Unfair contract terms are to do with clauses in standard form consumer contracts to do with goods and services for personal use. The Commission says the main hallmarks of these contracts are that the terms have been offered to the consumer on a ‘take it or leave it’ basis.
“Businesses have had 15 months to prepare for these changes and we have taken steps to inform them of the laws, including by publishing our guidelines last month,” says Commerce Commission chair Dr Mark Berry. “From tomorrow we will start targeting contracts in industries that have proven problematic overseas or where we have received complaints in the past.
Sectors to be scrutinised include telecommunications, rental cars, fitness, airline and online trading. The Commission is concerned about loan contracts, particularly those provided by lower-tier finance lenders which can be harsh on vulneable consumers.
The Commission will be paying careful attention to terms that limit competition, such as automatic ‘rollover’ or renewal terms and terms that lock consumers into contracts that they wish to exit, preventing them switching to a competitor.
Consumer NZ has launched its “Play Fair” campaign targeting the use of unfair terms in consumer contracts to coincide with and enforce this rules change. Chief executive Sue Chetwin says companies had been given generous notice of the ban to give them time to review their contracts and take out unfair terms: “However, there’s little evidence this had happened. We’re launching our ‘Play Fair’ campaign to highlight companies which continue to use unfair terms despite the ban.”
Consumer NZ will enforce the Commerce Commission’s rules change by filing complaints about any company which continues to use unfair terms.
Chetwin says the ban is one of the most significant changes to New Zealand’s consumer law in the last 20 years.
The new unfair contract term provisions only apply to contracts signed after 16 March. The new laws also apply to any existing contract (except insurance contracts) that is varied or renewed after 16 March. The Commission’s guidelines are available online.