Online traders breaching Fair Trading Act warned

Supplied Content
Wellington, May 11, 2020

Commerce Commission Chairperson Anna Rawlings (Website)

On the back of increases in online shopping in New Zealand in recent weeks, the Commerce Commission is reminding retailers of their obligations when they sell products online.

Rising complaints

The Commission has received a significant increase in consumer complaints about retailers selling online in the last month.

Complaints include traders advertising goods that are no longer available, claims about delivery timeframes that are not being met, cancelled orders, general frustration about lack of communication and extensive delays in getting a refund, processing orders and receiving goods, including click and collect orders. 

Commission Chair Anna Rawlings said that many retailers have had a rush of sales through their existing websites and apps while others have set up online purchasing for the first time.

“We recognise that both retailers and consumers are facing challenging times as a result of Covid-19 restrictions but the online marketplace is not a free for all where anything goes. The same rules prohibiting misleading conduct that apply to physical stores also apply to online retail,” she said.

Stock and website management

“It is important that retailers have good systems in place to manage stock and their website so that they don’t mislead consumers by continuing to advertise and sell items online that are no longer available or are unable to be delivered within a specified timeframe. In the event that they do sell something they can no longer provide, they need to provide a refund to the consumer in a reasonable timeframe,” Ms Rawlings said.

Key factors

Key things that retailers need to remember: (a) You must not offer to sell goods that you do not reasonably believe you will be able to supply on the terms offered (b) Clear and accurate information should be provided to consumers about the availability of goods and when they can expect to receive them (b) If you do not specify timeframes for delivery then the law requires delivery within a reasonable timeframe (c) Goods should arrive within the time frame stated, if that doesn’t happen consumers may be entitled to reject the goods and ask for a full refund (d)
If there are known delays with courier deliveries, you should reflect that in your stated delivery timeframes so that consumers can make fully informed purchasing decisions (e) You can sell products with a future delivery date as long as you are clear about when they will be dispatched and at the time the order is made you reasonably believe that you can fulfil the order on the future delivery date you have promised.

Impact on trading

“Restrictions on trading and supply chain disruptions due to the response to Covid-19 can have an impact on the availability of goods, a retailer’s ability to fulfil orders, and delivery timelines for courier companies. We encourage consumers to pay attention to any messaging on a website about delivery timeframes before making a purchase. If anything is unclear, contact the retailer directly. If you need something urgently, or within a particular timeframe, check with the retailer that they can meet your timeframe before purchasing.”

Overseas traders

“We have also received complaints about consumers shopping from websites that use a .co.nz web address, and expecting their goods to be despatched from within New Zealand, when in fact the trader is based overseas. We encourage consumers to do their research before using an online store for the first time. Check the ‘contact us’ information on the site for a physical address and phone number and do an internet search to look for comments or reviews from others who have used the website,” Ms Rawlings said.

Commission guidelines

Consumers can find more about their rights when buying online in general and when their plans or purchases are affected by COVID-19 on the Commission’s website.

Retailers can find more information about their obligations when selling online on the Commission’s website. Retailers who are new to online selling should take time to read the guidance and seek independent legal advice. 

All traders must adhere to the Fair Trading Act and Consumer Guarantees Act when selling goods and services in New Zealand regardless of the method of sale.

Source: Commerce Commission, Wellington.

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