As has been widely reported, New Zealand fashion label WORLD is in a spot of bother regarding it claims that its garments are FABRIQUE EN NOUVELLE ZELANDE (that is, “Made in New Zealand”). This article discusses the Fair Trading Act in New Zealand, and what this means for WORLD and other traders when promoting a products origin.
New Zealand publication The Spinoff reported that WORLD was in fact sourcing t-shirts made in Bangladesh from New Zealand clothing wholesaler AS Colour. WORLD then applied to the t-shirts sequin appliques obtained from a Chinese supplier (and available on the website Alia Baba). It sold the t-shirts with inner labels stating “FABRIQUE EN NOUVELLE ZELANDE.” The only indication that the t-shirts themselves were not in fact made in New Zealand was the inner care label, which stated that the t-shirts are made in Bangladesh.
Since The Spinoff story broke, the Commerce Commission has received a number of complaints under the Fair Trading Act and has opened an investigation
So what does it mean to claim something is “Made in New Zealand” and what are the repercussions if these claims are false?
“Made in New Zealand” and the Fair Trading Act
The Fair Trading Act aims to protect consumers against certain poor conduct by traders. There are prohibitions against misleading and deceptive conduct, making unsubstantiated representations and making false and misleading representations about the place of origin of goods.
Often it will be a matter of degree whether a specific statement about the place of origin of goods will fall below the required standard. For example, if a trader states on its website “Made in New Zealand since 1960”, the perception by consumers is likely to be that all the goods on the website are made in New Zealand. Care must also be taken when goods are derived from multiple places, for instance designed in one country, with components made in another, and final assembly occurring in a third. In such a case, any simple claim to a single place of origin may cause difficulties. The Commerce Commission provides some compliance guidance on its website, however ultimately only the Courts can determine whether the Fair Trading Act has been breached. The Commission says that a relevant consideration in respect of clothing includes the place “where is it actually changed from a fabric into a garment.”
There are also specific consumer information standards for some goods and services, including a standard that requires new clothing sold in New Zealand to be labelled with the country where the clothing was made or produced.
Implications for WORLD
WORLD’s sweeping statements made in the media that all its clothes are made in New Zealand and the placement of the origin labels out of sight of the consumer are likely to be problematic. The Commerce Commission’s website notes that, “origin labels in side seams of garments are unlikely to meet [the clothing consumer information standard]. Origin labels should be clearly positioned in the neck area of the garments.” The Commerce Commission is likely to look unfavourably on WORLD’s claims.
If the Commerce Commission’s investigation finds that WORLD’s conduct may have breached the Act, it has the power to prosecute. If convicted, WORLD could face hefty fines and may also be required to recall its clothing and issue corrective statements. Perhaps the most significant damage has already been inflicted on the WORLD brand through negative publicity, such as the comments made by Ms. L’Estrange Corbet.
The takeaway message for traders is to be thoughtful about the claims they make in advertising, on websites, or on products. If you cannot substantiate a general sweeping claim, consider instead making specific claims for specific goods, or more detailed claims such as “assembled in New Zealand from imported components.”. Seek advice in advance if you are unsure whether a claim might be misleading or deceptive. It is far better to be proactive and consider the legal effect of the claims you are making at the time they are made, rather than managing the fallout in the event they fall foul of the Fair Trading Act.
This article is intended to summarise potentially complicated legal issues, and is not intended to be a substitute for individual legal advice. If you would like further information, please contact the AJ Park representative.