Consumer NZ is urging the New Zealand government to ban unfair trading practices, following Australia's move to outlaw misleading tactics that exploit consumers.
Consumer New Zealand is calling for the government to introduce a ban on unfair trading practices, arguing that current laws do not adequately protect shoppers from misleading and exploitative tactics. The call comes as Australia moves to implement its own prohibitions against such practices.
Australia's ban on unfair trading
Australia's proposed ban targets practices that exploit consumer vulnerabilities, such as drip pricing (where hidden fees are added at the last minute), manipulative online interfaces designed to trick customers, and subscription traps that make cancellation difficult. The Australian competition regulator, the ACCC, has been a strong advocate for these reforms, citing concerns that current laws are insufficient to tackle emerging digital-era scams and manipulative business models.
Consumer NZ highlights that similar unfair trading practices are prevalent in New Zealand. These can include subscription services with opaque terms, excessive surcharges, and pricing strategies that leave consumers paying more than they initially expected. The move in Australia reflects a growing international trend towards stronger consumer protection in increasingly complex markets, particularly in digital commerce.
New Zealand's existing protections
New Zealand's primary consumer protection law is the Fair Trading Act. It prohibits misleading and deceptive conduct, false representations, and certain unfair practices. However, Consumer NZ argues that this Act is reactive, requiring proof that a practice is already misleading or deceptive, rather than preventing inherently unfair practices from occurring in the first place.
This distinction is critical in a rapidly evolving market where businesses can quickly develop new tactics that may not technically breach existing laws but still result in consumer detriment. The current framework may not be agile enough to address novel forms of digital exploitation or subtle psychological manipulation.
The surge in financial complaints
The call for stronger protections comes amid a surge in financial complaints in New Zealand. Recent reports indicate that economic stress, mounting debt, and even the use of AI tools to generate and submit complaints have contributed to the sharpest increase in financial disputes in 15 years.
The Financial Services Complaints Ltd (FSCL) and the Banking Ombudsman Scheme have both noted a rise in the complexity and volume of cases. While some of these complaints relate to traditional financial products and services, a growing proportion stem from online transactions and digital platforms where transparency can be lacking.
Why a ban matters
A proactive ban on unfair trading practices would give regulators more power to intervene earlier and prevent harmful business models from taking hold. It would shift the burden from consumers having to prove they were misled, to businesses demonstrating their practices are fair and transparent.
This could lead to a fairer marketplace, particularly for vulnerable consumers who may be more susceptible to deceptive tactics. It would also align New Zealand with international best practices in consumer law, ensuring that local shoppers receive similar protections to those in other developed nations.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.