Is Price Gouging Illegal In New Zealand?

Priya runs an online camping gear store in Auckland. After a major storm, demand for torches, power banks and portable cookers jumps overnight. Her supplier also lifts wholesale prices, couriers add urgent delivery fees, and she starts wondering: can she raise her prices without getting into trouble?

If you're in retail or services, this can be a tricky moment. You don't want to lose money when costs spike, but you also don't want customers accusing your business of price gouging.

The good news is that New Zealand law doesn't ban every sharp price increase. The real risk usually sits in how you set, advertise and explain your prices, and whether your conduct crosses the line under competition or consumer law.

Is Price Gouging Illegal In New Zealand?

Generally, no - there isn't a standalone New Zealand law that makes price gouging illegal just because a price is high.

New Zealand businesses usually have freedom to set their own prices. That means you can charge more when demand increases, when your costs go up, or when you're selling a scarce product, provided you're not breaking another law.

The main laws to keep in mind are:

• Fair Trading Act 1986: this deals with misleading or deceptive conduct, false pricing claims, bait advertising and unfair practices.
• Commerce Act 1986: this deals with anti-competitive behaviour, such as price fixing, cartel conduct and misuse of substantial market power.
• Consumer Guarantees Act 1993: this affects your refund, repair and replacement obligations when you sell to consumers.

So, a high price isn't automatically illegal. But a high price paired with misleading advertising, hidden fees, fake discounts, collusion with competitors or unfair refund terms can create real legal risk.

For example, if you normally sell a product for $40 and you increase it to $65 during a busy period, that may be lawful. But if you advertise it as "half price, was $130" when you never genuinely sold it at $130, that becomes a Fair Trading Act issue.

What Does The Fair Trading Act Say About Pricing?

The Fair Trading Act doesn't tell you what price to charge, but it does require your pricing display to be honest and not misleading.

For most retailers and service providers, this is where the biggest day-to-day pricing risk sits. The Commerce Commission can take action if your pricing conduct misleads customers, even if you didn't set out to deceive anyone.

Pricing issues under the Fair Trading Act can include:

• Misleading headline prices: advertising a low price, then adding unavoidable fees late in checkout.
• Fake discounts: saying "was $100, now $70" when the product wasn't genuinely sold at $100 for a meaningful period.
• Bait advertising: promoting a product at a sharp price when you don't have reasonable stock available.
• Unclear surcharges: adding card fees, booking fees or urgent service fees without making them clear before the customer commits.
• False reasons for price rises: saying a price increase is due to supplier costs if that isn't true.
• Misleading refund statements: using "no refunds" wording that makes consumers think they don't have rights under the Consumer Guarantees Act.

Say you advertise "emergency generator hire from $99", but every customer must pay a compulsory $60 set-up fee and $35 weekend fee. If those extra fees aren't clear upfront, the headline price may mislead customers.

Your safest approach is to make the total price, or the way the price will be calculated, clear before the customer buys, ideally through clear customer contracts and checkout terms.

Can I Charge More During High Demand Or Emergencies?

Yes, you can usually charge more during high demand or an emergency, as long as your pricing is transparent and you're not engaging in anti-competitive or misleading conduct.

Customers may not like a sudden increase, but the law generally recognises that prices can move with supply, demand and cost. If freight doubles, staff overtime applies, or stock becomes harder to source, you may need to adjust your prices to keep trading.

A Worked Example

Priya normally buys power banks from her supplier for $28 each and sells them for $49. After the storm, her supplier price increases to $42, urgent freight adds $6 per unit, and she pays staff overtime to pack orders.

She decides to sell the power banks for $69 for the next week. Her product page says:

• the current price is $69 including GST;
• express delivery is optional and costs $12;
• standard delivery remains available but may be delayed; and
• the price may change as stock and supplier costs change.

That price rise isn't automatically unlawful. Priya is being clear about the price and optional delivery cost. She isn't pretending there's a discount, hiding a compulsory fee, or coordinating prices with a competitor.

Now change the facts. If Priya says "supplier costs have tripled" when they haven't, or advertises "today only" every day for three weeks, she is creating Fair Trading Act risk.

When Can Excessive Pricing Become A Commerce Act Problem?

Excessive pricing can become a Commerce Act issue where the pricing is connected to anti-competitive conduct, market power or coordination with other businesses.

The Commerce Act 1986 isn't a general price control law for most businesses. It doesn't usually stop a small business from charging a high price for its own product. Instead, it focuses on conduct that harms competition.

You should be especially careful if any of these situations apply:

• You talk to competitors about prices: agreeing on prices, discounts, fees or margins can amount to cartel conduct or price fixing.
• You agree to limit supply: businesses can't coordinate to hold back stock so everyone can charge more.
• You allocate customers or areas: agreeing that one business will serve certain customers while another takes the rest can be unlawful.
• You have substantial market power: since the updated section 36 rules took effect in 2023, businesses with substantial market power must not engage in conduct that has the purpose, effect or likely effect of substantially lessening competition.
• You impose resale prices: telling resellers the minimum price they must charge can raise resale price maintenance issues.

For a typical small retailer, the biggest Commerce Act risk isn't the amount of the price itself. It's discussing or agreeing pricing with competitors, even informally.

Avoid messages like "let's all lift our call-out fee to $250 this weekend" in industry group chats. Even if you think everyone is just venting about costs, pricing coordination can be taken seriously.

How Should I Advertise Discounts, Surcharges And Refund Terms?

You should advertise discounts, surcharges and refund terms in a way that lets customers understand the real deal before they decide to buy.

This is where small wording choices can make a big difference.

Discounts And "Was/Now" Pricing

If you compare your current price with a previous price, make sure the previous price was genuine. Ask yourself:

• Did we actually sell the product at the higher price?
• Was it available at that price for a reasonable period?
• Are we using the comparison in a way that creates a fair impression?

If a product launched yesterday at $120 and today you say "was $120, now $79", that may be hard to justify.

Surcharges And Extra Fees

If you add surcharges, show them early and clearly. This includes:

• card payment surcharges;
• booking fees;
• weekend or after-hours fees;
• urgent delivery charges;
• fuel or travel surcharges; and
• platform or administration fees.

Card surcharges are an area regulators watch closely. If you charge one, it should be easy for customers to see before payment, and you should be comfortable that it reflects your real cost of accepting that payment type.

Refund Terms

Be careful with "no refunds" wording. You can usually decide your own refund policy for change-of-mind returns, but you can't mislead consumers about their rights under the Consumer Guarantees Act.

If goods or services don't meet the consumer guarantees, customers may have rights to a repair, replacement, refund or other remedy under a clear Consumer Guarantees Act policy. Your terms should explain your policy without suggesting those legal rights disappear.

What Should My Pricing Policy Include?

A pricing policy should set out how your business changes, advertises and explains prices, especially when demand or costs move quickly.

This doesn't need to be complicated. For many small businesses, a practical internal policy can help your team avoid rushed decisions that create legal or customer service problems.

Here's a useful outline to start from. A lawyer or legal professional should tailor it before you use it, because templates often miss the details that matter for your business model.

1. Purpose: explain that the policy is designed to keep pricing clear, lawful and consistent.
2. Who Can Approve Price Changes: name the roles that can approve temporary increases, discounts and promotions.
3. Reasons For Price Changes: list legitimate reasons, such as supplier increases, freight, staff costs, demand, stock levels or seasonal trading.
4. Evidence To Keep: record supplier notices, freight invoices, screenshots, promotion dates and internal approvals.
5. Advertising Rules: require accurate price claims, genuine discount comparisons and clear GST-inclusive consumer pricing where relevant.
6. Surcharges And Fees: set out when surcharges apply, how they're calculated and where they must be disclosed.
7. Refund And Cancellation Wording: align customer-facing wording with the Consumer Guarantees Act and your change-of-mind policy.
8. Competitor Contact: make clear that your team must not discuss prices, margins, fees, stock limits or customer allocation with competitors.
9. Review Process: set a timeframe for checking temporary price changes and ending promotions.

It also helps to update your website terms, customer contracts and checkout wording at the same time. If your documents say one thing but your ads say another, your team may struggle to explain the position when a customer complains.

Common Pricing Mistakes To Avoid

The most common pricing mistakes are usually practical ones, not complicated legal ones.

When you're changing prices quickly, watch out for these traps:

• Leaving old ads live: if your homepage says $79 but checkout says $99, customers may argue the lower price was advertised.
• Changing the price after purchase: once a customer has bought at an agreed price, you usually need a clear contractual right to change it.
• Hiding compulsory fees: if the customer can't avoid a fee, don't leave it until the final payment screen.
• Using pressure tactics you can't support: statements like "only 2 left" or "sale ends tonight" need to be true.
• Copying a competitor's price message: matching the market is one thing, but discussing or coordinating prices with competitors is very different.
• Overstating refund limits: your policy can't remove consumer guarantees that apply by law.

If something has already gone wrong, start by collecting the facts. Save screenshots of the ad, checkout flow, emails, invoices, stock records and the exact wording the customer saw. Then pause the promotion or correct the wording while you work out the next step.

If the issue affects many customers, or if the Commerce Commission contacts you, get tailored advice before responding. What you say early can shape how the issue is handled.

Key Takeaways

• New Zealand doesn't have a standalone price gouging law that bans every high price or sudden price rise.
• The Fair Trading Act is the main risk area for misleading pricing, fake discounts, bait advertising, hidden fees and unclear surcharges.
• The Commerce Act can apply if pricing involves competitors, cartel conduct, resale price maintenance or misuse of substantial market power.
• You can usually raise prices during high demand if you're transparent and your claims about costs, stock and discounts are accurate.
• Refund terms need to sit alongside the Consumer Guarantees Act, not pretend consumer rights don't exist.
• A clear pricing policy, accurate website terms and good records can help protect your business when prices move quickly.

If you'd like help with your pricing terms, website terms and conditions, customer contracts or advertising compliance, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.