, grade, quantity, composition, style, or model or have had a particular history or particular previous use [Source: Fair Trading Act 1986, s 13(a)].

For example, falsely claiming a product is "Made in New Zealand" when it is imported would be a breach of section 13(i) of the FTA. Similarly, claiming a product is of "Italian leather" when it is not, could breach section 13(a) and 13(i) if the representation implies a specific quality or origin that is false.

Consequences for Businesses Under the FTA

Breaches of the FTA can result in significant penalties for businesses and individuals. Courts can impose pecuniary penalties, which are financial penalties, of up to $200,000 for individuals and up to $600,000 for bodies corporate for certain offences under the Act [Source: Fair Trading Act 1986, s 40(1)].

Furthermore, courts have the power to make various orders to remedy a breach, including:

  • Declaring the whole or any part of a contract to be void [Source: Fair Trading Act 1986, s 43(2)(a)].
  • Varying a contract [Source: Fair Trading Act 1986, s 43(2)(b)].
  • Ordering the refund of money or return of property [Source: Fair Trading Act 1986, s 43(2)(c)].
  • Ordering the payment of the amount of any loss or damage [Source: Fair Trading Act 1986, s 43(2)(d)].

Enforcement by the Commerce Commission

The Commerce Commission is the New Zealand agency responsible for enforcing the Fair Trading Act 1986. It investigates complaints about misleading conduct and can take enforcement action against businesses that breach the Act [Source: Fair Trading Act 1986, s 36B].

The Consumer Guarantees Act 1993 and Product Origin

The Consumer Guarantees Act 1993 (CGA) provides a set of guarantees that suppliers and manufacturers must meet when supplying goods and services to consumers. While the CGA does not directly address "origin" as a standalone guarantee, a false representation about origin can lead to a breach of other guarantees under the Act if it affects the quality or description of the goods.

The CGA applies to goods and services ordinarily acquired for personal, domestic, or household use [Source: Consumer Guarantees Act 1993, s 2(1)].

Guarantee as to Description

When goods are sold by description, there is a guarantee that the goods will correspond with that description [Source: Consumer Guarantees Act 1993, s 9]. If a product's origin is part of its description (e.g., "New Zealand woollen blanket"), and that origin is false, the goods may not correspond with their description, breaching this guarantee.

Guarantee as to Acceptable Quality

Goods must be of acceptable quality [Source: Consumer Guarantees Act 1993, s 6]. This means they must be:

  • Fit for all the purposes for which goods of the type in question are commonly supplied [Source: Consumer Guarantees Act 1993, s 7(a)].
  • Acceptable in appearance and finish [Source: Consumer Guarantees Act 1993, s 7(b)].
  • Free from minor defects [Source: Consumer Guarantees Act 1993, s 7(c)].
  • Safe [Source: Consumer Guarantees Act 1993, s 7(d)].
  • Durable [Source: Consumer Guarantees Act 1993, s 7(e)].

The acceptable quality of goods is assessed taking into account factors such as the nature of the goods, the price, any statements made about the goods on packaging or labels, and representations made by the supplier or manufacturer [Source: Consumer Guarantees Act 1993, s 7(2)]. If a false claim about origin influences a consumer's expectation of quality, and the actual origin results in goods that do not meet that reasonable expectation (e.g., lower durability or different materials than implied), it could lead to a breach of the acceptable quality guarantee.

Remedies Under the CGA

If goods fail to comply with a guarantee under the CGA, the consumer has rights to remedies. The nature of the remedy depends on whether the failure can be remedied or is of a substantial character [Source: Consumer Guarantees Act 1993, s 18].

  • Minor failure: The consumer can require the supplier to remedy the failure within a reasonable time. If the supplier fails to do so, the consumer can have the failure remedied elsewhere and recover reasonable costs, or reject the goods [Source: Consumer Guarantees Act 1993, s 23].
  • Substantial failure: The consumer can reject the goods or claim compensation for any reduction in value [Source: Consumer Guarantees Act 1993, s 24]. Rejecting goods means returning them and choosing either a refund of the money paid or a replacement of the goods [Source: Consumer Guarantees Act 1993, s 24(2)].

Consumers may also be able to claim damages for any loss or damage resulting from the failure, provided it was reasonably foreseeable [Source: Consumer Guarantees Act 1993, s 32].

Interaction Between the Acts

The Fair Trading Act and the Consumer Guarantees Act often overlap and can both apply to a situation involving a false representation about product origin. The FTA addresses the misleading conduct itself, prohibiting businesses from making false claims. The CGA provides specific guarantees about the goods, such as their description and acceptable quality.

If a business makes a false representation about a product's origin (breaching the FTA) and, as a result, the product does not match its description or is not of acceptable quality (breaching the CGA), a consumer may have recourse under both Acts. For example, a consumer could seek remedies under the CGA directly from the supplier for the failure of a guarantee, and the Commerce Commission could investigate the business for breaching the FTA's prohibitions on misleading conduct.

When to Seek Independent Legal Advice

Individuals seeking to understand their specific rights and obligations, or considering action regarding false representation of product origin, should consult with an independent legal professional. Community Law Centres offer free legal advice and can provide guidance on consumer rights and available remedies. The Disputes Tribunal provides a low-cost, informal process for resolving disputes up to $30,000.

Key Resources