Fine for failing to disclose ‘in trade’ status

Issued 11 July 2018
Release No. 153

Prolific online sellers beware – fine for failing to disclose ‘in trade’ status

A Palmerston North man has been fined $5000 on three charges under the Fair Trading Act for failing to disclose his trader status when selling items on the internet, and for selling an unsafe cot online.

It is the first time the Commission has taken a prosecution for failing to disclose ‘in trade’ status. Other such offenders have received infringement notices.

“This case is a warning to those who sell on online marketplaces that they must comply with product safety requirements, and if they are prolific sellers they must alert prospective customers that they are selling ‘in trade’. Traders must declare their status to consumers, so that consumers know they are protected by the Fair Trading Act and the Consumer Guarantees Act (CGA) and can exercise their rights,” said Antonia Horrocks, the Commission’s General Manager, Consumer and Competition.

Bilal Shurab was sentenced in the Palmerston North District Court on 10 July. He supplemented his regular income by listing items for sale on online marketplace Trade Me. The items listed were mostly second-hand household items, including cots.

In more than 1300 Trade Me listings between November 2016 and April 2017, Mr Shurab failed to disclose that he was “in trade”.

“Mr Shurab was operating a business on Trade Me but he failed to declare that when selling online. This was liable to mislead consumers that they were engaging in a private sale and were not covered by the protections in the CGA,” said Ms Horrocks.

Two of the charges were for selling an unsafe cot. In March 2017 Mr Shurab listed a cot under the heading “Baby Cot with 2 mattress”. The Commission received a complaint about the safety of the cot and advised Trade Me, which removed the listing. Mr Shurab said the cot was a bassinet and was not covered by the relevant safety standard. The Commission disagreed and supplied Mr Shurab with guidance on the legal requirements for sale of cots.

Within a few days Mr Shurab re-listed the cot as “Bassinet/Baby cot with 2 mattress”.

The cot was then bought by the Commission and sent for testing. It was found to be non-compliant with the relevant safety standard because there were faults that created risks that a child could climb or fall out of the cot, become smothered or strangled.

Mr Shurab was fined $3500 for the charges relating to the unsafe cot and $1500 for the failure to disclose in trade status charge.

Background
Household cots
The Commission enforces six mandatory product safety standards, including that for household cots. The standards are intended to prevent or reduce the risk of injury.

‘In trade’ status
The Fair Trading Act requires anyone who is in trade to make this clear to consumers when offering goods or services for sale online. This informs consumers that they are covered by the Fair Trading Act and the Consumer Guarantees Act.

The Commission’s fact sheet about buying and selling online includes guidance about ‘in trade’ status, and Trade Me has this guidance about ‘in trade’ disclosure.

Consumer rights under the CGA are featured in this episode of the Commission’s animated series It’s All Good.

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