Fair Trading Act 1986 (NZ)

If you’re running a small business, marketing is part of the job. You’re writing website copy, posting on social media, sending quotes, running promotions, and answering customer questions every day.

But there’s a legal line you can’t cross (even accidentally) - and that line is set by New Zealand’s Fair Trading Act 1986.

The Fair Trading Act is one of the most important laws in New Zealand for any business that sells products or services. It applies whether you’re a one-person online store, a tradie, a café, a consultant, or a fast-growing startup.

Below, we’ll break down what the Fair Trading Act means in plain English, what “misleading and deceptive conduct” really looks like in practice, where small businesses commonly get caught out, and what you can do to protect your business from day one.

What Is The Fair Trading Act 1986 (NZ) And Why Does It Matter?

The Fair Trading Act 1986 (often searched as the “fair trading act nz” or “nz fair trading act”) is a key consumer law in New Zealand. Its job is to promote fair conduct in trade and protect consumers (and other businesses) from misleading or unfair behaviour.

In day-to-day terms, the Fair Trading Act affects how you:

advertise your products and services
describe pricing, discounts and promotions
make claims about quality, performance, and results
use testimonials, reviews, comparisons, and “before/after” content
communicate with customers during the sales process (including quotes and proposals)

One of the most important parts of the Fair Trading Act is the rule that you must not engage in misleading or deceptive conduct (or conduct that is likely to mislead or deceive) in trade.

This is not just about blatant scams. Many Fair Trading Act issues happen when a business is enthusiastic about what it offers, uses broad marketing language, or makes assumptions about what a customer understands.

And importantly: the Fair Trading Act can apply even if you didn’t intend to mislead anyone.

What Counts As Misleading Or Deceptive Conduct Under The Fair Trading Act?

“Misleading or deceptive conduct” is a broad concept - and that’s why it matters so much for small businesses.

In general, your conduct may be misleading or deceptive if what you say (or don’t say) creates a false impression for your audience.

That “conduct” can include:

things you say in ads, product descriptions, and social posts
photos, images, diagrams and demonstrations
price displays and discount messaging
statements made by staff in-store or on the phone
what you imply through silence (for example, leaving out an important limitation)

It’s Not Just About Lies

Under the Fair Trading Act, you can run into trouble even if every sentence you used is technically “true”. What matters is the overall impression.

For example, a claim might be misleading if:

it’s missing key context
it’s based on assumptions that don’t apply to typical customers
you use fine print that contradicts a bold headline
you use images that imply results that most customers won’t achieve

This overlaps closely with the legal idea of misrepresentation, where a false statement (or misleading impression) induces someone to enter into a transaction.

Who Is “The Audience”?

When assessing whether conduct is misleading or deceptive, the focus is generally on the likely effect on the target audience - for example, ordinary consumers reading your ad or website page.

If you’re selling to other businesses (B2B), the Fair Trading Act can still be relevant. A misleading claim made to another business customer can still create risk, particularly where it impacts the decision to buy.

Common Fair Trading Act Risk Areas For Small Businesses

Most Fair Trading Act problems don’t start with bad intentions - they start with busy business owners trying to sell their product quickly and clearly.

Here are some of the most common areas where misleading and deceptive conduct issues show up.

1. Pricing, Discounts And “Was/Now” Sales

Pricing is one of the fastest ways to get into trouble, because customers rely heavily on price information and “specials” when deciding to buy.

Common risky pricing practices include:

advertising a discount off a “usual” price that wasn’t genuinely the usual price
displaying a price that excludes compulsory fees without making that clear
advertising “from $X” pricing where very few customers can actually access that price
using drip pricing (adding unavoidable charges later in the checkout)

If you run promos, make sure your advertised price is accurate and clearly explained. This is especially important for online stores and service businesses that quote packages.

A helpful related concept is how you present the advertised price - getting this wrong can quickly become a Fair Trading Act issue.

2. Performance Claims And “Guaranteed Results”

Be careful with big claims, especially if you can’t prove them.

Examples include:

“guaranteed to cure X” or “guaranteed results” claims
“the best in NZ” or “number one provider” where you don’t have evidence
claims about speed, durability, lifespan, or outcomes that don’t match typical use
implying qualifications, certifications, or approvals you don’t have

A practical tip: if you’re making a factual claim (not just obvious puffery), assume you should be able to back it up with real evidence.

3. Product Descriptions, Photos And Before/After Content

Images and “results” content can be misleading if they imply something that isn’t typical or isn’t what you’re selling.

Think about:

edited photos that materially change what’s shown
photos showing inclusions that aren’t part of the sale
before/after results that are not representative (without clear disclosure)
stock images that imply a size/quality you can’t deliver

This is a common issue for ecommerce sellers, beauty and fitness businesses, trades, and anyone selling “transformational” services.

4. Testimonials, Reviews And Influencer Content

Social proof is powerful - and that’s exactly why you need to be careful under the Fair Trading Act.

Risky practices include:

publishing testimonials that aren’t genuine
editing reviews in a way that changes their meaning
not disclosing that an influencer was paid or gifted product (where that could mislead)
using a customer’s review to imply results that aren’t typical

If you’re working with affiliates or running email campaigns as part of your marketing strategy, it’s also worth ensuring your approach aligns with the email marketing laws that apply in New Zealand (because compliance issues often stack up across different areas).

5. Fine Print That Contradicts Your Headline

Many small businesses try to “fix” bold marketing claims with footnotes or terms in small print. That can still be misleading if the overall impression is wrong.

As a general rule:

your headline should be accurate on its own, or
any important limitation should be clear and prominent (not hidden at the bottom of a page)

This is where your written customer terms can do a lot of heavy lifting - but they need to actually match what you’re advertising. For many businesses, having clear terms and conditions is a key part of staying consistent and reducing disputes.

6. Website Statements And Missing Key Information

Sometimes the risk isn’t what you say - it’s what you don’t say.

For example, you may need to disclose:

material restrictions on availability (limited stock, limited areas serviced)
important exclusions (what isn’t included in a package)
time limits (expiry dates on promos, vouchers, packages)
conditions attached to “free” offers

If you collect customer information through your website (for enquiries, bookings, newsletters, or analytics), you should also make sure your site’s compliance is joined up - including having a Privacy Policy where required. While privacy law is a separate area, inconsistent or unclear disclosures can cause customer trust issues that flow into complaints.

What About “Unsubstantiated Representations”?

In addition to the general ban on misleading or deceptive conduct, the Fair Trading Act also prohibits unsubstantiated representations. This is where a business makes a representation about goods or services without having reasonable grounds for it at the time it’s made.

In practice, this means if you make a claim that sounds factual (for example about performance, benefits, or likely results), you should have evidence or a solid basis for the claim before you publish it - not after someone challenges you.

What Are The Consequences If You Breach The Fair Trading Act?

It’s tempting to think Fair Trading Act compliance is only a “big business” problem. But in reality, small businesses can feel the impact more sharply because the cost of fixing issues can be significant.

Potential consequences can include:

customer complaints and refund demands (even where you believe you’ve delivered what you promised)
disputes that consume time and energy, especially if your business relies on word-of-mouth
Commerce Commission involvement in more serious or widespread conduct
court proceedings brought by regulators or private parties
remedies or orders such as injunctions, corrective advertising, damages, refunds, or contract cancellation (depending on what happened)
penalties and fines in some cases (particularly for certain types of conduct)
reputational damage (which can be long-lasting online)

Even if a matter doesn’t end up in court, the practical reality is that misleading advertising claims can create a chain reaction: unhappy customers, negative reviews, chargebacks, platform complaints, and lost revenue.

This is why it’s worth treating the Fair Trading Act as a “from day one” legal foundation - just like getting your business structure, contracts, and compliance systems sorted early.

How Can You Stay Compliant With The Fair Trading Act (Without Killing Your Marketing)?

The good news is you don’t need to make your marketing boring or overly cautious. You just need a system that keeps your claims honest, consistent, and supportable.

Here are practical steps you can put in place.

1. Audit Your Claims (And Keep Proof)

Go through your main customer touchpoints and identify any factual claims, such as:

pricing comparisons (“save 30%”, “normally $X”)
results (“double your leads”, “lose 5kg in 2 weeks”)
product features (“waterproof”, “organic”, “made in NZ”)
speed/time promises (“same-day delivery”, “24-hour turnaround”)

For each one, ask: Can we prove this? If not, rewrite it to be accurate.

2. Make Qualifications Clear And Prominent

If a claim is true only in certain circumstances, don’t hide that.

For example:

“from $X” should clearly explain what affects price
delivery timeframes should specify regions and cut-off times
packages should clearly list inclusions and exclusions

This is also where carefully drafted disclaimers can help - but only if they genuinely clarify rather than contradict. If you use disclaimers, they should be tailored to your business and placed where customers will actually see them. (Generic blanket disclaimers can create a false sense of security.) For some businesses, having properly drafted disclaimers is a useful part of risk management.

3. Align Your Terms, Quotes, And Sales Process

Misleading conduct risk can arise not just from advertising, but from how you sell and deliver.

To reduce risk, make sure:

quotes match your website and social claims
sales staff (or you, if you’re the salesperson) don’t overpromise to close the deal
your customer onboarding process includes key information in writing
your terms reflect what you actually do in practice (not what you hope to do)

This is particularly important for service providers (consultants, agencies, trades, and professional services) where deliverables can be misunderstood if they’re not documented clearly.

4. Train Anyone Who Speaks To Customers

If you have staff answering phones, responding to DMs, writing quotes, or handling sales, they are part of your “conduct in trade”.

Give them simple guidelines on:

what they can promise
what needs to be confirmed in writing
how to talk about pricing and timeframes
when to escalate a question rather than guessing

If you’re hiring your first employee, it’s also worth getting your legal basics right across the board (including documentation like an Employment Contract) so your business is protected and your expectations are clear internally too.

5. Be Extra Careful With Comparisons And “Best In NZ” Claims

Comparative advertising can be effective - and risky - if it’s not accurate.

If you’re comparing yourself to competitors (even indirectly), ask:

Is the comparison current and fair?
Are we comparing like-for-like?
Do we have evidence?
Would an ordinary customer understand the context?

If the answer is “not really”, rephrase. It’s usually safer to focus on what you do well, rather than trying to prove you’re “the best”.

6. Get Legal Advice Before Launching Big Campaigns Or New Offers

If you’re about to launch a major promo, a subscription model, or a new product line, it can be a smart move to get a quick legal check first - especially if you’re making strong claims or relying on complicated pricing mechanics.

This is one of those areas where a short review up front can save a lot of cost later (including having to change advertising, refund customers, or manage formal complaints).

Key Takeaways

The Fair Trading Act 1986 is a core law for New Zealand businesses, and it heavily affects how you advertise, price, and sell your products or services.
“Misleading and deceptive conduct” under the Fair Trading Act is broad - it can include what you say, what you show, and what you leave out, even if you didn’t mean to mislead.
Common Fair Trading Act risk areas for small businesses include discount pricing, “from” pricing, performance claims, testimonials, influencer content, unsubstantiated representations, and fine print that contradicts headline advertising.
Consequences of non-compliance can include customer disputes, reputational damage, regulator involvement, court action, and being required to change your advertising or business practices.
Practical compliance steps include auditing your marketing claims, keeping proof for factual statements, making limitations prominent, aligning your sales process with your advertising, and training staff on what they can promise.
Well-drafted terms, clear disclaimers, and consistent customer communications can help reduce risk - but they need to reflect what your business actually offers and delivers.

This article is general information only and doesn’t take into account your specific situation. It isn’t legal advice.

If you’d like help reviewing your advertising, promotions, website claims, or customer terms so you’re compliant with the Fair Trading Act, you can reach us on 0800 002 184 or email team@sprintlaw.co.nz for a free, no-obligations chat.

Fair Trading Act 1986 (NZ): Misleading And Deceptive Conduct Explained