The New Zealand Commerce Commission is one of the most active regulators in the country. Importantly, small businesses are not immune to Commerce Commission scrutiny. All small businesses must be aware of a number of well-established principles when dealing with consumers, some of which are discussed below.

Imaginative promotion of products and services is a normal part of attracting customers to your business and encouraging them to buy.

However, when you advertise or talk with your customers, take care that each selling point is factually correct. The only exception is puffery or self-evident exaggeration, eg ëwhiter than whiteí or ëthe best thing since sliced breadí, where it is unlikely that any customer would take it seriously.

It is equally important to consider all facts together when examining the overall impression created in the minds of average consumers in the target audience. You must be careful that the impression of the goods and services is not misleading. In other words, it is insufficient for each point to be ëtechnicallyí or ënarrowlyí correct.

Even silence can be misleading where it is clear that customers have the wrong idea about the product or service, and are relying on your advice. Predictions can also be misleading if there is no reasonable basis for making them.

Specific care must be taken when you are referring to:

• The characteristics of the product or service that are likely to be very important to your customers;
• Your competitorsí products, services, or businesses; and
• The characteristics of the product or service that are subject to variation.

Any price savings or discounts advertised must be genuine and give the customer enough information to explain how they are calculated.

For example, state whether your new prices are a reduction on:

Any price comparisons must be between substantially similar goods and services.

When advertising or using ëpoint of saleí promotional material that discusses price, you must:

Any agreement between you and one of your competitors on the price you intend to charge is illegal. Such agreements do not have to be in writing ñ even a ënod and winkí understanding that can take place anywhere may constitute price fixing.

Agreeing to share the market among competitors is illegal. The Commission has found many businesses to be illegally sharing markets. The forms in which offences can take place include:

In most cases, your customers are entitled to a full refund when the:

Generally, you do not have to provide refunds where customers have:

A firm with a substantial degree of power in a particular market cannot use this for the purpose of damaging a ësmallí competitor. This can be done by refusing to deal with a competitor, or by offering to deal on such unfavourable terms that the offer amounts to a refusal.

Small businesses that are adversely affected can lodge a complaint with the Commission.

However, a supplier does not have to supply everyone. The onus is on the business seeking supplies to show that the supplierís action was taken with the purpose of eliminating or substantially damaging the business, or deterring or preventing it from entering that market.

Small print is commonly used in advertising, promotions, and other marketing material. It sometimes changes or contradicts the overall impression created by print, pictures, and other promotional elements. The courts have stated that ësmall print cannot save a representation from being misleadingí.

Important: This is not advice. Clients should not act solely on the basis of the material contained in this fact sheet Items herein are general comments only and do not constitute or convey advice per se. Changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. We believe the contents to be true and accurate as at the date of writing but can give no assurances or warranty regarding the accuracy, currency or applicability of any of the contents. This fact sheet is made available to our clients as a helpful guide for their private information. Therefore it should be regarded as confidential and should not be made available to any person without our prior approval.