A North Island egg farmer’s free range egg scam has been well and truly cracked by authorities in a case that serves as a stiff warning to all traders that flouting consumer laws is a risky business indeed.
Around 200,000 customers and 38 retailers were duped in the rort, in which the farmer labelled more than 206,000 dozen cage eggs as free range, and, by Commerce Commission estimates, pocketed an extra $375,000 for his deception. The farmer – whose company is now, not surprisingly, defunct – was recently walloped with a sentence of 12 months’ home detention and 200 hours’ community service.
Janice’s Lesson Number 1: Whether it’s out-and-out deceptive practice, as in this case, exploiting consumers through a lack of knowledge, or somewhere in between, if you’re in business, make no bones about it, the pressure is heating up further to ensure you’re doing right by your customers.
Last year, the Government passed the wide-reaching Fair Trading Amendments Act, and businesses have until March next year to come to grips with the raft of changes, new expectations and the extent to which the new laws more clearly define areas previously shaded in grey.
Contractual clean-up
Standard form contracts – we’ve all got them, and chances are quite a stack. These are the legal documents we sign for personal goods and services … everything from electricity and telephone to the gym, day care, and the like. The legal powers have decided – and quite rightly, I would say – that the laws around these have been too loose, allowing for “take it or leave”-type clauses that clearly advantage the business, and leave no room for negotiation for the poor consumer, who risks being left locked into all sorts of onerous commitments. Gym memberships can be a classic example – contractually bound for aeons and obliged to ongoing payments, no matter what.
Janice’s Lesson Number 2: With the exception of insurance contracts, these amendments seek to even out the playing field in standard form contracts, and provide both parties more equal power. Helpfully, the Commerce Commission has released draft guidelines on where it anticipates lines being drawn on what will be acceptable and what will not, and how the principles look likely to be assessed.
Hearteningly, feedback’s being sought not only from business, but consumers, too, on these draft guidelines, which you can check out – and add your voice to – at www.comcom.govt.nz/fair-trading/guidelines/draft-unfair-contract-term-guidelines/.
Extended warranties
I have a bit of a shopping weakness when it comes to technology, and when a shiny, newly-released Ipad caught my eye in Kuala Lumper a few years back, I was sold. It came with a standard one-year warranty, and the option of extending it for a price. I took the extra cover. And, wouldn’t you know it, one year and precisely 10 days later my beloved Ipad died, never to be rebooted again. It was replaced immediately at no cost.
Now, that was the first time any retailer has ever convinced me to take one of these extended warranties, and I only went ahead – thank goodness – because it was an overseas purchase, and my Ipad wouldn’t be covered by our Consumer Guarantees Act. Back home, I’ve had numerous – but nebulous – sales pitches on why I should protect myself with an extended warranty, but, every time, I’ve declined, because I’ve weighed up the cost, the risk and my automatic rights under consumer protections, and I haven’t been able to justify it.
Janice’s Lesson Number 3: Extended warranties can have their place, but, conversely, they can also be a costly trap for the unwary, especially those who aren’t up with consumer laws and believe they’ll have no right to redress without this extra protection. Under these new amendments, businesses will be required to provide black-and-while, clear cut information that spells out the buyer’s rights under the Consumer Guarantees Act, their entitlements under an extended warranty, and details on precisely what added protection they’ll receive in shelling out for the cover.
Grand claims
The new Act also targets businesses whose hyped claims overpromise and under deliver. If you’re in business and you’re branding yourself as the fastest, the best, the cheapest or the whatever else “-est”, come next year, the law will expect you to be able to substantiate those claims with cold, hard evidence.
It also seeks to go some way to prevent the harrowing cases we’ve seen where charlatans convince the vulnerable they can cure their disease. And, yes, it also sets out to clip the wings of businesses promoting their product with grand claims of the “mega weight loss in lightning speed” and “washboard abs with next-to-no effort” ilk.
Telemarketers and door-to-door salespeople will face tighter rules, too. Sellers will need to provide customers written information on what they’re signing up for, as well as a five-day cooling-off period, whereby purchasers can back out of any deal at no cost. Online trading is also in for a bit of a shake-up, including the requirement that traders state clearly if they are a business, so buyers know in advance whether their purchases will be covered under the Consumer Guarantees Act.
Janice’s Lesson Number 4: For businesses and customers alike, the Internet is gold in terms of being better informed on the rights and obligations around consumer laws. For starters, you can check out the Commerce Commission’s website to see all the latest information on these changes, together with the more long-standing laws. And, if you want to put your views forward on the draft guidelines around unfair contract terms, remember, you have until the end of next month to have your say.