The Fair Trading Act: Surcharges and Misleading Claims
Consumer Literacy
🏷️ What the Fair Trading Act does
When you shop in New Zealand, two different laws protect you, and it pays to know which one does what. The Consumer Guarantees Act 1993 is about quality: it says the goods and services you buy must work, match their description, and last a reasonable time. The Fair Trading Act 1986 is about honesty: it governs how things are sold and advertised, and it bans traders from misleading or deceiving you, whether by a false claim, a made up discount, a hidden fee, or a claim they cannot back up. This guide focuses on the Fair Trading Act and the everyday tricks it catches, from fake was prices and drip pricing at the checkout to bait advertising and unsubstantiated marketing claims. It also covers card and payWave surcharges, which is an area in flux: surcharges must already be reasonable and reflect what a payment actually costs a merchant, and the government has signalled a ban on in-store surcharges, so you need to know exactly what applies right now. Finally, it explains unit pricing at the supermarket and how to complain to the Commerce Commission, the regulator that enforces the Act. Knowing these rules turns you from an easy target into a shopper who can spot a dodgy price and push back with confidence.
Fair Trading Act or Consumer Guarantees Act?
People mix these two up constantly. The simplest way to keep them straight is that the Consumer Guarantees Act deals with the product, and the Fair Trading Act deals with the pitch. If your new dryer stops working, that is a Consumer Guarantees Act issue about quality. If the shop lied about the dryer to get you to buy it, that is a Fair Trading Act issue about conduct. Many disputes involve both.
| Question | Fair Trading Act 1986 | Consumer Guarantees Act 1993 |
|---|---|---|
| What it covers | How goods and services are advertised and sold | The quality and fitness of goods and services |
| Typical problem | Misleading price, false claim, hidden fee | Faulty, unsafe, or short-lived product |
| Who enforces it | The Commerce Commission | You do, direct with the retailer |
| Where a claim can go | Commerce Commission, Disputes Tribunal, courts | Retailer, then the Disputes Tribunal |
The three big bans
The heart of the Fair Trading Act is a short list of things a business simply cannot do when it deals with you.
- Misleading and deceptive conduct (section 9). A business must not do anything, in trade, that is likely to mislead or deceive. This is deliberately broad. It covers what a trader says, what it shows in a picture, and even what it leaves out if the silence creates a false impression.
- False or misleading representations (section 13). A business must not make specific false claims, for example about the price, the origin, the quality, a sponsorship, or whether goods are new.
- Unsubstantiated representations (section 12A). A business must not make a claim without reasonable grounds to back it up at the time it makes the claim, whether or not the claim later turns out to be true.
You do not have to prove the business meant to trick you. The test is the effect on a reasonable shopper: were you likely to be misled? A genuine mistake in an advertisement can still breach the Fair Trading Act, which is why careful retailers correct errors quickly and honour reasonable expectations.
Who enforces it, and the penalties
The Commerce Commission enforces the Fair Trading Act. It cannot get your money back for you in an individual dispute, but it investigates patterns of misconduct and takes businesses to court. The maximum penalty for each offence is $200,000 for an individual and $600,000 for a body corporate, and courts can also order refunds, corrective advertising, and compensation. For your own money back, you can also take a Fair Trading Act claim to the Disputes Tribunal.
💸 Misleading pricing tricks
Most Fair Trading Act problems that shoppers actually meet are about price. The law does not stop a business charging what it likes, but it does stop a business creating a false impression about a price. Here are the tactics to watch for.
Fake was prices and phantom discounts
A was price, sometimes shown as a struck-through number next to the sale price, tells you that you are getting a genuine saving. It is only honest if the item was really sold at that higher price for a meaningful period beforehand. If a shop briefly ticks the price up to $199 so it can advertise a drop to $99, or if the item was never sold at $199 at all, the was price is misleading. The same goes for a permanent sale, where a product is always on special so the higher reference price is a fiction. A saving claim such as save $100 must reflect a real, recent selling price.
Drip pricing
Drip pricing is where a business advertises a low headline price, then adds unavoidable fees one drip at a time as you move through the checkout: a booking fee, a service fee, a card fee, a delivery charge. By the time you reach the final screen the price is much higher than the one that drew you in. Where those fees are compulsory, revealing them only late in the process can mislead you about the true cost, and the Commerce Commission has taken action against drip pricing. An honest business shows the real all-in price up front.
Bait advertising
Bait advertising promotes a deal the business cannot realistically supply, for example a headline bargain with only one or two units in stock, used to pull you in so staff can steer you to a dearer item. Advertising something you do not have a reasonable supply of, or never intended to sell at that price, can breach the Fair Trading Act.
If an advertised special is always sold out, if the was price seems suspiciously round, or if compulsory fees only appear at the last checkout step, treat the deal with suspicion. Screenshot the advertisement and the final price. That evidence is what turns a vague complaint into a solid one.
Unit pricing at the supermarket
Unit pricing shows the price per standard unit, such as per 100g, per litre, or per 100 sheets, so you can compare products of different sizes and cut through clever pack sizing. Since 31 August 2024 it has been compulsory in physical stores for larger grocery retailers, those with a floor area of 1,000 square metres or more, and from 31 August 2025 for online grocery sellers. The rules sit under the Consumer Information Standards (Unit Pricing for Grocery Products) Regulations 2023, made under the Fair Trading Act, and the unit price must be shown clearly and legibly, at least a quarter the size of the retail price.
A bigger box is not always cheaper per unit. Compare the small per-unit figure on the shelf label, not the large ticket price. A 500g bag at $4.50 is 90 cents per 100g; a 750g bag at $6.30 is 84 cents per 100g, so the larger bag is better value. Unit pricing does that maths for you.
💳 Card and payWave surcharges
A surcharge is an extra fee a business adds when you pay by card, often shown as a percentage such as 2%, or sometimes a flat amount. Surcharges are common on payWave, contactless and credit card payments, because those methods cost a merchant more to accept than plain EFTPOS. This is one of the fastest moving areas of consumer law in New Zealand, so it is worth understanding both the rule that applies now and the change that has been signalled.
The rule that applies now: surcharges must be reasonable
Under the Retail Payment System Act 2022, the Commerce Commission oversees what it costs businesses to accept card payments. Its guidance is that a surcharge should be no more than the merchant's actual cost of accepting that particular payment method, which is usually the service fee the merchant's payment provider charges for that method. A business should not use a surcharge to recover general running costs such as wages, power, or the cost of the terminal, because those are not specific to any one payment method. EFTPOS is usually free or very cheap to accept, so a surcharge on an EFTPOS payment is hard to justify at all.
The Commission has also cut the interchange fees that sit behind these costs, a change it expects to save businesses around $90 million a year, which should push surcharges down over time. So a flat surcharge of 2% or more applied to every card, including EFTPOS, is very likely to be higher than the real cost, and that makes it unreasonable.
A reasonable surcharge is tied to the payment method and roughly matches the cost of that method, often well under 1% for contactless debit and a little more for credit cards. If a business charges the same high percentage on everything, or surcharges EFTPOS, the surcharge is probably too high. A surcharge must also be disclosed before you pay, not sprung on you at the terminal.
The change that has been signalled: an in-store surcharge ban
In 2025 the government announced it would ban surcharges on in-store payments made with EFTPOS, Visa and Mastercard, covering both debit and credit, and including contactless, payWave and digital wallet payments. The change was signalled to take effect by no later than May 2026. Online payments were not included in the proposed ban, so a surcharge could still apply when you buy online. The government estimated New Zealanders pay around $150 million a year in surcharges, including tens of millions it described as excessive.
The ban has not taken effect. The legislation stalled in Parliament and the signalled May 2026 date passed without it coming into force, so in-store surcharges are still lawful for now, as long as they are reasonable and reflect the cost of the payment method. This is exactly the sort of rule that can change quickly, so check comcom.govt.nz for the current position before you assume a surcharge is banned.
How to complain about a surcharge or a misleading price
Your options run from quick and free to formal:
- Ask at the counter. A business must tell you a surcharge applies before you pay. Ask what the surcharge is for and whether a fee-free option, such as EFTPOS or cash, is available.
- Complain to the business in writing. Set out the price you saw, what you were charged, and why you think it is misleading or excessive. Keep it factual and keep a copy.
- Report it to the Commerce Commission. Use comcom.govt.nz to report misleading pricing or excessive surcharging. The Commission looks for patterns and can act against a business even though it will not chase your individual refund.
- Claim your money at the Disputes Tribunal. If you are out of pocket, you can bring a Fair Trading Act claim to the Disputes Tribunal for a low fee, with no lawyers.
🔢 Four New Zealand examples
These examples show how the rules play out with real numbers. The figures use round amounts for clarity, and the rules and rates are current for July 2026.
Situation: Aroha buys lunch for $40 at a Wellington cafe. The terminal adds a flat 2.5% surcharge on all card payments, including plain EFTPOS. She wants to know whether that is reasonable.
The numbers:
Sixty-four cents is trivial once, but a flat 2.5% on every card across a busy cafe adds up, and it is above the cost the Retail Payment System Act says a surcharge should reflect. Aroha can pay by EFTPOS to avoid the fee, ask the cafe to review its surcharge, or report a persistently excessive surcharge to the Commerce Commission.
Situation: An online store advertises a heater as was $199, now $99, save $100. Sam checks a price-tracking screenshot and sees the heater has sold at $120 for months and was only briefly listed at $199 the week before the sale.
Why it is misleading:
A reference price that was only in place for a few days, or that is far above the usual selling price, points to a phantom discount. Sam can keep the screenshot, complain to the retailer, and report the pattern to the Commerce Commission, which takes misleading saving claims seriously.
Situation: Mere sees a concert ticket advertised at $80. As she moves through the checkout, the site adds a booking fee of $8.50, a service fee of $6.00, and a card processing fee of $2.50, none of which she can avoid.
The true cost:
Drip pricing works because the headline sticks in your mind. Where fees are compulsory, showing them only at the last step can mislead you about the real cost under the Fair Trading Act. Before you buy, take the final screen total, not the advertised number, and compare that across sellers.
Situation: A supplement brand advertises that its capsules are clinically proven to boost immunity by 40%. When asked, the brand cannot point to any clinical study, only to customer reviews.
Why it breaches the Act:
Words like proven, guaranteed, or a precise percentage set a high bar. A trader must hold the evidence when it makes the claim, not scramble for it afterwards. A company that breaks this rule faces Commerce Commission action and penalties up to $600,000 per offence.
Related guides and tools
- Consumer Guarantees Act guide, for your rights when a product is faulty rather than mis-sold.
- Making a complaint and using the Disputes Tribunal, for turning a Fair Trading Act problem into a claim.
- Chargebacks guide, for reversing a card payment when goods are not as described or not delivered.
- Supermarket pricing guide, for using unit pricing and spotting shelf-price tricks.
Verified against the Commerce Commission (comcom.govt.nz) on the Fair Trading Act, misleading pricing and payment surcharging under the Retail Payment System Act 2022; Consumer Protection (consumerprotection.govt.nz) on the Fair Trading Act; the Consumer Information Standards (Unit Pricing for Grocery Products) Regulations 2023 on legislation.govt.nz, in force for large physical stores from 31 August 2024 and online grocery sellers from 31 August 2025; and the government announcement of a proposed in-store surcharge ban signalled for no later than May 2026, which as at July 2026 had stalled and was not in force. Fair Trading Act penalties are up to $200,000 for an individual and $600,000 for a body corporate per offence. Figures current for July 2026. This guide is general information, not legal advice.
🎯 Test Your Knowledge
Complete this 10-question quiz to check your understanding of the Fair Trading Act and surcharges
Related tools and guides
- Percentage off plus GST calculator: check a discounted, surcharged price in one step.
- Unit price calculator: see through pack sizes to the true price.
Situations like yours. The 4 situations worked through above sit alongside 32 more about scams, faulty goods and your rights, each with the sums shown.