Selling online

This page was updated1 year ago

The internet has given businesses the opportunity to sell to anyone no matter where they are.

But the internet is not a 'free for all' where anything goes. The Fair Trading Act applies if you engage in business in New Zealand and this includes advertising or selling to New Zealand consumers online, even if you are based outside of New Zealand.

If consumers can purchase goods and services from you online, you must also make it clear that you are in trade. This is so that consumers know they are protected under the Fair Trading Act and the Consumer Guarantees Act.

There are many different ways of selling online including:

websites
smartphone applications
emails
text messaging
social media
online auctions such as Trade Me and eBay
ticket reselling platforms
daily deal and group buying websites.

The law applies to offers and sales made through all of these channels, and more. It does not matter what promotional method you choose.

If you sell goods or services online, you must:

make it clear to potential buyers that you are in trade
ensure any representations you make about the goods or service are accurate and not capable of misleading or deceiving consumers.
not mislead consumers about their rights
have a reasonable basis for any claims you make about your goods or services
avoid engaging in unfair sales practices, such as bait advertising or pyramid selling
comply with the product safety and consumer information standards where relevant, and not sell any goods prohibited by an unsafe goods notice.

You must also comply with the Consumer Guarantees Act. There are minimum guarantees that apply to all products and services.

Goods should:

be of acceptable quality
be fit for a particular purpose
arrive on time and in good condition
match the description
be supported by available spare parts and repair facilities (by manufacturers).

Services should be:

carried out with reasonable care and skill
fit for a particular purpose
carried out in a reasonable time
charged for at a reasonable price.

If you make misleading representations about the consumers' rights under the Consumer Guarantees Act (or under any other law) you may breach the Fair Trading Act. Read more about your obligations under the Consumer Guarantees Act on the Consumer Protection website.

We see a number of commonly-recurring problems with online sales.

Terms and conditions

You need to:

make sure the terms and conditions of any online sale are clear and easy to find – including terms relating to price, quality and condition, delivery, returns and warranties, and the like
ensure that the messages conveyed in any offer are accurate
make qualifications, limitations and other important terms clear, don't bury them in the fine print or on a link-through page.

Any term that is likely to be material to a consumer must be given prominence in the offer.

Availability of goods and services

You must:

not offer to sell goods or services that you do not reasonably believe you will be able to supply on the terms offered
provide clear and accurate information to consumers about the availability of goods and services and when the consumer can expect to receive them.

Traders who do not hold stock

If you do not hold stock “on the shelves” and instead source stock to supply once you have taken an order, you need to:

make sure that any representations made about availability and delivery times are accurate
ensure that you don’t promote goods for sale unless you have a reasonable basis to believe you can fulfil the order consistently with how the offer was promoted.

Daily deals and voucher sales

If you offer goods or services through daily deal or group buying websites, you must:

have the capacity to fulfil every deal that is sold
make clear before customers accept the offer the timeframe within which the voucher must be redeemed
make sure that they have sufficient resources (stock, staff, booking-slots etc) to fulfil every voucher 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.

Buyers should not be left with a voucher that they are unable to redeem because you are “booked-up” or otherwise unable to deliver on the voucher within a reasonable timeframe.

Delivery of goods

As with any business where goods are not supplied at the time of purchase (such as telemarketing or mail order), an online trader must ensure that delivery terms are clear and can be met. These include shipping costs, taxes, fees and the estimated delivery times.

Shill bidding

You are only allowed to bid on your own online auction or get someone to bid for you where:

the online auction has a reserve price
the vendor bid is below the reserve price
the bid is clearly identified at the time it is made as a vendor bid.

If a you bid in any other circumstances this is illegal under the Fair Trading Act as it misleads genuine bidders about the price. This illegal practice is referred to as “shill-bidding”.

Price comparisons

Traders often compare the price of a good or service with a usual price or recommended retail price (RRP) to show consumers that they can get a bargain by buying now, through them.

When selling goods or services online, you must not exaggerate price discounts. Any representations you make about price must be clear, accurate and unambiguous.