The Fair Trading Act 1986 (“FTA”) applies to any person or business who engages in trade, which covers most businesses, including overseas businesses supplying goods and services in New Zealand and online sales. The purpose of the FTA includes protection of consumers by requiring businesses to provide truthful and accurate information about their products and services. Given the hefty fines that businesses may be subject to for breach of the FTA terms (up to $200,000 for an individual and $600,000 for a body corporate, for each offence but excluding any additional penalties), it is important that businesses are aware of their obligations under the law and for consumers to understand what to look out for. This article sets out three important elements of labelling or packaging of products that businesses must comply with.
- All claims on packaging must be truthful
The FTA prohibits:
- General misleading or deceptive conduct;
- False or unsubstantiated claims; and
- Unfair sales tactics.
Businesses should therefore only make claims that can be supported by evidence and are wellfounded. This is particularly important if a business or product is promoting certain qualities in relation to:
- Environmental impact;
- Country of origin;
- Claiming products are organic; and
- Health/nutritional claims.
Particularly in New Zealand where consumers are generally encouraged to buy local, consumers may be influenced to pick a product that is “New Zealand made”. If a business is claiming the same, then the majority of the production process and active ingredients should be in or sourced from New Zealand.
- Point out any defects
Under the Consumer Guarantees Act 1993, businesses are required to sell products that are of acceptable quality. However, provided that any defects are only minor and the consumer is advised prior to purchasing them, these products may still be sold. Such defects may include:
- Damaged packaging;
- Missing items; or
- Items past their best before date.
Consumers should be well infomed before purchasing a product with a minor defect so businesses should be clearly indicating any defects on the labelling.
- Disclose important information
The FTA requires business to disclose certain information about their products when selling them, including:
- date marking;
- a list of ingredients;
- relevant warnings and advisory statements;
- the food’s name or description;
- your business’ name and contact address;
- allergen information;
- percentage labelling;
- food quantity/weight;
- a nutrition information panel; and
- use and storage instructions.
If the required information does not appear on food labels, that business may be seen to be misleading consumers, which is unlawful and may lead to penalties being imposed under the FTA.