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Tougher penalties to protect consumers

3 July 2003 Media Statement

Tougher penalties to protect consumers

Amendments to the Fair Trading Act passed by Parliament last night will provide greater protection for consumers, says Consumer Affairs Minister Judith Tizard.

The Fair Trading Act is designed to protect consumers from misleading and deceptive conduct, and unfair practices, by traders. It also provides for the disclosure of consumer information relating to the supply of goods and services, and product safety standards to protect against unsafe products.

“Since the Act came into force in 1987, there have been enforcement problems. The low fines imposed by the Courts have not deterred offending or re-offending. Historically, procedural impediments have prevented the Commerce Commission from using all the remedies available to it in the Act.

“Scams are now rife in New Zealand and many of them target low-income people who can least afford to bear the loss. This is particularly true of pyramid-selling schemes, which have resulted in significant profits for their promoters.”

The amended Fair Trading Act will:

- increase general penalties to $60,000 for individuals; $200,000 for companies;
- create a tougher penalty regime for pyramid-selling schemes, including a new ‘commercial gain’ penalty up to the equivalent revenue gained from offending;
- strengthen the Commerce Commission’s enforcement powers; and
- make it easier for the Commerce Commission to fully utilise remedies under the Act to assist consumers.

“I’m delighted with this legislation as it benefits consumers and businesses.

“It creates greater incentives for traders to comply with the Act, which means that consumers are less likely to be scammed by unscrupulous traders. Likewise, reputable businesses are less likely to lose customers to businesses making false or misleading claims about their products and services,” Judith Tizard said.

ENDS

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