Last week, the Commerce Commission announced its first enforcement actions under a new prohibition on “unconscionable conduct” in the Fair Trading Act (FTA).
This development demonstrates the Commission’s commitment to acting on its stated enforcement priorities and provides a valuable insight into how the unconscionable conduct provisions may be applied in practice.
Commission focuses on protecting vulnerable consumers
The Commission has filed proceedings against Brand Developers Limited (trading as The TV Shop) and Tech Vault Enterprises Ltd (trading as HouseSmile), alleging that both engaged in conduct that constitutes a substantial departure from generally accepted standards of business conduct in New Zealand. In both cases, the Commission’s focus has been on alleged high-pressure sales tactics and exploitative practices targeting vulnerable consumers, including those with cognitive impairments or serious illnesses.
The Commission’s Deputy Chair, Anne Callinan, described the alleged conduct as “some of the worst we have seen”, involving high-pressure sales and debt collection tactics, including the sale of high-value products on long-term payment plans to customers who could not afford them. The Commission alleges that The TV Shop failed to ensure customers understood the terms of sale, including the nature of “30-day trial” offers, and used aggressive post-sale retention strategies.
While these initial cases involved particularly vulnerable consumers, it is important to note that the unconscionable conduct provisions in the FTA (summarised in our previous article here) are broadly drafted and are not specifically dependent on establishing vulnerability. The Commission’s actions therefore serve as a reminder for all businesses to review sales and customer engagement practices. At the same time, the Commission’s guidance describes unconscionable conduct as behaviour that “substantially” departs from expected standards of business conduct and is “so harsh that it goes against good conscience” – a standard which the Commission notes should only rarely be breached.
Unconscionable conduct in Australia
While this marks the first enforcement of unconscionable conduct in New Zealand, there has been significantly more enforcement activity in Australia (under equivalent provisions on which the NZ regime was largely based). For example:
- In December 2025, the Federal Court ordered Bupa to pay a penalty of AU$35 million after finding that its mishandling of health insurance claims (rejecting claims outright where only part of a medical procedure was covered) constituted unconscionable conduct.
- In September 2025, the Federal Court fined Optus Mobile AU$100 for unconscionable conduct in relation to pressurising sales and debt collection tactics (including to customers who were vulnerable or disadvantaged).
- In May 2025, the Federal Court ordered Captain Cook College to pay AU$20 million for engaging in unconscionable conduct in relation to its online courses. The College had removed enrolment safeguards to boost profits, enrolling thousands of vulnerable students in online courses they were unlikely to complete, resulting in significant student debt and over AU$50 million in government payments under a student loan scheme.
Potential consequences and risk litigation
If found guilty of unconscionable conduct, businesses face significant consequences including current fines of up to NZ$600,000 for companies and NZ$200,000 for individuals. The courts also have the power to order compensation for affected consumers and to vary or cancel contracts. We expect the significance of the unconscionable conduct prohibition in New Zealand is only likely to increase following the Government’s recent confirmation that it intends to raise the maximum penalty under the FTA from NZ$600,000 to the highest of NZ$5 million, three times the value of the commercial gain or the value of the transactions.
With the Commission now actively enforcing these provisions and the prospect of much higher penalties on the horizon, the stakes are high for New Zealand businesses who fail to meet the expected standards of conduct. With the additional risk of serious reputational damage arising from enforcement action for unconscionable conduct, now is a good time for all businesses (particularly those dealing with potentially vulnerable customers) to take a hard look at their sales and customer engagement practices to ensure they are aligned with the latest case law and regulatory guidance.
If you have any questions about how these developments may affect your business, or require assistance with reviewing your internal practices, please get in touch with the contacts listed or your usual Bell Gully advisor.
Disclaimer: This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
