Govt to Sharply Increase Fair Trading Penalties to Deter Misleading Conduct

Under the current Fair Trading Act, the maximum penalty for breaches is $600,000—an amount critics argue is too low to deter large businesses from risky or underhand practices.

The Government has announced sweeping reforms to strengthen New Zealand’s fair trading laws, including dramatically higher penalties for misleading advertising and other breaches that harm consumers and distort competition. Economic Growth Minister Nicola Willis says the upcoming legislation aims to remove the financial incentives for businesses to mislead customers, ensuring a fairer marketplace for both consumers and compliant businesses.

The changes respond to a growing volume of complaints and several high-profile breaches of consumer law, signalling what the Government describes as a “firm reset” in how New Zealand tackles unfair commercial practices.

Major Increase in Penalties for Serious Breaches

Under the current Fair Trading Act, the maximum penalty for breaches is $600,000—an amount critics argue is too low to deter large businesses from risky or underhand practices. The new reforms will introduce a far tougher penalty regime, aligning New Zealand more closely with comparable jurisdictions like Australia.

Once the changes come into force, penalties for serious breaches will increase to the highest of:

• Three times the value of the commercial gain,

• The value of the transactions involved, or

• A base maximum penalty of $5 million.

This means major offenders could face fines reaching into the tens of millions of dollars.

“Right now, the gains some businesses make from breaching the Act can outweigh the penalties they face,” Willis said. “The new regime eliminates that incentive. Those who mislead consumers or distort competition will face serious financial consequences.”

Context: Complaints and High-Profile Breaches on the Rise

Complaints to the Commerce Commission about fair trading issues have increased by almost 23 per cent in the last five years. The nature of complaints has ranged from misleading advertising and false pricing to refund refusals and subscription traps.

Recent cases that sparked public discussion include:

• Two Pak’nSave stores pleading guilty to 18 charges of misleading pricing.

• Woolworths being charged with 14 breaches of the Act following a Consumer NZ campaign.

Commerce and Consumer Affairs Minister Scott Simpson said these cases highlight the urgent need for stronger tools to hold repeat offenders to account.

“Between July 2020 and July 2025, the Commission received more than 48,000 complaints,” Simpson noted. “Some businesses have broken the law more than once. These reforms give the Commission the ability to act more effectively and earlier.”

New Civil Penalties Regime for Greater Enforcement

In addition to higher fines, the Government is introducing a new civil penalties regime, allowing the Commerce Commission to take action based on the balance of probabilities—the same standard used in most civil cases.

This change will make it easier for regulators to respond to non-criminal breaches without having to meet the tougher criminal standard of proof. Criminal prosecution will remain available for serious or deliberate offences.

Simpson says the reform will “build a fairer and more confident marketplace” by giving regulators more practical enforcement tools.

Aligning With International Standards

Willis emphasised that the changes will move New Zealand closer to international practice. In Australia, maximum penalties for breaches of fair trading laws can reach A$50 million, triple the benefit obtained, or 30 per cent of turnover—whichever is greatest.

“Consumers should have confidence that they’re treated fairly, and honest businesses should not be at a disadvantage against those using unfair tactics,” Willis said. “The current penalties do little to prevent dominant players from leveraging questionable practices.”

Not All Proposals Proceeding

Following discussions with business groups and stakeholders, the Government has chosen not to proceed with several earlier proposals, including:

• Banning directors from insuring or indemnifying themselves against penalties,

• Expanding infringement fees, and

• Extending provisions for unfair contract terms.

Willis said these proposals required more time and further engagement before any future consideration.

Next Steps and Legislative Timeline

The legislation will be introduced to Parliament early next year, followed by a full select committee process where the public and industry stakeholders can submit feedback. If passed, the new penalties and enforcement tools are expected to take effect later in 2026.

The Government says the reforms represent a fundamental shift in consumer protection policy, reflecting both rising public concern and the need to maintain confidence in New Zealand’s retail and business environment.

“These changes send a clear message,” Simpson said. “Misleading consumers won’t be tolerated—and those who repeatedly break the rules will face real consequences.”