'It's OK to complain': consumers urged to know their rights, and use them, after confidence drop

Falling confidence in New Zealand’s consumer protection regime has triggered a new campaign to help the public know their rights.

Consumer Protection, part of the Ministry of Business, Innovation and Employment (MBIE), recently released its biennial national consumer survey, and Consumer NZ chief executive Jon Duffy said the results should cause concern.

While most consumers were aware there are laws to protect their rights, less than half of those surveyed by MBIE understood how consumer protection laws are applied and had “at least a moderate understanding of consumer laws”.

Consumers’ confidence in the enforcement of consumer laws by regulators such as the Commerce Commission also declined after having improved in 2020, the survey found.

Less than 35% of those surveyed agreed there was enough enforcement of consumer laws to prohibit businesses from misleading or deceiving them. Only 24% of consumers said there was adequate enforcement of laws which prohibited businesses from price-fixing, or engaging in other anti-competitive behaviour. This was a fall from 33% in the previous survey, to a new low.

Duffy said the decrease in self-reported knowledge of consumer protection law shown in the survey was worrying.

“People need to know about this stuff.”

Those with higher incomes had higher awareness of NZ’s consumer protection laws. NZ households with incomes of $120,000 to more than $150,000 reported up to 99% awareness of consumer laws.

MBIE found some groups were less likely than average to be aware of consumer laws. For those earning up to $25,000, 89% were aware of NZ’s consumer laws. Māori were also less likely than the average consumer to be aware of consumer laws, with 89% reporting they were aware of them while Pacific Peoples’ awareness was measured even lower, at 86%.

Some groups were more likely to say they knew nothing, or only a little, about their rights as consumers, including 58% of women reporting they knew nothing, or very little about their rights. MBIE said “those whose main occupation is looking after families” was also lower than average, at 75%.

In contrast, other groups had a better than average understanding of consumer rights when buying and said they knew “at least a moderate amount” about them; including men (49%), graduates (49%), New Zealand Europeans (49%) and older people and those with higher incomes.

MBIE eyes new campaign

MBIE’s national manager for consumer protection, Simon Gallagher, said MBIE planned to start a new consumer rights and harm prevention campaign as early as July to tackle dropping consumer confidence.

Gallagher said MBIE was taking a slightly different approach to its campaign as it worked to get consumers the right information when they need it, whether that’s at the time of purchase, or when they discover a problem after a sale.

The campaign is still in the planning stage, however, Gallagher said it would run across multiple different channels through media, websites and its partners in the consumer protection system, and the private sector.

MBIE would rewrite and change much of the consumer information currently up on its website, and post a new campaign page.

“Because the Consumer Guarantees Act is self regulating, it's really getting that message across that it's up to you, the individual, to do something about it, to actually get the benefit [of the legislation]. We want people to stand up for their rights.”

Gallagher said the campaign would set people up for success while they spend, boosting understanding of their rights - and how to use them confidently - as well as how to fix things when they go wrong.

MBIE could, for example, target pushing consumer law information to people when they have an item in an online shopping basket.

“We have to figure out each of those points where we can actually influence the behaviour,” Gallagher says. “That discovery point is one that we're thinking about, when we have people who open the package at home and it's not quite right. That possibly could be another point to target, if we can figure out how to actually get to the consumer at that point, to give them some tips and resolutions.”

When putting it right doesn’t happen

Fifty-five percent of consumers experienced a problem with a purchase they made in the past two years, the MBIE survey revealed.

The most common types of problems experienced by consumers included the product or service not working as expected (32%), poor customer service (28%), or the product or service being faulty/damaged (25%).

The number of consumers that reported taking action to try and resolve their most recent problem fell to 67% compared to 73% in 2020.

"When asked why they did not take any action, consumers are most likely to say they were unsure of what they could do to resolve it (36%), as well as questioning the efficacy of any action (34%). These findings reflect the increasing cynicism consumers are expressing about the adequacy of consumer legislation and the extent to which to which they are enforced."

The survey found consumers who did take actions were slightly more likely to have achieved a resolution at 70% compared with 66% in 2020.

Home-based telecommunications services (home phones, home internet) had the highest problem incidence rate in the survey, with 24% reporting problems with purchased services.

Problems with the building services category reached 24%, which MBIE said potentially reflected labour and material shortages experienced in the industry. 

MBIE said another industry to watch was the purchase of motor vehicles (through car dealerships), where the incidence rate of problems increased over time from 10% in 2018 to 17% in 2022.

Telecommunications also highlighted another area of concern in the survey; dispute resolution.

MBIE found that “awareness of various dispute resolution services is eroding over time with The Disputes Tribunal of New Zealand being the only service that most consumers are aware of”. 

“While most consumers say they have heard of the Disputes Tribunal of New Zealand, awareness is at its lowest level to date at 73%, compared to 80% in 2018.”

The tribunal was followed by the Banking Ombudsman Scheme at 46%, and the Motor Vehicle Disputes Tribunal (34%). 

“Awareness of all other listed dispute services is less than 40%, and 17% of consumers reported not being aware of any,” the consumer survey found.

Less than half of all consumers agreed in the MBIE survey there was adequate access to services that help resolve disputes between consumers and businesses. 

Consumer awareness of the Citizens Advice Bureau (CAB) and Consumer NZ remained relatively high, with 83% of consumers saying they were aware of CAB, and and 79% aware of Consumer NZ.

Advertising the difference

Much like MBIE, the Telecommunications Dispute Resolution Scheme (TDRS) has been cranking up its awareness campaigns.

TDRS Operations Manager, Jeanie Robinson, said TDRS launched its first major national ad campaign in 2022 which ran on radio, television and social media.

“This has had a big impact, with more Kiwis accessing our services as a result. Recently, we’ve launched a new series of advertisements, as it’s important that people know where to go when they have issues.”

She said awareness was an area that was always worked on by the scheme.

“In more recent times, phone and internet providers took additional steps to support customers during the pandemic, which resulted in less complaints, so we did not run campaigns during that time ... So far this year, 47% more people contacted TDRS about complaints than last year, so we’re making great progress. We hope to see this continuing to grow.”

Of consumers who took action to resolve their problem, 10% said they went to a dispute resolution service at some point during the process, and 4% said their problem was resolved through one. This compared to 12% that said they went to a dispute resolution service at some point in 2020, and 4% that resolved their problem through one.

The Telecommunications Forum represents companies in the industry which account for about 95% of telecommunications customers.

Its chief executive, Paul Brislen, said he would like to see NZ adopt an Australian approach to measuring complaints, which compares complaint numbers against the size of the telco.

He said on a “per customer basis”, telecommunications was probably the most complained about service. But if the data showed complaints per service, or on a use basis, telecommunications wouldn’t seem as high.

“If it's on a per service or a per use basis, then my local garage is absolutely despicable because I've only used them once, and I'll never use them again,” Brislen said.

He said its TDRS “was a point of difference”.

“I'm a huge fan of telling people that we've got this scheme. It's good for consumers. It's good for the telcos. The trick is it's not a complaint scheme. It's a dispute scheme. You have to complain to your telco first, and if you reach a deadlock and you don't like what you're doing, then the dispute resolution scheme is there as a backstop.”

A review in 2021 by the Telecommunications Commissioner into its dispute scheme prompted TCF to make widespread changes to how it runs its scheme, Brislen said.

It is setting up a new company structure to run the scheme and appointing a new, independent chair to lead it so it is "at arm's length from the industry". TCF had also been rewriting its constitution, and had come up with a new customer service code to help telcos talk with, and engage their customers.

TCF "will flip the switch on the new scheme in July", and Brislen said the industry had gone even further than the Commerce Commission's recommendations. He says TDRS will have a "hefty budget" to make sure people know its there for consumers, and is working to get more telcos signed up to the scheme.

But, not every firm belongs to a dispute resolution scheme like TDR, including some well-known telcos who have been shamed by Consumer NZ's annual "naughty and nice" list. 

Brislen urged consumers not to join businesses that don't have a dispute resolution "backstop".

Nice to be mentioned

Duffy, the boss of watchdog Consumer NZ, said he was of course pleased to see that people know about it.

Putting aside his selfish perspective, Duffy said it was no surprise consumers were finding the "landscape confusing".

"There's lots of different places, all of which have slightly different functions and roles and jurisdictions. So you can see why people would be a little bit confused. Maybe some organisations blur into others in consumers' minds."

There are some 50 different dispute resolution schemes, for example. Duffy said there needed to be "rationalisation".

"Perhaps having fewer, more comprehensive organisations could be a good thing."

Having some businesses operate outside of a dispute scheme could be tackled by making them mandatory, Duffy said.

But, he said the telco sector was a good example of how businesses need to get better at dealing with complaints in the first instance. For many consumers it is far too hard to get someone on the phone to discuss their complaint, and in an increasingly online world many aren't offering any better service online.

"What consumers want is someone who's going to answer your email or your chat, or your phone call quickly and resolve your issue for you. And repeatedly, we just don't see that with the telcos, particularly the big, the bigger ones, it's actually really difficult to get a hold of people to answer your query and in a modern, highly digitised society, it's really impactful."

Complaining is not something we find easy to do anyway, Gallagher said.

"Kiwis don't like standing up for their rights," he said.

"[Complaining] is something that's actually OK, it's normalising that it's OK. It's meant to be a two-way conversation with the provider of the product or the service, to actually try to resolve it."