If you're buying goods from a second-hand dealer, at auction, or privately, it's important to know your rights.

Private sales

Private sales are consumer-to-consumer deals. They cover everything from garage sales, to goods you buy privately on the net or through the classified ads in papers.

The big draw of private sales is the expectation of getting a bargain - cut out the second-hand dealer and the price should be cheaper. As an added bonus, you'll usually avoid the pushy sales patter of a professional retailer.

However, don't expect much protection from the law if something goes wrong. Neither the Fair Trading Act nor the Consumer Guarantees Act applies. All is not lost though: you may get limited help from the Contractual Remedies Act if you've relied on a claim made by the seller that was important to you. The Act is complicated but in essence: if you have been misled you may be able to claim compensation.

Then there is the venerable Sale of Goods Act 1908. You can claim damages if the seller didn't own the goods or there was money owing on them. It may also help if you have been told a porkie by the seller about the quality or performance of the thing you have bought. But there's a snag; sellers can contract out of the Sale of Goods Act. Of course, not many private sellers would know this - but if they do, you've got to be told before the deal is struck.

Overall, with a private sale you're largely on your own. This makes it important to keep a note of the seller's street address and phone number just in case you need to track them down.

Buying from a dealer

If you buy goods for personal or household use from a second-hand trader and then discover them to be faulty, you have rights under the Consumer Guarantees Act. It says goods must be of acceptable quality when sold. If the goods aren't, you can take them back. If the problem is minor, the second-hand dealer may choose to repair or replace the item or refund your money. For major defects, it's entirely up to you whether you accept a refund or ask for a replacement.

If the dealer doesn't repair the item within a reasonable time, or refuses to repair it, replace it or even refund your money, you can have the repairs done elsewhere and recover the costs (plus incidental costs) from the dealer.

Goods must be of acceptable quality when sold. If the goods aren't, you can take them back.
Goods must be of acceptable quality when sold. If the goods aren't, you can take them back.

What is acceptable quality?
It is what a reasonable consumer would expect and will depend on the price, age and condition, and any information you are given concerning the items. Naturally the standard will be lower for second-hand goods than with new.

For example, when a fridge costs $50, it's a reasonable indication that it doesn't have much life left in it, especially if you were told it was cheap because of a specific fault. If, however, you paid $500 for the fridge, you could reasonably expect it to last a lot longer.

Or again, if you bought a second-hand washing machine for $500 and the retailer said it was a great machine and had been fully overhauled, you could reasonably expect it to last longer than a $50 machine.

Take time to check and test goods before buying them. Items that look good but seem inexpensive may well have hidden defects.

Selling on behalf of others
Second-hand dealers often sell on behalf of private sellers. The fact that they are acting for third parties does not allow them to dodge the Consumer Guarantees Act. If the goods are faulty, the dealer must accept responsibility.

Dealer warranties
The Consumer Guarantees Act applies regardless of any other warranties or guarantees a dealer may offer. A dealer can't "contract out" of the Act by offering a guarantee that is less than you would receive under the Act. Neither can they remove or reduce your rights by putting up signs such as "No refunds" or "As is, where is".

Can anyone set up as a second-hand dealer?
Under the Secondhand Dealers and Pawnbrokers Act, dealers must be licensed. This includes scrap-metal merchants. Applications are seen by police, and licences issued by a Licensing Authority appointed by the Minister of Justice. Licensing doesn't apply to charity shops selling donated goods.

Dealers must sight approved photo ID and record the contact details and signature of everyone selling them goods, as well as the details of the goods.

Some items must be held for a month by the dealer before they can be sold. These include electronic goods, bicycles, cameras, watches and jewellery.

If a dealer buys or is offered any goods for sale that they know or suspect are stolen, they must report that fact to the police.

Buying goods at auction

How auctions work
To make a bid at an auction, you usually have to register and sign an agreement with the auction house. Make sure you read the agreement before the auction begins.

The sale goes to the highest bidder, but only if that bid has met or exceeded any reserve price. Once you have cast the highest bid, it is too late to change your mind. You have entered into a legal contract to buy the goods.

Goods will be "passed in", if they don't meet a reserve price. If this happens, and your bid was close to the reserve, the auctioneer may ask if you want to make another offer to the seller.

Auctions and the law
The Auctioneers Act requires that auctions are only carried out by registered auctioneers.

The Consumer Guarantees Act and the Fair Trading Act both apply to auctions where the seller is a professional trader. Notice of the terms of the auction must state whether the seller is a professional trader.

Auction goods bought from private sellers aren’t covered by these Acts but they may be covered by the Sale of Goods Act, which requires products to be of merchantable quality. However, auction houses can opt out of that law (and usually do).

Online auctions

Goods bought from online auction sites like Trade Me are also covered by the Consumer Guarantees Act and Fair Trading Act (although they’re not covered by the Auctioneers Act so don’t have to be carried out by a registered auctioneer).

When buying online

  • Check the seller's trading history.
  • Check the item's retail price. Not all auction prices are a bargain.
  • Factor in your likely postage/freight costs.
  • Consider insuring expensive items.
  • If it sounds too good to be true, it's probably either stolen or the seller is working some kind of scam.
  • Check the site community message board regularly for advice and warnings.
  • If you are buying a major item, check the Personal Properties Securities Register (www.ppsr.govt.nz) to find out if there's money owing on it.
  • If you can, pay by credit card. You can reverse the transaction if the goods don't turn up.
  • Consider using an escrow service - especially with expensive items.

When selling online

  • Check the site's fees and factor them into your calculations.
  • Don't panic if you don't receive any bids initially. Most come in over the final 48 hours of an auction.
  • Make sure your terms of sale are clear, and give an indication as to shipping costs.
  • If you're not using an escrow service, don't send the goods until you have been paid (if you're paid by cheque, wait until the cheque has cleared).

Special cases

Electrical goods
Under the Electricity Act 1992 and its regulations, electrical appliances for sale must be safe. This law applies to every way of selling an electrical appliance, even your neighbour's garage sale.

Stolen goods
Nearly all property stolen in burglaries is re-sold. If you even suspect that what you're buying might have been stolen, be careful. You could possibly be in line for a receiving charge.

Licensed second-hand dealers and pawnbrokers have to keep a register of goods that pass through their shops, and details of who sold or pawned them. This offers some protection against buying stolen property.

Also, the Consumer Guarantees Act gives you good title. This means if you buy from a trader (but not privately) and it's subsequently found the goods are stolen, you can claim damages from the seller.

To protect yourself, ask a seller how they can verify that the goods they are selling are clean. If the reply is vague, it's probably best to move on.

Be particularly careful about buying through classified ads if only a cellular phone number is supplied.

Your questions answered

Can a second-hand dealer say "no refunds"?

Retailers can't get out of the CGA by putting up signs saying "No Refunds". If something breaks down just after you've bought it, the dealer has to repair or replace it, or give you your money back, provided the failure is covered by the Act.

But you have no legal right to get your money back just because you change your mind - though you can always ask!

The second-hand fridge I bought broke down a week after the shop warranty expired. What are my rights?

You may still be protected under the CGA. This states that goods need to be fit for their purpose, be safe, and last for a reasonable time, taking into account age, condition and the price you paid.

In your case, if the fridge cost 50 bucks, that's a reasonable clue it didn't have much life left in it. But if you paid, say, $500, you can expect it to last a lot longer. The dealer should repair the unit or replace it with a working one in similar condition. If they can't do that, they should give you your money back. You don't have to accept a credit note.

Charity shops generally have to meet the Act too, although there's an exemption if you're not an ordinary customer: for example, if you're getting a $50 heater for just $5 because that's all you can afford.

What about antiques?

You wouldn't dream of using most antiques for their original purpose. If you buy a 1928 vacuum cleaner, for example, it's common sense that you won't try to clean your house with it.

I bought a second-hand camera which the camera shop was selling "on behalf" of someone else. If something goes wrong, do I talk to the shop or the seller?

The shop has the same obligations under the CGA as it does when it's selling its own new stock. If there's a problem with your camera, it's up to the shop to sort things out with you.

I gave a second-hand clothes shop a coat to sell on my behalf. They told me they sold it for $100, and gave me my share. I later found out they sold it for $150.

This is theft. Complain to the shop and, if necessary, take them to a [Disputes Tribunal]. You may also want to contact the police. But note that to make your case, you will probably need the receipt from the sale, a written statement from the buyer and your own record of what the shop paid you.

I know my old washing machine is not safe anymore. Can I sell it for parts?

Yes, but you have to make the situation clear. Cut off the cord, and where the cord was, attach a label stating that the machine is unsafe and not to be used.

What happens if a dealer says something which just isn't true?

The Fair Trading Act applies to all retailers, including second-hand dealers. Under the law, dealers can't mislead consumers about what they're selling.

The law also prohibits other unfair practices, such as "bait advertising". This is where a trader entices you into the shop by advertising a product when they know they haven't enough to supply a reasonable demand.

If you get stung and can't sort it out with the trader, contact the Commerce Commission, which enforces the Fair Trading Act. The Commission records all the complaints it receives, but it doesn't investigate every case. If you want redress yourself, you can go to a Disputes Tribunal.

I put a deposit down on a dining suite and told the dealer I'd be back the next day with the rest of the money. But they sold it to someone else.

When the seller agreed to sell the suite to you and accepted your deposit, they entered a contract. By them selling to someone else, they've broken that contract.

You obviously have the right to get your deposit back. You can also ask for any costs incurred: the trailer you hired to collect the furniture, the cost of travelling to and from the seller, and so on.

I sold a table to a dealer for $50 and he put it in his store for $250. I feel ripped off.

There is no limit to the markup a trader can place on second-hand goods. Shop around when you're selling goods, just as you would if you were buying.

I bought an inkjet printer from a second-hand dealer for my business use and also for the kids' schoolwork. Do the Consumer Guarantees Act and Fair Trading Act apply?

The Fair Trading Act certainly applies. It covers anyone in trade and sellers can't contract out of it. Whether the Consumer Guarantees Act applies depends on the circumstances. In this case, the appliance is something a household might ordinarily have, so the Act does apply. But if you bought an expensive colour laser printer, say (something ordinary households wouldn't have) it wouldn't apply.

You should also note that because you're buying the printer for business use, the seller can contract out of the CGA. But they must do so in writing at the time of the purchase

Our advice

  • Have a very close look at what you plan to buy. If you're not an expert, take along someone who knows more about it than you.
  • If you're buying from a trader, make sure you get a receipt which shows what you've bought, the amount you paid, the name and address of the trader and the date. Keep the receipt in a safe place.
  • Keep a copy of any advertisement, catalogue or sales tag referring to what you've bought.
  • If one particular feature of the item is important to you (the grill on a stove, for example), ask the dealer to make sure it works properly.
  • Bargain hard, whether you're buying or selling, privately or through a dealer.