Buyer’s remorse:
Our biggest shopping concerns
Customers worried about being ripped off by retailers are turning to the Commerce Commission in their thousands. Over 2015, the commission received more than 5000 reports from consumers about behaviour by retailers that might have breached the Fair Trading Act.
About a quarter had pricing concerns, 23 per cent were worried about the quality of the goods they were buying and 22 per cent questioned the quality of services they received.
Here are some of the most common complaints received by the commission, and what to do if you get caught in the same way.
Wrong price charged for product at the till – sale price not being applied
A business that displays advertised prices lower than what they are actually going to charge is misleading customers.
The Commerce Commission cited an example where a supermarket charged higher prices for some fruit and vegetables at the checkout than at their display. It was convicted and fined.
In New Zealand, most retailers with computerised barcode systems are members of GS1 New Zealand, which has a code of practice that states the retailer cannot charge more than the displayed price. If you query a wrong price, you will usually get a refund of any extra you have paid.
But if there has been a mistake, and the price displayed is substantially lower than it should be, the shop does not have to honour it. The Contractual Mistakes Act might apply, which offers relief from the usual rules when a clear error has been made.
If the retailer often advertises items at the wrong price, they could still be breaking the Fair Trading Act.
The product’s price was increased before the sale, making the savings look better
Retailers cannot bump up the ‘‘regular’’ price of an item to make an upcoming sale look better. A discount needs to be a genuine discount on a price that was legitimately charged beforehand, with the expectation that shoppers would pay it.
Any retailer who inflates prices before a sale risks breaching the Fair Trading Act.
Drip-pricing on products, where the advertised price is lower than what the customer will finally pay
A number of online retailers add extra charges and fees to their headline price, so what is advertised is not what you actually pay.
This is a contentious issue and the Commerce Commission is looking into how airlines use the practice. They have been sanctioned overseas.
In general, if a retailer advertises one price with the aim of getting buyers’ attention, then adds on other fees afterwards, they could be accused of misleading customers and be in breach of the Fair Trading Act. Use of ‘‘was/now’’ pricing Research has shown that seeing a product advertised at a reduced price – beside a claim of what it would have sold for before – is likely to drive people to purchase.
But consumers need to know that the ‘‘was’’ price they are being quoted is legitimate. The Commerce Commission warns that retailers need to be clear when making comparisons with earlier prices, if they have charged a lower price in the meantime.
‘‘For example, if a business advertises a product as ‘was $15 now reduced to $10"’, but has more recently offered the product for $12, the ‘was’ price may be misleading, even if the business previously sold the product at $15. This is because the actual saving is only $2 not $5. The business could instead advertise ‘originally $15, previously $12, now $10’,’’ it said.
If the business continues to sell the product at the lower price, that would become regarded as the usual price, the commission said.
‘‘It would be misleading for a business to continue to claim it was discounting a price when that price had become the usual selling price.’’
A supermarket chain was given a warning when it claimed customers could save at least 20 per cent or 25 per cent in a promotion. In fact, it had been 32 weeks since it had charged the original price.
Specifications on an advertised product are not what the customers receives
Consumer NZ spokeswoman Jessica Wilson says customers who receive a product that is different to what was advertised would have grounds to complain under the Consumer Guarantees Act.
‘‘The Act requires products to match the description given in ads or sales brochure. The situation would also raise grounds for a Fair Trading Act complaint if the consumer had been misled about the product.’’
The quality of the product differs from the advertised version
The Commerce Commission says shoppers must receive a product that matches the description in a catalogue or online, or the manufacturer’s packaging and labels.
Wilson said this too could be a breach of the Consumer Guarantees Act. ‘‘Goods also have to be of acceptable quality, given the price paid and any representations made about the product. If the consumer is misled about the quality of a good, a complaint can also be made under the Fair Trading Act.’’
The delivery of a product is significantly delayed, or it isn’t delivered at all
Wilson said when a shop agreed to deliver an item, it needed to be done on time and in good condition.
‘‘If no time is agreed, delivery has to be within a reasonable time. If the item doesn’t arrive on time, you’re entitled to claim compensation for any losses incurred as a result of the delay. You’re entitled to reject the product and claim a refund if the failure to get the goods to you is substantial,’’ she said.
Disagreements over the details of a contract’s term and conditions (eg what’s covered by an insurance product)
If you have concerns about an insurance contract, you should talk to the insurer in the first instance.
If you cannot reach an agreement, you can go to their external disputes resolution scheme – usually the Insurance and Financial Services Ombudsman. If there were misrepresentations, this could be a breach of the Fair Trading Act. Depending on the size of the claim, you could take your case to the Disputes Tribunal or the District Court.
Introduction of early termination fees and notice periods for rolled-over contracts
It can be relatively common to find that a fixed-term contract, such as with a gym, has renewed without you noticing – and you have to pay if you want to get out of it. ‘‘The Fair Trading Act bans unfair contract terms. Roll-over contracts that impose unreasonable fees and notice periods to cancel would risk breaching this ban and are open to challenge,’’ Wilson said. You can approach the business in the first instance – it is up to them to prove that they had a good reason for including contract terms. The Commerce Commission can ask a court to make a declaration on whether a term is unfair, at which point the business cannot enforce it. The commission suggests these questions might help identify an unfair term: Are you penalised if the contract is terminated but the business is not penalised? Can the business change important terms of the contract without your permission, or without letting you cancel the contract?
Can only the business decide whether the contract has been breached?
Unfair lending contracts
People also regularly complained about lenders not meeting their disclosure obligations under the Credit Contracts and Consumer Finance Act, and about the fees they charged. Lenders must disclose credit fees, default fees, their annual rates of interest and default interest rates. If they are charging administration fees, they need to relate to the actual cost of administering the contract.
Lenders also have a requirement to lend responsibly, so that customers are able to repay their loan, to ensure their customers are informed, and act ethically.