ASSIGNMENT

The assignment examines the background to the development and passage of the new Consumer Law Reform Bill which has just been introduced into Parliament.

There has been considerable background analysis of the deficiencies in the current law, including Fair Trading Act and Consumer Guarantees Act, and there are new provisions dealing with internet sales. The law is based on current Australian law.

Requirements:

TASK 1   (15%)

You have been asked to prepare a 4 page document which summarises the changes that are about to be made to our consumer protection law.

The document is to be used by businesses in the retail sector who deal with customers in their retail outlets and who also order goods and services online through the retailers’ websites.

The document needs to cover the following

• The background to the proposed changes to New Zealand’s consumer legislation – eg what has led to the new law?; what problem areas have been identified which require new law?; what steps have been taken by the various government departments, agencies and legislative bodies?

• The significant changes that have been proposed, and the reasons for these recommended changes

• The new initiatives dealing with online retail transactions

TASK 2   (5%)

You have been asked to write a brief (maximum of one page) submission to the select committee hearing. (Please ignore the fact that the Select Committee submission date has already closed).

The submission should deal with the problem areas covering online sales. You will need to look at the proposed law in the new Consumer Law Reform Bill covering online transactions and put forward your own views which either supports or identifies possible problem areas in the suggested legislation.

Resources

Consumer Law Reform: A Discussion Paper [PDF format, 1.3MB]

Consumer Law Reform Cabinet Paper 1 [PDF format, 1.7MB]

Consumer Law Reform Cabinet Paper 2 [PDF format, 1.4MB]

First reading speech by Minister of Consumer Affairs Chris Tremain

The Bill’s Explanatory Note includes a General Policy Statement that discusses the background to the Bill and some of the main changes.
Explanatory note on Consumer Law Reform Bill.

Consumer Law Reform Bill on the Parliament website

How to make a submission to a select committee [PDF Format 124 KB]

Bills can be downloaded from the New Zealand Legislation website http://www.legislation.govt.nz

SOLUTION

1. a.     Consumer protection laws

Consumer protection laws are the set of laws which are designed to protect the rights of consumers and restrict unfair trade practices and regulating information across the market. The purpose behind these laws is to prevent those businesses practices which are fraudulent. These laws are in the form of government regulations to protect consumer rights and to make the companies to disclose every information related to the product they are manufacturing or selling.(Knox and henry,2012)

A consumer is a person who purchases any good or avails service for private use except selling it. Consumer’s rights can also be protected by promoting fair competition in the market which helps in fixing price of goods. Efficient Consumer laws provide an environment for the consumers where they can freely and confidently transact. A confident consumer is very important in dynamic and efficient market which further, can help in accelerating the economy of that country.

Consumer protection laws in New Zealand

Famous consumer laws which are active in New Zealand are:

1. Fair trading Act 1986: This Act makes the every act of traders illegal which is to mislead the consumers and providing them wrong information related to the product.
2. Consumer Guarantees Act 1993: This Act check out the guarantees to which the products must match while being sold. The act gives right to the Consumers to claim compensations if the goods do not match with the guarantees.
3. Weights and Measures Act 1987: This Act penalizes those traders who use to sell the products or goods below the standard weight and measure.

There are also some other laws to protect the interest of consumers, such as: Door to Door Sales Act 1967 and Unsolicited goods and services Act 1975. With the emergence of E-commerce across the world, all consumer legislations need to be modified so that they must meet the challenges produced by economic policies. Most of these legislations are more than 20 years old

which needed to be reviewed.(Benett,2011) Whenever any law lacks behind in its purpose, which it is meant to serve then it needs to be reviewed by the government agencies. These old legislations which need to be reviewed are one of the big reasons in the differences between businesses and consumers.

In August 2009, there was a statement made by minister of Finance and Minister of regulatory responsibility of New Zealand government that poorly conceived and poorly implemented regulations can harm the freedom of consumer and also their productivity. By reducing the burdens imposed by such poor and old legislations New Zealanders can improve their lives and promote their economy to great extent.

If New Zealand has to overcome their disadvantages related to economy due to our small size and geographical isolation, we have to offer a better policies related to consumer affairs. Fair Trading Act, 1986 (FTA) is more or less similar to that Australian Trade Practice Act 1974. It is equally important to educate people on the existing legislations related to consumer protection. According to a survey conducted in 2006, it was reported that not even 2% of public in New Zealand are aware of these legislations. They can  not even recall the names of the legislation. Australia has also reviewed its consumer laws and now the laws are much efficient to cover all the aspects related to consumer and their protection. Hence, the reviews of New Zealand Consumer laws are really required. The bill is in the parliament and it is supposed that the new laws will be introduced soon till the end of this year. Under this review of consumer laws in New Zealand, every legislation has to be reviewed in context of its origin and purpose, its relevance in today’s market condition and how it is applicable in dealing with consumer transactions. It should also be examined that the legislation is not contradictory with any other existing law.

Objectives of this review are to present before people of New Zealand, an efficient and effective consumer law that enables the consumer to transact confidently in the market, Protect the consumers and big suppliers from unfair or inappropriate trade conduct, it must be sufficient to deal with present and future market conditions with up to date regulations, it must be simple and easily accessible to the normal consumers who are affected by this and to be in harmony with Australian Consumer Laws also in accordance with single economic market (SEM) with

Australia as proposed by Government. The main area of focus in this review is Fair Trade Act (FTA). Although FTC was working good enough with the principle of dealing fairly and clearly with consumer matters but there was still a gap between the pre contractual scenario and the bargains at the end of the process.(Bill,2011)

First reading of the Bill was passed on 9^th February 2012, with commerce committee of parliament and it closed on 29^th March 2012.

The bill also going to amend and consolidate much other legislation related to commerce in New Zealand including Sales of Goods Act which is more than a century old. According to consumer affairs Minister Mr. Boscawen, the bill will also empower the governmental agencies to act effectively and strongly to restrict the movement dangerous and harmful products in market. The changed law will empower the officials of commerce department and ministry of consumer affairs to investigate and enter into the premises where such dangerous goods are being sold or any kind of illegal activities are going on.  The proposed bill consist the provision for the Layby Sales in Fair Trade Act and delete the Layby Sales Act 1971. This is a kind of purchase of goods where the person buying the goods pays for the goods in installments, but until the last installment the goods remains to the vendor. The new bill contains all the provisions related to Layby sale.

In a nutshell, the bill will modernize the existing consumer laws of New Zealand. Once the new consumer law is introduced in New Zealand, all the Advertisers and producers have to comply with the new rules and make their products meet the demands of consumers. (Gully,2012)

1. With the emergence of the web environment buying and selling goods becomes much easier today with the help of internet. Most of the transactions are carried out in much lesser time than it takes earlier and in easier way. (http://www.consumeraffairs.govt.nz/,2012)The new proposed consumer legislation of New Zealand will also bring changes in the interest of traders trading through internet. For this there is a need of removing the loopholes of old consumer laws. It is the desire of New Zealand Government through this Bill is to provide protections to those consumers also who are buying products on internet.

(http://www.mta.org.nz/n2867.html,2012)These are the positive developments but in Bill excludes the vehicle traders from this category they can not auction their product on line. On line sale are very popular between consumers today but as every thing has some flaws, there are also some problems attached to online selling. Basically there may be three kinds of problems first with the Internet service provider second with the connections and third with consumer’s expectations for success. One should be very sure while selecting the service providers because if other companies have their sites stored in the same network where you have yours then it may cause the server overloaded. There should not be more than 10 to 12 sites per server. It is important for dealing with the problems that before building a website for trade one should set the strategies for your business. There is no doubt that the coming consumer law of New Zealand will make the consumers more confident in transacting with the traders not only in an open market but also trading online with auction method.

References:

1. 1.     Liesl Knox and Hesketh Henry, 2012, ‘Consumer Law: Time for an over haul’, Asia pacific : New Zealand, retrieved on 18^th May 2012 from http://www.gala-marketlaw.com/joomla4/index.php?option=com_content&view=article&id=307&Itemid=307

2.     Adam Bennett, 2011, ‘Raft of changes to consumer law introduced’, Nzherald, retrieved on 18^th May 2012 from http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10712847

3.     ‘Consumer Law Reform Bill 2011’, Bill Digest, New Zealand Parliament, retrieved on 18^th May 2012 from http://www.parliament.nz/en-NZ/PB/Legislation/Bills/BillsDigests/c/1/f/49PLLawBD18571-Consumer-Law-Reform-Bill-2011-Bills-Digest-No-1857.html

4.     Scoop Business, 2012, ‘Consumer Law Reform Bill may actually reduce consumer protection’, retrieved on 18^th May 2012 from http://www.scoop.co.nz/stories/BU1204/S00705/consumer-law-reform-bill-may-reduce-consumer-protection.htm

5.     Legislation & Policies, 2010, ‘Introduction’, Ministry of Consumer Affair, retrieved on 18^th May 2012 from http://www.consumeraffairs.govt.nz/legislation-policy/policy-reports-and-papers/disscussion-papers/consumer-law-reform-a-discussion-paper/2.-introduction

6.     ‘Consumer Law Reform Bill may actually reduce consumer protection’, MTA Assured, 2012, retrieved on 18^th May 2012 from http://www.mta.org.nz/n2867.html

7.     Bell Gully, ‘Getting ready for Consumer Law reform’, 2012, retrieved on 18^th May 2012 from http://www.bellgully.com/resources/pdfs/Getting-ready-for-the-Consumer-Law-Reform-Bill.pdf

LD45

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