False Or Misleading Representations Under The Fair Trading Act In NZ

If you’re running a business, marketing can feel like a constant balancing act. You want your ads to stand out, your website to convert, and your sales team to confidently pitch what you offer.

But there’s a legal line you can’t afford to cross: misleading people about what you’re offering.

In New Zealand, the Fair Trading Act 1986 (FTA) is one of the main laws that regulates what you can (and can’t) say when you advertise, sell, negotiate, or promote your products and services. And because it applies broadly across industries, almost every small business will come across it at some point.

This guide breaks down what “false or misleading representations” means in practice, why it matters, and what you can do to reduce your risk - without killing your marketing momentum.

What Are “False Or Misleading Representations” Under The Fair Trading Act?

Under the FTA, businesses must not engage in misleading or deceptive conduct (or conduct that is likely to mislead or deceive). The Act also contains specific rules about certain false or misleading representations - for example, particular claims about price, quality, or standard.

In practical terms, “false or misleading representations” refers to claims your business makes that are untrue or likely to mislead customers (or other businesses) about what you’re selling, who you are, or the deal they’re getting.

This matters because the FTA doesn’t only target obvious scams. It can apply to everyday marketing and sales conduct - including websites, social media posts, packaging, email campaigns, quotes, proposals, and conversations during negotiations.

When people look up false or misleading representations under the Fair Trading Act, they’re usually trying to work out one of these practical questions:

• “Is my advertising claim allowed?”
• “Can I say ‘best’ or ‘cheapest’?”
• “What if I genuinely believed what I said was true?”
• “What happens if a customer complains?”
• “What do I need to prove my claims?”

At a high level, the FTA is aimed at keeping markets honest. The law expects businesses to be accurate and fair in the way they represent goods, services, pricing, and commercial terms.

It’s also worth remembering that the FTA often overlaps with other legal obligations - for example, consumer rights under the Consumer Guarantees Act 1993, and privacy obligations if your marketing relies on customer data (for example, having a suitable Privacy Policy).

What Types Of Claims Can Breach The Fair Trading Act?

Misleading conduct (and false or misleading representations) aren’t limited to a specific format. They can be made in words, images, or even through what you leave out.

They can also happen at different stages of doing business, including:

• advertising and promotions
• quotes and proposals
• sales calls and negotiations
• product labelling and packaging
• online listings and website product pages
• invoices and contract documents

Common areas where small businesses can accidentally slip up include:

Pricing And Discount Claims

Pricing representations are one of the most common risk areas because customers often make quick decisions based on price cues.

Examples that can become problematic include:

• advertising a “sale” price where the “was” price isn’t genuine
• not clearly disclosing mandatory fees, delivery charges, or add-ons
• using “from $X” pricing when most customers won’t be able to access that price
• implying a discount is time-limited when it isn’t

A good habit is to pressure-test your website and ads as if you were a customer seeing them for the first time. If the “real” price only becomes clear at checkout (or after a phone call), that’s a potential red flag.

Quality, Performance, Or “Results” Statements

Any claim about what your product or service does - speed, outcomes, durability, compliance, effectiveness - needs to be accurate and supportable.

This is especially relevant for businesses selling:

• health and wellbeing services
• cosmetics or supplements
• construction or trade services
• software and digital products
• professional services (consulting, finance, training)

If you say “guaranteed results” or “works in 7 days”, you should assume you may need to prove it later. Your advertising shouldn’t rely on vague hype if it creates a strong impression in the customer’s mind.

Origin, Brand, Or “Made In” Claims

Statements like “Made in New Zealand”, “NZ owned”, “locally sourced”, or “imported from X” can be powerful - and legally sensitive.

If your supply chain is complicated, make sure your marketing team understands what’s true and what’s merely aspirational. If you’re using suppliers or manufacturers overseas, you should be careful about how you describe origin and production.

Testimonials, Reviews, And Social Proof

Testimonials and reviews can also be risky when they’re:

• fake
• edited in a way that changes their meaning
• presented as typical when they’re not
• incentivised without clear disclosure (for example, offering discounts for positive reviews)

Even if you didn’t create a misleading review yourself, you still need to be careful about how you use and display customer feedback as part of your marketing.

Business-To-Business Claims

It’s a common misconception that the FTA is only a “consumer law”. In reality, misleading conduct and false or misleading representations can also arise in B2B transactions - for example, when a supplier pitches their capability, turnaround time, compliance status, or pricing assumptions to your business.

If you sell to other businesses, your proposals, quotes, and capability statements still need to be accurate and not misleading.

It’s one reason having clear written terms can help reduce disputes later - whether that’s a tailored Service Agreement for your clients, or well-structured Business Terms for repeat sales.

Does Intent Matter (And What If It Was An Honest Mistake)?

For many business owners, the scary part is the idea of being penalised for something you didn’t mean to do.

Under the FTA, intent often isn’t the deciding factor. Conduct can still be misleading even if:

• you genuinely believed it was true
• you copied the information from a supplier
• it was a mistake by an employee or contractor
• you didn’t realise customers would interpret it that way

The focus is typically on the overall impression created by what you said (or showed), and whether that impression is likely to mislead the audience.

That means compliance is less about “good intentions” and more about having:

• a process for approving marketing claims
• evidence to back up factual statements
• clear disclaimers where appropriate (but not as a band-aid)
• consistent staff training on what can and can’t be promised

If you’ve got a team making sales calls, it can also be worth setting rules around what’s said and recorded. For some businesses, it’s relevant to understand business call recording laws in New Zealand, particularly if recordings are used for quality assurance or dispute resolution.

Practical Examples: What Can Count As “Misleading” In Real Life?

It’s often easier to understand the FTA through examples. Here are some common scenarios where small businesses can accidentally trigger risk.

Example 1: “Fixed Price” Work That Isn’t Really Fixed

Let’s say you advertise a “fixed price” package for a service, but in practice the price regularly changes because of “standard extras” you didn’t clearly disclose upfront.

Even if your clients could have asked more questions, the issue is whether your advertising created a misleading impression about the true cost.

Example 2: Overpromising Timeframes

If you routinely say “delivery in 24 hours” or “we can start next week” but you don’t have a realistic basis for that, it can become misleading - especially if those timeframes are a key reason the customer chooses you.

This is where it helps to document what you are committing to, and under what assumptions. Strong written scope and change-control clauses in a Master Services Agreement (or a tailored service agreement for smaller projects) can help align expectations and reduce disputes.

Example 3: “Eco-Friendly” Or Sustainability Claims

“Green” marketing is everywhere, but broad sustainability claims can create legal risk if they imply something you can’t support.

If you say:

• “100% recyclable”
• “carbon neutral”
• “plastic-free”
• “ethical sourcing guaranteed”

…you should be prepared to substantiate it with credible information. If you can’t, a softer and more accurate claim (with detail) is usually safer.

Example 4: Using Fine Print To “Fix” A Big Headline

A common trap is relying on small disclaimers to correct a bold headline. Disclaimers can help, but they won’t always save you if the main representation is strong and the disclaimer is buried or unclear.

Think of it this way: if the headline creates the key impression, your disclaimer needs to be prominent enough to genuinely change that impression.

What Are The Consequences If Your Business Gets It Wrong?

No one starts a business expecting to end up in a dispute about advertising or sales conduct. But complaints under the FTA do happen, and the impact can be more than just a slap on the wrist.

Depending on the situation, consequences can include:

• customer complaints and refund demands (sometimes escalating quickly on social media)
• disputes with other businesses (for example, in a supply arrangement or sale negotiation)
• investigations or enforcement by regulators (in serious cases)
• court orders, penalties, or settlements
• reputational damage, which can be brutal for a small business relying on local trust
• internal cost (management time, marketing rework, legal fees, distraction from growth)

And importantly, misleading representations can also create contract disputes - for example, where a customer says they only signed because of what was promised during negotiations.

Having well-drafted documents won’t excuse misleading conduct, but it can reduce confusion about what’s included and what isn’t. If your business relies on quotes, online checkouts, or repeat transactions, it’s often worth tightening your legal foundations with tailored Terms of Trade.

How Can You Reduce Risk Without Killing Your Marketing?

Most small businesses don’t need “boring” marketing - you just need marketing that’s accurate, supportable, and consistent.

Here are practical steps you can implement to reduce your risk under the misleading conduct and false or misleading representation rules in the FTA.

1. Treat Marketing Claims Like “Business Assets” (They Need Sign-Off)

If you have staff, contractors, or an agency writing ads and website copy, consider implementing a simple approvals process.

This might include:

• a checklist of high-risk claim categories (price, timeframes, results, guarantees)
• a rule that “absolute” words (like “guaranteed”, “always”, “never”) need manager approval
• keeping evidence on file for factual claims (testing results, supplier specs, certifications)

This is particularly important if your business is scaling fast. What felt “safe” when you were personally overseeing every customer interaction can become risky once a team is involved.

2. Make Sure Your Offers Match Your Contracting Documents

One of the most common causes of disputes is a mismatch between:

• what the marketing says
• what the sales team promises
• what the contract actually delivers

Your advertising and sales scripts should align with your customer-facing agreements and policies. For example, if your website promises “cancel anytime” but your contract has a minimum term or cancellation fee, that’s an obvious pressure point.

If you sell services, make sure your deliverables, timelines, and exclusions are properly captured in your contract structure (often through a service agreement or a master agreement plus statements of work).

3. Be Careful With Comparisons And “Best In Market” Statements

Comparative advertising (like “cheaper than competitors” or “#1 in NZ”) can be lawful, but it’s also easy to get wrong if you can’t back it up.

If you’re going to compare:

• be specific about what you’re comparing (price? features? turnaround time?)
• be confident your comparison is current and accurate
• avoid cherry-picking that creates a misleading overall impression

In many cases, it’s safer to focus on what you do and what you include, rather than trying to rank yourself against the entire market.

4. Train Your Sales Team On “Representations”

False or misleading representations don’t only come from ads. They can come from what’s said on a call, in a meeting, or in an email thread.

A quick training session can help your team understand:

• what they can promise (and what they can’t)
• how to handle “Is this guaranteed?” questions
• how to talk about timelines honestly
• when to escalate a tricky question to management

If you hire sales staff, it’s also worth ensuring your basics are in place from an employment perspective. For example, using a suitable Employment Contract can help you set clear expectations about policies, conduct, and compliance responsibilities.

5. Keep Evidence For Your Key Claims

A simple rule: if a claim helps sell the product, keep proof of it.

This could include:

• supplier specifications and warranties
• testing or benchmarking results
• certificates or compliance documentation
• before/after photos with context (and permission)
• clear records of promotions and pricing history

Even if no dispute arises, this is good discipline. It also helps you market more confidently, because you’ll know your claims are defensible.

Key Takeaways

• Under the Fair Trading Act 1986, businesses must not engage in misleading or deceptive conduct, and there are also specific rules that prohibit certain false or misleading representations.
• Misleading conduct under the FTA can arise from everyday advertising, sales conversations, quotes, websites, and packaging - not just deliberate “bait and switch” conduct.
• Intent isn’t always the key issue; what matters is the overall impression your conduct creates and whether it’s likely to mislead your audience.
• High-risk areas include pricing and discounts, delivery or turnaround timeframes, “guaranteed” results, origin or “made in” claims, and testimonials or reviews.
• Disclaimers can help, but they won’t necessarily fix a bold misleading headline - your main message still needs to be accurate and clear.
• Practical risk reduction includes approving marketing claims, aligning ads with your contracts and terms, training staff, and keeping evidence to substantiate important statements.
• Strong customer-facing documents like a Service Agreement and Terms of Trade can help set expectations clearly and reduce disputes, but they won’t excuse misleading conduct.

If you’d like help reviewing your advertising claims, tightening up your customer contracts, or putting the right legal foundations in place from day one, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.

This article is general information only and does not constitute legal advice. For advice about your specific situation, get in touch with a lawyer.