Govt to act on unfair commercial practices

Commerce and Consumer Affairs Minister Kris Faafoi and Minister for Small Business Stuart Nash have today released a discussion paper outlining options to protect consumers and businesses from unfair commercial practices.

“Unfair commercial practices can cause significant stress for consumers, in some cases leading to financial difficulty, while the consequences for businesses include cash flow issues, increased costs and stress,” Mr Faafoi says.

“I’ve heard about traders who have used aggressive tactics to sell products to vulnerable consumers, and businesses that were powerless to stop suppliers varying the terms of their contract, including price.”

Unfair commercial practices can also include the use of pressure tactics, deception and contract terms that are very one-sided (for example, by shifting risks onto one party, or allowing one party to unilaterally vary the terms of a contract).

Stuart Nash says he’s particularly concerned about the impact of unfair commercial practices relating to payments on small businesses.

“Small businesses can face significant cash flow issues as a result of other businesses not paying them on time as per contract terms. This has flow-on effects for other parts of the economy, especially for the families and communities these businesses support.

“The Government wants to build a more productive, sustainable and inclusive economy, but we won’t get there with these types of practices in the marketplace.

“At the same time, we need to strike a balance to ensure any changes are proportional to the problem. We want honest businesses to continue to compete effectively, negotiate firmly, and freely enter into contracts,” Mr Nash says.

While existing provisions in the Fair Trading Act and Commerce Act protect consumers and businesses against a range of unfair commercial practices, the Government wants to make sure there aren’t any gaps in the current protections.

The unfair commercial practices discussion paper is available here. Submissions close on Monday 25 February 2019.