Consumer Guarantees Amendment Bill

It is a pleasure to rise in support of my colleague and neighbour Jackie Blue. I think the last time we spoke on this bill I got slightly further than my learned colleague in front of me, Cam Calder, who managed only to put out “Tēnā koutou” before the dinner break, so I did slightly better—but still. The Consumer Guarantees Amendment Bill is about consumer rights. This Government is committed to promoting an environment where consumers—all of us fit into this category—can make purchases knowing that our rights are protected. Before we broke for the last adjournment when I spoke on this bill, Jackie Blue gave some wonderful examples. The one that I remember is about TradeMe. If we as consumers win a competitive online auction from a professional seller, we are not covered by the Consumer Guarantees Act, but if I hit the button for “buy now” on the same online auction, then I am. This is an anomaly that must be fixed.

We must remedy this, because there are unscrupulous people in this world who would specifically look for these loopholes to sell inferior goods to innocent people who get really excited about winning an auction online but find that they have no protection. I prefer to hit the “buy now” button because I cannot be bothered waiting for the auction to happen. My son likes to wait for that auction to happen, but by the end of it he is not protected by the Consumer Guarantees Act, and that is a very, very sad situation.

There is always recourse, and people could take this up with the sellers if they can find them and take them through the disputes tribunal. However, without the protection in law a disputes tribunal has little legal reason for finding in favour of the buyer. We were told by Jackie Blue that millions of New Zealanders are trading on sites like TradeMe. I am a member, my son is a member, and I have sold and bought items on TradeMe. Even my son has traded and swapped toys through TradeMe and I had to drive miles away to pick up those toys that he traded online. Now I know that he was not actually covered by this law, and was just one of the 280,000 weekly online transactions on TradeMe. We are looking at over a million transactions a month, and that is a lot of auctions that are probably won and not protected by the Consumer Guarantees Act. This bill addresses that issue.

The other issue is one that was on telly recently on Fair Go about extended warranties. Most people, naive but well meaning, and concerned to protect their newly purchased goods, often end up buying extended warranties. We have probably all done it at one point; I know I certainly have. But as we all know, it is completely useless and a complete waste of money. A lot of extended warranties that people buy at the moment cover less than what consumers are entitled to under the law. If we happen to break things by accident, most home and contents insurance cover them, so there is really no use for an extended warranty.

Having said that, there will be some people like my friends in Mount Albert who have seven children, and their washing machine will be getting a good go, 7 days of the week. That washing machine probably needs an extended warranty, but that is not so in normal, everyday cases. Customers and retailers must be clear as to what the Consumer Guarantee Act covers, as it seems people often get turned away by retailers when things go wrong because they do not have extended warranties, but the Consumer Guarantees Act should cover them. This is a good bill, and I commend it to the House.

We have very weak consumer protection law in New Zealand, and the Green Party supports anything that will strengthen consumer protection, help to protect consumers, and keep them well informed when they are buying goods. So we are very pleased to support the Consumer Guarantees Amendment Bill, which helps to protect consumers in two small but important ways, and we congratulate Jackie Blue on this bill. It gets rid of the loophole that means that if consumers buy something through a competitive online auction, they are not covered by the Consumer Guarantees Act. Obviously, when there are 15,000 businesses selling online every week, this is an important issue. There is no doubt that some unscrupulous operators are deliberating exploiting the loophole. Jackie Blue reported that the Motor Trade Association actively advises car salespeople to make use of the loophole to dispose of older and less reliable cars before the loophole is closed through legislation like this. This is shocking, and the sooner that we close the loophole the better it will be. The sooner that we pass this legislation, the better it will be.

The second issue is that extended warranties are sometimes being offered by retailers at considerable cost, when, in fact, the extended warranty provides little or no greater protection than that which already exists under the Act. We think that addressing that issue is a very good initiative, because it will mean that consumers will have to be informed about whether an extended warranty that they are considering purchasing provides any benefit, any right, or any convenience greater than that provided for under the Act. The warranty will have to include more information about what it really means, and this is important because many people do not really have any idea what an extended warranty might or might not entitle them to.

The provisions that address both those matters will assist consumers to make informed decisions about purchasing, but the underlying problem is that most consumers in New Zealand have never heard of the Act. If they have heard of it, they have absolutely no idea what it means for them. I note that the Minister of Consumer Affairs is doing a reform of consumer law. She may like to carry out a survey. I am sure she would find that the overwhelming majority of consumers have no idea that the Act means that retailers are obliged to guarantee that the products they sell are of an acceptable quality and are fit for their purpose. This means that most products should perform well for many years, and if they do not, then the retailer must be prepared to have them repaired or replaced. Most consumers have no idea of that, and I think it would be useful to consider requiring retailers to refer to this right in any pamphlet in which they advertise their product. If consumers knew of the existence of this Act, if they knew that everything that they were buying needed to be of an acceptable quality and fit for its purpose, and if they knew that the retailer must take it back if it fell apart—as many consumer goods do these days—then I think that retailers would not be able to con consumers with extended warranties, and consumers would be much better informed.

The other point I make is that all of these amendments are intended to help consumers to make informed decisions about purchases. Consumers are not exactly clamouring for these amendments to be made, but they will be helpful. Yet what consumers are clamouring for, and what would help them to make informed decisions, is the right to know where a product, especially food, comes from. It is ironic that the Government claims that it is supporting this bill because it supports the consumer’s right to know what he or she is buying, but it refuses to allow mandatory country-of-origin labelling so that we can find out what we are buying. Nor has anyone ever explained—perhaps the Minister of Consumer Affairs could explain this in this debate—why it is mandatory to know where our clothes and our footwear come from, but nothing else, including our food.

It is also ironic that the Government will not support consumer legislation to protect consumers from exorbitant interest rates and loan sharks—a bill on which is coming before this House straight after this debate—yet it puts forward this bill as being a great piece of consumer protection. One of the key objectives of the whole Ministry of Consumer Affairs is to enable consumers—

I am sorry to interrupt the honourable member, but her time has expired.

It gives me great pleasure to rise to speak in the first reading debate on the Consumer Guarantees Amendment Bill, which is in the name of Dr Jackie Blue. I commend the member for bringing this very good bill to the House.

The bill covers two issues. One is that of extended warranties, as we have heard from the previous two speakers, Melissa Lee and Sue Kedgley. Extended warranties were the subject of a Ministry of Consumer Affairs survey of 1,000 people in 2009. It was a very good survey. The previous speaker, Sue Kedgley, was clearly unaware of it, but it was very rigorous, unlike some that the Green Party has done recently.

The survey showed that very few New Zealanders knew about the implications of extended warranties. They did not realise that extended warranties provide customers with very little protection and certainly do not cover more than the Consumer Guarantees Act does. There are two exceptions to that: goods that are bought at auction and goods that are purchased by a tendering process. They are not covered in the same way. The protections in the Consumer Guarantees Act do not apply to them, and it may well be worth considering purchasing an extended warranty. But, in the main, when consumers purchase goods from a retail chain store, for example, it is most unlikely that the purchase of an extended warranty will give any additional protection to what they already get under the Act.

The second provision in this bill concerns online sales. The Green Party member Sue Kedgley mentioned my consumer law reform discussion document, which is under way at present. It was released a few weeks ago and submissions are being called for at the moment. Written submissions will close on 31 July. Verbal submissions will be heard on 10 and 11 August. Online sales form quite a part of that discussion document under the consumer law reform project, because they are a gap in the law. We heard from Melissa Lee that some purchases are covered by the Consumer Guarantees Act and others are not. Confusion exists as a result of that.

The provisions in this bill are excellent. I am pleased to think that I am hearing from the House that Dr Jackie Blue’s bill will go to a select committee, at which point she has agreed to hand over the bill to the consumer law reform process. I am delighted that she has done that, because these matters will be able to be addressed at that point.

The member who spoke before me, the Green Party member Sue Kedgley, mentioned that we have very weak consumer protection law in New Zealand. That in fact is not the case. Many jurisdictions look very enviously on the Consumer Guarantees Act; it is good principles-based law. New Zealanders are very well aware of the protections offered to them under the Consumer Guarantees Act.

In the survey carried out in 2009, which I mentioned earlier, 49 percent of New Zealanders were able to name the Consumer Guarantees Act, and they knew in general terms of the protections that were conferred on them by the Act. They knew that if they had an issue with goods they had bought they could go back to the retailer, and that they have the right to have the goods replaced or repaired, or to have their money reimbursed. Those who are familiar with research will know that that was an extraordinarily good result. It shows that the Ministry of Consumer Affairs, over a period of time, has done a very good job of educating people as to their rights under the Consumer Guarantees Act.

I am looking forward to seeing the consumer law reform submissions. I am also looking forward to hearing the oral submissions that will follow. This is a revolutionary initiative in New Zealand. We are reviewing seven pieces of legislation with the intention of rolling those into two pieces of principles-based legislation: the Fair Trading Act and the Consumer Guarantees Act. That will simplify the process; it means that New Zealanders will experience less confusion about their rights when they buy goods. We are aiming to set up a very level playing field where businesses and consumers can enter the marketplace with confidence. Thank you.

Tēnā nō tātou katoa e te Whare. A simple browse of today’s TradeMe listings on Māori heritage yields the following classic finds: with a starting price of $6, I could buy a vintage stereoscopic postcard of Māori children in Rotorua. It is a used postcard posted on 3 September 1906 with a genuine message on the back. For a dollar more, I could get another postcard called: “In the Ngawhas—Whakarewarewa”. It is described as being in excellent condition. Or, for the mighty starting price of $12.50, I could buy the postcard known as “A Haka for a Penny”, featuring the children of Ōhinemutu, and categorised as a “Nice tidy piece of historical significance.” All of these examples are from my electorate and my home town of Rotorua, which is the home town of the Hon Steve Chadwick, as well. The problem is that from the luxury of our computer, how do we know whether we are getting a good deal? How reliable is the classification of the stereoscopic postcard? Is it really 3-D or is the illusion of depth just a marketing technique? What does it mean to be in “excellent used condition”? Without a trademark in sight, how can we guarantee whether a postcard is a tidy piece of historical significance or just a big huge rip-off?

The Consumer Guarantees Amendment Bill is about giving us some confidence with the supply of goods and services by suppliers through competitive online bidding, such as on TradeMe. We in the Māori Party support the concept of safer trading using online auction websites, and the assurances that purchases of goods and services through online auctions will be protected under the Consumer Guarantees Act. We are also pleased that this bill will require transparency with the benefits of extended warranties. From time to time some might ask how the key kaupapa of the Māori Party fits with these sorts of bills. We have rangatiratanga, kaitiakitanga, and manaakitangi, and those are values that promote excellence, accountability, and transparency. We support the notion inherent in this bill that consumers should be informed about whether any extended warranty they are considering purchasing provides any benefit, right, or convenience.

One of the issues that creates some debate amongst many Māori is the cultural authenticity of objects listed in online auctions or for competitive tender. Under the Protected Objects Act of 1975, it is an offence to sell taonga tūturu—in other words, Māori cultural objects—to people other than registered collectors, public museums, or licensed dealers. It states that there should be a banned or restricted items section on, for example, TradeMe sites. The question we have is who monitors the vast range of products for sale on sites such as TradeMe. The bill requires that retailers who are offering extended warranties to consumers must fully inform the consumer about the benefits of that warranty. I remember a couple of years ago a huge furore broke out about a set of wooden stacking Māori dolls, which were selling for up to $35 a set at souvenir and gift stores around Aotearoa. Aroha Mead, a senior lecturer in Māori studies at Victoria University, said that the dolls were an insult to traditional artists. They were basically a derivative of an original Russian doll, but made in China. The key question is whether this bill will do anything to improve the extended warranty one might get for products such as those.

In closing, I note that the concept of an extended warranty is frequently applied to hire purchase agreements for vehicle sales. We know that many of our low-income communities, particularly Māori and Pacific communities, are often encouraged to sign up to hire purchase agreements as a way of being able to buy up front without needing to show the cash. It is an issue that will come up again, particularly with the next bill that is to be debated, the “Loan Sharks Bill”. It is suffice to say that we support the concept of increasing the accountability and transparency of any of these transactions. The Māori Party is pleased to say that we will be supporting this bill’s referral to a select committee.

It is a great pleasure to speak in the first reading of the Consumer Guarantees Amendment Bill, not only because the Consumer Guarantees Act used to be one of the areas of my legal practice prior to becoming an MP, but also because I am taking a call on behalf of my learned colleague Clare Curran, who is Labour’s very diligent and busy MP for Dunedin South.

I should congratulate Dr Jackie Blue on this sensible bill. We support this bill as a fitting response to the genuine community concern about consumer protection. This bill extends the right of the consumer in an evolving market place. It is a common-sense bill that updates our legislation so that it better serves the consumer in the modern market place. Equally, I should congratulate my colleague Carol Beaumont on her Credit Reforms (Responsible Lending) Bill, more commonly known as the “Loan Sharks Bill”. Carol Beaumont’s bill protects the most vulnerable families by cracking down on loan sharks, and I heartily encourage the Government to support it on the basis of principle, not expediency.

The Consumer Guarantees Act 1993 sets out a number of warranties that consumers receive from suppliers, manufacturers, and importers of goods, and from suppliers of services. It is not possible to contract out of these warranties unless the consumer of the goods or services is a business. The Act requires the supplier to guarantee that it has the right to sell the goods, and the goods must be of an acceptable quality. The supplier may remedy a failure of any goods to comply with the guarantee by repairing the goods, by curing the defect in title, or by refunding the money paid where appropriate.

That all sounds very good, and the Act serves very well in the, shall I say, conventional market place. However, consumers are not well served in the online market place; for instance, they are not protected under the current Act when entering into competitive bidding online. Loopholes exist that bypass consumer rights, and those loopholes need to be closed. This bill amends the Consumer Guarantees Act 1993 to improve its operation in two areas: firstly, extended warranties, and, secondly, the supply of goods and services by suppliers through a competitive bidding process that uses an online trading facility.

The bill seeks to assist consumers to make informed decisions about purchasing extended warranties. It will provide for a cooling-off period following the purchase of an extended warranty, during which consumers can change their mind and cancel the purchase of an extended warranty and still receive a full refund. It will further extend the protections of the principal Act to goods and services supplied through a competitive bidding process, using an online trading facility, for example TradeMe. According to Clare Curran, Labour’s spokesperson on communications and information technology, today at around 12.30 p.m. over 55,000 Kiwis were shopping on TradeMe. That is a big market place. Yet under the current Act, consumers are not protected when entering into a competitive auction online. This loophole means unscrupulous sellers can often market faulty goods without fear of come-back.

To conclude, in supporting the Consumer Guarantees Amendment Bill, Parliament is seeking to close some apparent loopholes for the benefit of consumers. I hope that intention will continue this evening in support for Carol Beaumont’s bill, and that it will not be halted for mere political expediency at the expense of New Zealand consumers. Thank you.

It is my pleasure to speak in the first reading of the Consumer Guarantees Amendment Bill tonight. First, I acknowledge Dr Jackie Blue, who has put forward this member’s bill. I think it is fantastic when we have support from all parties for a bill that is practical. Everybody sees that the gap in the legislation can be easily fixed through Parliament bringing in a little legislation. It is a small bill, but it makes a big difference for the people whom it affects.

It is also great that the Consumer Guarantees Amendment Bill is being referred to the select committee that I sit on, the Commerce Committee. We are a busy, hard-working select committee, but I am sure that we will find time for this bill. I will be interested to hear what submitters have to say about this bill, and about the other bills to do with consumer guarantees that are coming before our select committee and which we are working on.

The thing about this bill is that it affects many young people in our society. Over 280,000 online trades are made a week, and over a million are made in a month. I am a parent, like many of the people who are out there listening to the debate tonight, and our kids go on TradeMe continually. They are continually trawling, trying to find that bargain, and trading their Pokemon cards or bits of Lego. They deal with professional traders and with other kids who just want to trade a Pokemon card, and like many parents out there, I drive around the city dropping off Pokemon cards in other people’s letterboxes. It would be cheaper for me to buy the cards brand new, but it is all in the spirit of TradeMe to trade and to teach children the value of the money they have.

There is a loophole on TradeMe, in terms of professional traders. If we go on TradeMe and opt for the “buy now” option, we are currently protected by the Consumer Guarantees Act.

The other option on TradeMe is to go through an auction. My children are often lucky enough to win the auction. They sit there until the last second, pushing in the last dollar, another dollar, and another dollar, even as their parents sit there freaking out at the dollars going up and up and up. [Interruption] They are buying Pokemon cards; the most expensive Pokemon cards ever, I have to say. If young people are lucky enough to win the auction, they are not protected at all. When it concerns a non-professional trader, I think that is fine, because it is in the spirit of TradeMe. But when it concerns professional traders, this legislation will change the situation to ensure the Consumer Guarantees Act will apply to those traders.

I also put out a challenge to any school teachers listening, especially in the Wellington area. This is great legislation to engage young people on. Young people trade on TradeMe, so this legislation would be great to do a bit of a study on in social studies classes. Teachers cover governance in their social studies classes, especially in year 10. That could show young people how they can make an impact by coming in and being a submitter to a select committee on something that they are interested in and that impacts on their lives. They could see how the process works.

My challenge is to school teachers and to any children who are listening or watching—they should be going to bed, as it is 10 past 8; my children should be in bed—to come along and make a submission to our select committee. This bill affects them, because TradeMe affects them. We have a very robust select committee process. Young people could come in, have their say, and see how our process works. They could see the outcome from coming in and giving a submission with their friends or as a class project. We would love to see them at the Commerce Committee.

The other area that this bill affects is extended warranties. I might go with my children to buy an iPod. The shop assistant says to get an extended warranty for 5 years, because if something happens we have this warranty and will be so much better off. If customers scratch the screen, they will be able to bring in the iPod, and the retailer will see whether they are covered. Actually, in many cases, customers should be covered under the warranty that they already have without having to buy an additional warranty. The salesperson will now have to tell customers that so they will know it when they go into the shop, and that is a really good thing.

The other thing is that there will be a cooling-off period with regard to the extended warranty. If customers get all excited in the shop when buying an iPod and purchase an extended warranty, and they then go home and their parents say that the extended warranty cost $60 more than they were told about, there is a cooling-off period so that customers can go and do something about it.

It is my pleasure to speak in the first reading of this bill this evening. Thank you.

I will speak briefly. I thank all members for their support of the Consumer Guarantees Amendment Bill. I am really pleased and delighted that it will go to a select committee and be merged with the Minister’s consumer reform legislation, which he is bringing to this House, hopefully later this year. I certainly hope it will be this year. I think the matters raised in this bill are urgent and have been of some concern for some time in the sector. The online issue is urgent because of the sheer number of transactions that occur on a daily, monthly, and yearly basis. I know that TradeMe has been extremely concerned. It brought in its own code of practice for professional sellers some 18 months ago because there was no legislation. It has been waiting for this legislation to come to the House.

The loophole, where if a consumer wins a competitive auction from a professional trader he or she is not covered by the Consumer Guarantees Act, is not something that online bidders understand. Very good points have been made about educating the public about the Consumer Guarantees Act. Equally concerning is the issue of unnecessary extended warranties being bought. The fact is that often when consumers buy items and they buy extended warranties, they are probably paying for protection consumers are already entitled to under the Consumer Guarantees Act or other consumer laws; or even their home and contents insurance policy may cover it, and possibly the manufacturer’s warranty. But, as the Minister indicated in her speech, there may be situations where an extended warranty is entirely appropriate.

Once again, I thank members for their support. I think members have raised important issues, which I am sure will be taken up at the select committee. I look forward very much to this bill becoming part of the consumer legislation the Minister is bringing to the House later this year. Thank you.

Bill read a first time.

Bill referred to the Commerce Committee.