What is the Fair Trading Act and what does it cover?

Last checked: 20 February 2025

The Fair Trading Act (FTA) ensures that consumers can rely on the information traders provide when buying goods and services.

The FTA makes it illegal for traders to:

mislead consumers
give false information, or
use unfair trading practices.

The Consumer Guarantees Act (CGA) is another important law that protects consumers' rights. Find out more about the CGA and what it covers

Who and what does the Fair Trading Act (FTA) apply to?

The FTA applies to anyone in trade, from big organisations like hotel chains, airlines and department stores, to small or temporary businesses like a souvenir stall or ice cream stand. It also applies to online businesses.

It covers pricing, advertising, information about the product or service, sales techniques and financing. It also covers product safety, trading practices and employment ads.

The FTA rules for businesses

Businesses must describe goods and services accurately

Whenever a business promotes or sells their goods and services they must use accurate and clear information.

This is both when it is said verbally or in writing. It also includes the overall impression given by pictures, advertisements, promotional material or a sales pitch. It isn't only about what information you are given, it is also about the impressions given when important information is left out.

Examples of misleading behaviour include:

advertising that claims a garment is made of angora wool, if it only contains a small percentage of this fibre.
not telling you the furniture you are about to buy for outdoor use, is not suitable to be used outdoors.
making untrue claims about a product's place of origin.
making false claims about scarcity of product, or time running out on a sale.

Learn more about "place of origin" claims on this Commerce Commission factsheet (PDF, 600KB)

Find out more about misleading scarcity claims

Businesses must provide reliable quotes and estimates

Traders must not mislead potential customers when giving quotes and estimates. Consumers need to be able to rely on these quotes when they decide whether to purchase something.

Businesses must follow fair surcharging rules

A surcharge is an additional cost to you where you select a payment method that is more expensive for a seller to provide, such as credit card or contactless debit card.

You must be informed of any surcharge before you pay and be made aware of cheaper ways to pay where available.

Businesses must not engage in unconscionable conduct

The Fair Trading Act prohibits unconscionable conduct. This is business activity that is a substantial departure from Aotearoa New Zealand’s generally accepted or expected standards of business conduct.

Unconscionable conduct can take many forms. It can include a contract between a business and a customer, but it does not have to. It can also involve one off activity or a system or pattern of conduct.

For example:

A court in Australia found a business guilty of unconscionable conduct when they were found to have sold elderly women expensive vacuum cleaners they did not want or need by creating a real sense of obligation to buy.
Another example is when an education provider enticed students to enrol in full-time online courses with claims the courses were free and by offers of free laptops, but they were enrolled under a student loan scheme and were left with large debts.

Businesses must not include unfair contract terms

Unfair contract terms include terms that:

would give one party significantly greater rights or fewer obligations than the other party, and/or
would be harmful to one of the parties to the contract.

Find out more about standard consumer contracts

Lenders should comply with the responsible lending principles

Lenders must make information about their loans freely available to you at their offices or on their websites. This will help you compare interest rates and fees and other loan features between lenders.

Lenders must make sure any loan you get is suitable for your needs, and you can afford it.

Protections for small businesses dealing with bigger businesses

The Fair Trading Act also gives some protection for small businesses against unfair contract terms and unconscionable conduct.

Learn about protections for small businesses when dealing with larger businesses

What you can do if your consumer rights have been breached

If you think your consumer rights have been breached either under the Fair Trading Act or the Consumer Guarantees Act, you have the right to seek a remedy.

Find out the steps you can take if you think your consumer rights have been breached