Unfair Practices and Techniques

Sales techniques, Finance agreements and Unfair practices

1. Claims that goods or services are needed
Any claim you make that goods or services are needed must be based on fact. You may establish the need for goods or services through the existence of a law or regulation, or through some mechanical requirement. Misleading or deceiving customers about any such laws or requirements would breach the Act.

2. Debt Collecting
There will be times when customers do not pay on time for the goods or services you provide. When you, or a collection agency you have employed, seek to recover debts, you must take care to comply with the law. You should not seek any collection or late-payment fees on top of the original debt unless the debtor was made aware before incurring the debt that they may face such charges.

 If the debtor was not warned that, in the event of non-payment, they would have to pay extra charges, any attempt to make them believe they have to pay additional collection and late-payment fees would be misleading. If costs are demanded in a misleading way by a debt collector acting on your behalf, you may be responsible.

If you wish to recover additional costs from your customers when they do not pay for the goods or services you have provided, you could inform them of this by placing large notices in your office or shop, by providing written notice of your terms of trade and by having customers endorse cheques agreeing liability for collection costs.

If debtors still do not pay their debts, you are entitled to take legal action to recover the debt and any other costs, such as collection and late-payment fees, which relate to the non-payment of the debt. It is up to the court to decide whether to order the payment of such costs, or any other penalties, and the debtor has the right to challenge your claim before the court. You should, therefore, take care that in your warnings to debtors you do not represent the possible legal consequences of non-payment as inevitable. Debt collection documents must not mimic court or other official notices or orders.


A debt collecting agency added a $50 collection free to a debt it was recovering. Its client had not told the customer a collection free would be added if the debt was not paid on time. The company was convicted and fined a total of $2,200 plus $190 costs.

3. Delivery of Goods
The promise that you will deliver goods to customers can be an important inducement for them to make a purchase. If, however, you mislead customers about the conditions applying to the delivery of goods, you risk breaching the Fair Trading Act.

Any conditions on an offer to deliver should be made clear: for example, if you deliver free only within the central city and only goods over a certain value.

“ Free delivery” must be just that. It is deceptive to add the cost of delivery into the price, and then to claim that delivery is free. If another customer who picked up the goods would pay a lower price, then delivery is not free.

You must not accept payment if you know that you cannot supply the goods or services ordered within the specified period. If no time limit is set, you must deliver within a reasonable time. (What is deemed “reasonable” will depend on circumstances.)

If there is an unexpected delay in delivery, you should consider contacting customers who have placed orders. A string of broken promises about delivery dates may result in compensation orders being made against you.

If you are involved in a direct marketing, telemarketing or mail order business, where goods are not supplied at the time of purchase, you must ensure that delivery conditions are clear and that you stick to them. This is particularly important in a business where delivery is the only form of supply.