The changes are part of a crackdown that gives customers more protection and addresses unfair contract terms.
The Register previously detailed the changes to outlaw zero hour contracts, but James & Wells partner Gus Hazel says there’s more law changes companies should be taking note of.
He says there are amendments being made to The Fair Trading Act in regards to unsubstantiated representations.
This includes the supply, sale, possible sale or promotion of goods and services.
Hazel says companies should tread carefully about what unsubstantiated claims they make, as they can be prosecuted for promoting claims that aren’t theirs.
“It is important to remember is that even if a claim is true, it may still breach the Fair Trading Act if a business did not have reasonable grounds for making it,” Hazel says.
“The substantiation requirement applies irrespective of whether the claim is false or misleading.”
An example the Commerce Commission gives of this is retailers using the term ‘factory price’.
This claim is usually made to show that customers can buy the product at the wholesale price the retailer purchased it at.
Due to the law amendments, businesses making ‘factory price’ claims will have to provide pricing and sales data to show that the prices are genuinely the factory price.
Otherwise, they could be prosecuted.
Hazel outlines four guidelines companies should use when making a claim:
- Don’t make claims that there are not reasonable grounds for believing to be true.
- Rely on facts, figures and credible sources of information, not guesses or opinions.
- Keep documentation or other information that you have gathered in the process of sourcing or researching.
- There must reasonable grounds for claims at the time they are made, substantiating a claim after it was made may not get you off the hook.
Penalties for breaching the Fair Trading Act are stiff, with company fines of up to $600,000 and individual fines reaching up to $200,000.
Hazel also warned that the Commerce Commission is investigating unfair contracts in industries that have proved to be problematic overseas, which includes online trading.