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Explainer | Consumer Protection Reform: Unpacking the Fair Trading Amendment Bill

Aug 28
4 min read

 

Written By Nicholas Holden

 

“Consumers, by definition, include us all. They are the largest economic group in the economy, affecting and affected by almost every public and private economic decision. Two-thirds of all spending in the economy is by consumers. But they are the only important group in the economy who are not effectively organised, whose views are often not heard.” (Kennedy, 1962)

 

Recently, the government has moved to amend the Fair Trading Act 1986 (FTA) in significant ways, through the Fair Trading Amendment Bill (Willis & Brewer, 2026). In broad terms, the Bill’s objective is to “ensure that the Act remains fit for purpose as business practices and digital markets evolve, strengthen deterrence of unfair trading conduct, support appropriate consequences for breaches, and enable efficient and effective enforcement” (Fair Trading Amendment Bill, 2026). This objective is sought to be achieved in three primary ways (Willis & Brewer, 2026). I will focus on the first two of these:

 

1.  Greater penalties for FTA breaches.

 

2.  A new ‘safe harbour’ defence in relation to the takedown of scams.

 

3.  Streamlining the update process for product safety standards.

 

Greater Penalties for FTA Breaches

 

Under the current regime, the maximum penalties for breaches of the FTA are $200,000 for individuals and $600,000 for bodies corporate (Fair Trading Act 1986). This penalty regime is significantly weaker than Australia’s Competition and Consumer Act 2010, and there have long been calls to strengthen it, which is a call this Bill addresses (Ministry of Business, Innovation & Employment, 2019). This involves the imposition of a penalty equal to the greater of the value of the impugned transactions, three times the value of the gain made, or the loss obviated, and $1 million for individuals and $5 million for businesses (Fair Trading Amendment Bill 2026). Per the Regulatory Impact Statement, this shift would address the issue that, under the current regime, penalties are too low to impact behaviour, as commercial gains often outweigh any penalty imposed (Ministry of Business, Innovation & Employment, 2026).

 

Relatedly, these amendments seek to shift the enforcement model from primarily the criminal jurisdiction to the civil jurisdiction, with the Commerce Commission retaining the ability to criminally prosecute the most serious breaches of the FTA (Fair Trading Amendment Bill 2026). The switch to a primarily civil liability regime makes enforcement easier because the standard of proof is on the balance of probabilities rather than beyond a reasonable doubt, as in criminal prosecutions (Ministry of Business, Innovation & Employment, 2026). This easier, more efficient enforcement heightens the deterrent effect of the increased penalties, encouraging compliance (Ministry of Business, Innovation & Employment, 2026). Further, this shift towards a primarily civil liability system is consonant with the view that attaching criminal liability to mere “commercial mistakes” is problematic (Sumpter, 2025).

 

‘Safe Harbour’ Defence

 

With the ubiquity of online services in everyday life, they are unfortunately increasingly being utilised by pernicious actors to scam vulnerable users (Lagonsin, 2026). Under the law, providers of online services on which scams occur (e.g., blogs, social media websites) may be liable for hindering legitimate business activity when they disrupt access to what they believe to be scam content on their platforms (Ministry of Business, Innovation & Employment, 2026). This has led online service providers to police scams in a very risk-averse way, causing consumer harm that could otherwise be avoided (Ministry of Business, Innovation & Employment, 2026). The ‘safe harbour’ defence in the Bill seeks to give online service providers confidence to disrupt what they believe to be scam activity on their platforms. This involves protecting online service providers from liability if they innocently but erroneously disrupt legitimate business activity on their platforms in pursuit of what they genuinely believe is scam activity (Fair Trading Amendment Bill 2026).

 

However, it is important to note that this defence is subject to a number of tight requirements, reflecting the balance between the public benefit derived from scam-disruption activities and the protection of the interests of those who legitimately use online services that are adversely affected by such efforts. For example, the provider’s disruption of the activity needs to be “reasonably proportionate to the nature and scale of the activity”, “taken in good faith” and be taken “within 28 days of the provider first having” reasonable grounds to perceive the activity as scam behaviour (Fair Trading Amendment Bill 2026). It was considered that implementing a ‘safe harbour’ defence would be “highly effective because it removes a key barrier to voluntary disruption efforts”, namely fear of legal liability (Ministry of Business, Innovation & Employment, 2026). However, only time will tell whether this is the case, as the defence’s effect will depend largely on its form, rather than merely on its existence.

 

Conclusion

 

Whilst the amendments I have outlined above appear promising, the Bill still has a long way to go, so the form these amendments take may well change. It will be interesting to see what the Finance and Expenditure Committee has to say; its report is due on 27 November 2026 (New Zealand Parliament, 2026).

 

Given the lifecycle of this Bill extends into the next term of government (New Zealand Parliament, 2026), this begs the question of whether it will be enacted should the balance of power change. It seems highly likely that it will be enacted, albeit possibly not in its current form, as consumer protection is largely a bipartisan issue and there appeared to be general support on the opposition benches during the first reading.

 

References 

Competition and Consumer Act 2010 (Aus). https://www.legislation.gov.au/C2004A00109/latest/text

 

 

 

Kennedy, J. F. (1962, March 15). Special message to the Congress on protecting the consumer interest. The American Presidency Project. https://www.presidency.ucsb.edu/documents/special-message-the-congress-protecting-the-consumer-interest

 

Lagonsin, J. G. (2026, July 17). New Zealand online scams surge as trust is exploited. Security Brief New Zealand. https://securitybrief.co.nz/story/new-zealand-online-scams-surge-as-trust-is-exploited

 

Ministry of Business, Innovation & Employment. (2026). Regulatory Impact Statement on the safe harbour provision to support online service providers to disrupt online scams. https://www.mbie.govt.nz/dmsdocument/31959-regulatory-impact-statement-on-the-safe-harbour-provision-to-support-online-service-providers-to-disrupt-online-scams

 

Ministry of Business, Innovation & Employment. (2026). Regulatory Impact Statement: Updating the Penalties Regime in the Fair Trading Act 1986. https://www.mbie.govt.nz/dmsdocument/31960-regulatory-impact-statement-updating-the-penalties-regime-in-the-fair-trading-act-1986

 

Ministry of Business, Innovation & Employment. (2019). Review of Consumer Law: Fair Trading Act Evaluation Report. https://www.mbie.govt.nz/dmsdocument/7112-review-of-consumer-law-fair-trading-act-evaluation-report

 

New Zealand Parliament. (2026). Fair Trading Amendment Bill. https://bills.parliament.nz/v/6/21790f4b-6f1e-49f0-6260-08deb083c0ea?lang=en&Tab=history

 

Sumpter, M. (2025). We should stop criminalising commercial mistakes. New Zealand Law Journal, (9), 317-319. 

 

Willis, N., & Brewer, C. (2026, May 13). Tougher penalties for misleading pricing incoming. Beehive.govt.nz. https://www.beehive.govt.nz/release/tougher-penalties-misleading-pricing-incoming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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