FTA fine to increase 733%
The government plans to increase the fine for companies advertising special promotion prices but failing to charge them by a whopping 733 per cent.
Nicola Willis, Minister of Finance, is bolstering the Fair Trading Act (FTA) when it comes to businesses running misleading promotions because the “regime has become outdated”.
Under the current law, companies that advertise a promotional price but fail to charge it at checkout face a $600,000 fine.
Willis, pictured, says that doesn’t do enough to deter would-be bad actors, so it’s being upped to $5 million – and that can become higher still for particularly bad examples of misleading consumers. Legislation to enact this will be introduced to parliament early next year.
In addition, companies will soon face a fine three times the value of the commercial gain made, or loss avoided, if they are found to be misleading customers over pricing.
The law change has been announced as the Commerce Commission reports an almost 23 per cent increase in fair-trading complaints over the past five years.
Earlier this year, two Pak’nSave supermarkets pleaded guilty to seven charges of incorrect pricing, while the regulator also filed criminal charges against Woolworths for alleged inaccurate pricing and misleading specials.
Anne Callinan, deputy chair of the commission, says: “We’re really pleased to hear the penalties will increase. We think it will make a huge impact in terms of being able to set deterrents against illegal conduct.”
Consumer NZ’s chief executive, Jon Duffy, adds: “We’re often talking about multinationals here who are facing far stiffer penalties in other jurisdictions. It’s really important our penalties provide a deterrent similar to overseas jurisdictions.”
Duffy has called for the government to go further and make it illegal for company directors to take out insurance against penalties.
However, after consultation with businesses and other groups, Willis says the government has decided not to proceed with proposals to stop directors taking out insurance or indemnifying themselves from FTA penalties.
She adds: “We have also opted not to progress proposals to expand infringement fees and unfair contract terms provisions.”
