A recent sentencing decision by the New Zealand District Court highlights the reach of the Fair Trading Act 1986 (FTA) and serves as a reminder of the substantial penalties that may be imposed for misleading conduct and representations.
In a judgment issued in December 2025, the District Court found Brand Developers Limited trading as The TV Shop (BDL) guilty of multiple breaches of the FTA. The prosecution was brought by the Commerce Commission (the relevant New Zealand regulator) and centred on online reviews, representations about consumers’ rights under the Consumer Guarantees Act 1993 (CGA), and advertising claims regarding “free” products. In a sentencing decision released on 6 August 2026, the District Court fined BDL a total of NZ$1.104 million.
The conduct: online reviews, consumer rights and advertising claims
BDL’s conduct fell into three broad categories. First, BDL instructed staff to write and post reviews of BDL and its products without disclosing their affiliation with the business, with the Commerce Commission identifying at least 473 such reviews. While it was unnecessary for the Court to determine whether the reviews reflected employees’ genuine views, the evidence in the liability judgment included some staff reviewing products they had never used and positively reviewing products they did not like. The Court also noted that some products were randomly allocated to staff for review, suggesting no requirement that the staff had used the products. BDL also moderated and withheld low-rated reviews, with thousands of reviews affected. Such conduct was liable to mislead consumers into believing that reviews had been written by independent customers and that consumer opinion of the products was more favourable than it actually was.
Secondly, BDL’s employees represented that BDL’s “risk-free trial”, “30-day money-back guarantee” and product warranties, took precedence over consumers’ rights under the CGA. Evidence before the Court showed that customers were repeatedly told that products could not be returned once the 30-day period had expired and that, under BDL’s warranty terms, repair or replacement were the available remedies. These representations were made in accordance with BDL’s returns and refund policies and internal guidance, almost all of which failed to refer to consumers’ rights under the CGA. The Court found that such conduct was misleading and had the potential to deprive consumers of rights available under the CGA.
Thirdly, BDL advertised a specific product, its Air Roaster Pro, as including “free”, “bonus” or “limited-time” accessories. The Court found that such claims were misleading because those accessories were always supplied with the product and were not genuinely available separately.
Determining the penalty
In determining the appropriate penalty, the Court found that the conduct occurred over an extended period, in some instances approaching four years. The offending was systematic and, in relation to the review conduct, deliberate and the result of instructions given by management, with some staff incentivised to participate. The remaining conduct was described as involving the “highest level of carelessness”. The Court also considered that the offending caused consumers harm and conferred a commercial benefit on BDL.
After applying the relevant sentencing principles, the Court adopted an overall starting point of NZ$1.33 million. Following adjustments for totality, cooperation and remorse, the Court imposed a final fine of NZ$1.104 million.
Key takeaway
Online reviews have been a long-standing area of focus for the Commerce Commission, and this decision is not the first time the Commerce Commission or courts have scrutinised online review practices. Consistent with earlier cases and existing Commerce Commission guidance, this decision reinforces that businesses should only collect genuine reviews, disclose relationships that may affect the independence of a review, and avoid practices that distort consumers’ overall impression of customer feedback. Reviews and ratings are capable of constituting misleading representations under the FTA, and businesses that procure undisclosed employee or related-party reviews, suppress negative reviews, or otherwise manipulate review systems risk significant enforcement action and penalties.
The decision also highlights the risk of contractual terms or policies presenting an incomplete account of consumers’ statutory rights. Even where a guarantee or warranty provides additional benefits, businesses may mislead consumers if they suggest those remedies are exhaustive or fail to acknowledge rights and remedies that may also be available under the CGA. Businesses should be alert to the risk that warranties and returns policies may be misleading not only because of what they say, but also because of what they leave unsaid.
The decision also reinforces that promotional claims will be assessed against consumers’ overall impression of an offer. Labels such as “free”, “bonus” and “special” may attract scrutiny where consumers are led to believe they are receiving something additional, when in reality it forms part of the ordinary product offering.
If you have any questions about this decision or your obligations under the Fair Trading Act, please get in touch with our Corporate and Commercial team or your usual contact at Hesketh Henry.
Disclaimer: The information contained in this article is current at the date of publishing and is of a general nature. It should be used as a guide only and not as a substitute for obtaining legal advice. Specific legal advice should be sought where required.
