You don’t have to put up with unfair contract terms. Join our Play Fair campaign to get rid of them.

17 March 2015 was a red-letter day for consumers. The date marked the start of a long-awaited ban on unfair contract terms. It’s one of the most significant changes to consumer law in the last 20 years and means you won’t have to accept the unfair conditions companies try to impose when you buy goods or services.

The ban applies to unfair terms in standard-form consumer contracts – the non-negotiable terms and conditions you’re presented with when you’re joining a gym, signing up with a telco or hiring a rental car.

Companies were given generous notice of the ban to give them time to remove offending terms. But we haven’t seen much evidence that’s happened. We've launched our “Play Fair” campaign to out companies that continue to use unfair terms.

Common culprits

Unfair terms can lie in wait in contracts used by a wide range of companies from electricity retailers to retirement villages.

These terms unfairly privilege the seller over the buyer. Common culprits include terms that give the company unilateral rights to vary the contract, the goods or services supplied, or even the price.

They also include terms that penalise the consumer – but not the company – for ending a contract. The company often retains the right to end the contract whenever it wants. But you face steep fees if you want to call it quits.

If you’ve ever signed up for a gym membership, there’s a good chance you’ve encountered these types of terms. Gym contracts are a target of our campaign. They can give the gym wide-ranging rights to change or cancel the agreement. But the rights available to the consumer may be extremely limited and costly to use.

Debitsuccess, which manages memberships for various gyms, has used a standard contract that reserves the gym's right to vary its services and change the location of any branch. The contract requires the gym member to keep paying fees regardless.

It’s easy to sign up for gym membership but it’s often not as easy to cancel. Debitsuccess’ contract states you have to give 30 days’ notice to cancel. You can’t consider the membership terminated until the company confirms that in writing.

Court action

In Australia, which introduced a ban on unfair terms in 2010, companies are being taken to court over the use of terms like these.

A Federal Court ruling in 2013 forced Aussie telco NetSpeed to remove contract terms that gave it unilateral rights to cancel and to vary the price without allowing customers to opt out. It also had to remove a term that required the customer to indemnify the company in any circumstance.

Last year, an Australian Competition and Consumer Commission (ACCC) investigation into daily deal site LivingSocial resulted in the company axing a clause which gave it the right to make substantive changes to its terms and conditions without telling customers.

The ACCC has also recently filed court proceedings against two companies, Chrisco Hampers Australia and Europcar, over alleged unfair terms in their contracts.

The Chrisco case involves a term in the company’s layby agreement that gives it the right to keep taking payments from a customer’s bank account when the layby has been paid in full. Europcar is being challenged over terms that require the customer to pay a liability fee if a rental vehicle is damaged or stolen, irrespective of fault.

Both companies have used similar terms in their contracts on this side of the ditch.

Clamping down

It's up to the Commerce Commission to take court action against companies here.

Under the Fair Trading Act, the commission can apply to the courts for a declaration that a term is unfair. If the court grants the declaration, the company can’t use the term in its contract or attempt to enforce it. Any company which does so runs the risk of breaching the Act and a $600,000 fine.

We’ll be filing complaints with the commission about any company that continues to use terms we believe are unfair.

What we’re doing

Here are some examples of potentially unfair terms we’d like to see changed.

Join us

Support our campaign to get rid of unfair terms.

  • If you’ve been given a contract you think contains an unfair term, let us know. Send a copy to us at playfair@consumer.org.nz
  • Let the company know you think the term is unfair. You can also make a complaint to the Commerce Commission. We have sample letters to help you.
  • Tell your family and friends they don’t have to put up with unfair terms and let them know about our campaign.
  • Follow our campaign here online.