The new criminal prohibition
A new provision (section 12A) introduced under the Fair Trading
Amendment Act 2013 which prohibits businesses from making
unsubstantiated representation is one of the key amendments to the
Fair Trading Act 1986 ("FTA").
The inclusion of such a prohibition means that businesses must
be able to back up all claims in respect of their products (or
services) before they are made, and must be able to do so before
such claims are made.
What constitutes unsubstantiated representation?
A representation is unsubstantiated if the person making the
representation does not, when the representation is made, have
reasonable grounds for the representation, this is irrespective of
whether the representation is false or misleading. A trader could
later prove a claim to be true, but it will still be a breach on
the trader's part if at the time the claim was made the trader
did not have grounds to substantiate it.
