The inclusion of a new prohibition on businesses making
unsubstantiated representations is one of the key amendments to the
Fair Trading Act.
Businesses are prevented from making representations about their
products or services if they do not have reasonable grounds for the
representation when it is made, whether or not it later turns out
to be true. These changes come into effect on 17 June 2014.
What is the purpose of the change?
Businesses will often make claims about their products or
services in advertising material to induce consumers to buy from
them. Usually consumers are not in a position to check whether
those claims are true.
These new provisions are intended to put the onus on businesses
to ensure they have evidence to back up their claims. Consumers
should be able to rely on what they are told by a trader so they
can make informed decisions.
