The internet has given businesses the opportunity to sell goods or services to anyone no matter where they are at the click of a button, however online selling is not a ‘free for all’ and comes with its own set of rules.
If you engage in advertising or selling goods to New Zealand consumers online, the Fair Trading Act applies even if you are based outside of New Zealand. This includes selling goods by any of the following methods;
- websites
- online auctions such as Trade Me
- ticket reselling platforms
- daily deal and group buying websites.
- smartphone applications
- emails
- text messaging
- social media
Business that sell goods or services online must make it clear that they are “in trade” by disclosing this status prominently at the point where a customer completes a purchase. The definition of “in trade” is broad and many factors will be taken into account including how regularly goods are offered for sale, if goods are made or obtained with the intention of selling them, if staff assist in sales, if the seller is GST registered or if the seller is trading through a legal entity , such as a company. This is not an exhaustive list and there are other factors which might mean a person is in trade. Sellers cannot avoid their obligations under consumer legislation by having someone else sell on their behalf.
For the sake of clarity, goods initially purchased for personal use and then sold (for example, outgrown clothes) do not count as being in trade, whereas bringing 10 mobile phones home from holiday to sell online does count as being in trade because there is the intention to resell.
Business selling online must also ensure they comply with the other provisions of the Fair Trading Act by;
- ensuring any representations made about the goods being sold are accurate and not capable of misleading or deceiving consumers;
- not misleading consumers about their rights;
- having a reasonable basis for any claims made about the goods being sold;
- not engaging in unfair sales practices; and
- complying with the product safety and consumer information standards where relevant, and not sell any goods prohibited by an unsafe goods notice.
The Consumer Guarantees Act sets out minimum guarantees that apply to all goods including those sold online. Goods must match their description, be fit for their normal purpose, be safe and of acceptable quality, have no undisclosed defects and be supported by available spare parts and repair facilities (by manufacturers).
We see a number of common issues with online sales. Many purchasers are suspicious and will search the seller online, their reviews and feedback and will check the business exists and all contact details are transparent. Some tips for getting it right are;
- make sure the terms and conditions of any online sale are clear and easy to find and not buried in the fine print or in a separate link – including terms relating to price, quality and condition, delivery, returns and warranties.
- Do not offer to sell goods that you do not reasonably believe you will be able to supply on the terms offered, especially if you do not hold stock “on the shelves”.
- If you offer goods through daily deal or group buying websites, such as GrabOne, you must have the capacity and resources to fulfil every deal that is sold within a reasonable time of the voucher being presented. If you are only able to satisfy a certain number of sales, you should limit the offer to a manageable number, specify in the offer any dates when the voucher cannot be redeemed, or ensure a refund is available if the customer has trouble redeeming it.
The Commerce Commission regularly receives complaints about sellers breaching their obligations when selling online and will so be mindful of your legal obligations before proceeding.