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The Commerce Commission of New Zealand has recently updated its guidelines for 2025, highlighting a few key points that every business owner should avoid. These mostly revolve around the obligations you owe your consumers, ensuring that your online information is accurate and transparent.
In this article, we’ll highlight three important obligations your small business owes to your consumers. We’ll also discuss what you are entitled to as a small business when interacting with other businesses. For further reading on protecting your business interests, you might find our legal guide to starting a small business useful.
1. Your Obligations When You Advertise Online
Everyone wants their business to look as attractive as possible online. However, it is imperative that all information is accurate and truthful. In 2025, the Commerce Commission continues to enforce laws surrounding false or misleading advertising, reminding small business owners to take extra care with the claims they make. Understanding what constitutes false or misleading advertising, how it breaches the law, and the consequent penalties is crucial – especially when you benefit from having robust Website Terms and Conditions in place.
What Counts As False Or Misleading Advertising?
False or misleading advertising involves any advertising that contains statements which are untrue or create a false overall impression. It is vital that you carefully assess the image your advertising portrays to consumers.
Some examples of practices that could be deemed false or misleading include:
- Comparing your product to another: When comparing your product with another in an online advert, you must ensure that any claims regarding the price, quality, range, or volume are accurate. If you falsely claim your product is superior, it will be considered misleading.
- Advertising an unavailable discount or sale: While it is common to promote a sale when one is available, if the sale is misleadingly presented or extremely limited, it may be classified as ‘bait advertising’ – that is, advertising designed to lure the customer under false pretences.
So What Makes It Illegal?
New Zealand law – specifically the Fair Trading Act 1986 – remains the cornerstone for regulating business advertising, whether online or offline. Sections 9, 10, and 13 of the Act prohibit false and misleading representations. Penalties under these sections continue to be significant; individuals and small business operators face steep fines, and in some severe cases, corporations may incur even more substantial penalties or criminal charges.
2. Your Obligations Regarding Online Reviews Of Your Business
Online reviews play a pivotal role in influencing consumer spending decisions. As a business with an online presence, it is important to manage and maintain genuine reviews. However, since online review platforms can be vulnerable to manipulation, you must ensure that reviews remain authentic and untainted.
You cannot write or allow untrue reviews to be posted on your platform. Reviews need to be genuine – for example, a review should not be submitted by someone within your business, by a competitor, or by a paid reviewer who falsely claims to have used your product or service.
But I Have Seen Businesses Offer Freebies For Reviews Before?
Offering incentives for reviews is legal provided the incentive is available to everyone, regardless of whether the review is positive or negative. It is essential to disclose that the incentive will be offered irrespective of the review’s content. This practice helps maintain transparency and complies with the latest guidelines.
What About Editing Online Reviews?
While it is acceptable to edit reviews to remove any content that is clearly false, fake, or misleading, you should not delete genuine reviews simply because they might affect your overall rating. Familiarise yourself with the review platform’s policies – these often provide clear instructions on when editing is permitted. For more guidance on maintaining compliant online policies, explore our Business Terms and Conditions resource.
If a misunderstanding arises regarding your services or product, consider reaching out to the customer to resolve the issue amicably. With their consent, you might request that they update their rating to reflect the resolution of the problem.
What Are The Consequences?
If your online reviews are found to be misleading or deceptive, you could be in breach of the Fair Trading Act. This type of conduct, which falls under misleading and deceptive practices, attracts significant penalties under the current law. Maintaining honesty in all customer interactions is not only a legal obligation but also a vital element of your business reputation.
3. Do I Have Any Obligations After The Customer Clicks Away?
You must guarantee that your product or service performs as described. Whether you sell goods or provide a service, a guarantee is a promise that your product or service will conform to the advertised description. These guarantees are automatic and exist alongside any additional warranties you may offer. For more details on what constitutes proper guarantees, our Consumer Guarantees guidelines provide excellent insights.
So What Must I Guarantee Exactly?
There are different guarantees for products and services:
- For products: They must be of acceptable quality – that is, they must match the description provided, be fit for their purpose, be free from hidden defects, and their ownership must be unquestionable.
- They must match the description given to the consumer.
- They must be fit for any purpose the consumer has made known.
For services:
- They must be provided with reasonable care and skill.
- They should be fit for the particular purpose or achieve the result that the consumer has specified.
- They must be delivered within a reasonable time when no specific timeframe has been agreed upon.
What Happens If My Product Or Service Does Not Live Up To Its Guarantee?
If your product or service fails to meet its guarantee, your customer has a legally enforceable right to a remedy. For products, this typically includes a refund, replacement, or repair. For services, the customer is entitled to either a cancellation and refund or compensation for any loss or damage suffered.
As a small business operating in 2025, it is essential to continually review and update your policies to remain compliant with the Consumer Guarantees Act 1993. The Act, and specifically Part 4, outlines the guarantee requirements and the corresponding customer rights. Leveraging our business set up services and regular legal updates can ensure that your policies remain robust and up-to-date.
As A Small Business, Am I A Consumer?
Absolutely! When you engage in transactions with other businesses, you are considered a consumer and are entitled to the same protections. It’s vital that you not only meet your obligations to your customers but also take steps to safeguard your own interests. For example, ensure you obtain sound legal advice, such as from our Business Law Experts, before entering into any contractual agreements.
The Commerce Commission advises small businesses to perform due diligence before engaging with another business. This includes asking plenty of questions, obtaining evidence of any claims made, ensuring proper contracts are in place, and protecting yourself where necessary. For more comprehensive advice, you might also consider reading our article on small business responsibilities.
Still Unsure?
Understanding your rights and obligations is critical for both consumer interactions and managing business-to-business relationships. Keeping abreast of the latest legal updates for 2025 will help you ensure compliance and protect your business from potential pitfalls. If you are unsure about any aspect of your obligations – or if you need assistance with drafting or reviewing your contracts – get in touch with us at [email protected] or on 0800 002 184 for a free, no-obligations chat. Our experienced legal team is here to help you navigate the complexities of New Zealand’s business law.
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