Summary of Fair Trading Act



11. Puffery
The Fair Trading Act does not prohibit “puffery” — exaggerations which are so obvious that they are unlikely to mislead anyone. Humorous and imaginative advertisements often use this technique. Examples are a claim that a product is “the best looking” or a car driving up a wall. Such statements reflect personal opinions, and no objective test can be used to determine their truth or otherwise, or are obvious exaggerations.

You should, however, be careful when using exaggerated statements. Representations and claims that appear to relate to facts rather than opinion, particularly regarding quality and price, may break the law if they cannot be substantiated. Claims that a product is “the best”, “the fastest” or “the most economical” would not be mere puffery if the product was substandard or a second.

Where a claim is solely an expression of opinion, it is probably puffery and unlikely to contravene the Act. The more factual or seemingly factual (and therefore the more capable of being proved or disproved) a claim is, the more likely it is to be a representation which, if misleading or deceptive, could break the law. You should also bear in mind the sophistication or otherwise of your target audience when making exaggerated claims which seem to be obvious puffery.


12. Claims about Qualifications and Skills
Any claims which you, as a trader, make about qualifications or skills you or your employees possess must be truthful and accurate. Do not claim membership or approval of trade organisations unless your membership has been approved. Do not base such claims on pending applications. Do not claim the endorsement of fictitious or disbanded bodies.


13. Sponsorships and Endorsements
To promote your product or services, you may decide to seek an endorsement from a prominent person or organisation. The Fair Trading Act prohibits false claims that a product or service has the support or endorsement of any person or group.

If you claim that someone uses your product, this claim must be true. It must also be current; such a claim would be false if that person had stopped using the product. Any claims made by someone endorsing your product or service must be true.

Example

A trader supplied free exercise books to schools, recovering the cost from advertising which appeared on the books. One of his employees falsely claimed to be the chairman of the local school committee when approaching potential advertisers. The trader also falsely claimed that the scheme had been endorsed by the Department of Internal Affairs and the Education Board. He was fined a total of $4,900 plus $1,230 costs.

You must also describe accurately the support given to your products or services by a reputable organisation. Such endorsements include Standards Association accreditation, or medical or product safety certification.

Example

A trader displayed for sale a hot water cylinder marked with the NZ Standards Association “S” Mark. The cylinder did not meet the relevant standard, and had not been passed by the Association. The trader was convicted and fined $3,500.

The Commission does not endorse or approve any organisation, person, scheme or marketing strategy. Claiming Commission approval will breach the Fair Trading Act.

Example

A trader claimed to members of the public that the Commission had approved its ‘interest free’ type promotion. This was not the case. The trader was convicted and fined $4,000.