Unsubstantiated representations under the Fair Trading Act: An analysis

Abstract

Section 12A of the Fair Trading Act 1986 was recently inserted following the passage of the Consumer Law Reform Bill in 2013, and came into force on 17 June 2014. The provision introduces a general prohibition on unsubstantiated representations being made by anyone promoting goods and services in trade. As the provision is only a year old, the Commerce Commission have not yet brought any cases on the provision before the courts. A body of case law examining the effects arising from this amendment has therefore not yet been developed. This paper seeks to analyse the effects which have been brought about by established substantiation policies in other jurisdictions, in order to provide a number of possible outcomes which may arise in New Zealand following the introduction of s 12A. It also considers whether there is a need to specifically regulate unsubstantiated representations in New Zealand and if so whether a general prohibition is the best approach. In conclusion, both queries are answered in the affirmative as the overall benefits of implementing a general prohibition against unsubstantiated claims will likely contribute beneficially to New Zealand’s economy.