In this article, we discuss the Commerce Commission’s recent legal proceedings against HelloFresh and against two PAK’nSAVE supermarkets for alleged breaches of the Fair Trading Act, and the implications of these proceedings for businesses.

HelloFresh

The Commerce Commission (the Commission) has filed criminal proceedings against HelloFresh in the Wellington District Court for alleged misleading conduct, in breach of the Fair Trading Act 1986 (the FTA).

The claim relates to conduct by HelloFresh between February 2022 and July 2023 where ex-customers who had previously been subscribed to HelloFresh were “cold called” and given a discount voucher, without it being made clear that accepting the voucher would “reactivate” their subscription.

The Commission began investigating HelloFresh in mid-2023 after receiving a significant number of consumer complaints about HelloFresh’s sign up, cancellation and reactivation process. The Commission operates screening and enquiry regimes across its portfolios, which allow it to vet complaints from the public and consider whether further investigation may be necessary.

The Commission’s deputy chair, Anne Callinan, said that the Commission believed that HelloFresh was in breach of the FTA as the conduct resulted in cancelled subscriptions being reactivated without the customers’ express knowledge or consent. Ms Callinan said: “We’re concerned some consumers have been misled into paying for services from HelloFresh they didn’t want through the use of misleading wording and processes in cold calls.”

We will now wait to see whether HelloFresh seeks to defend itself in these legal proceedings or opts to settle them with the Commission. In a statement made earlier this week to 1News, HelloFresh acknowledged the Commission’s decision to commence proceedings and stated that it took remedial action as soon as it became aware of the activities.

Charges filed against two PAK’nSAVE supermarkets

In December 2024, we reported that the Commission was filing charges against Woolworths and two PAK’nSAVE supermarkets for alleged breaches of the FTA. Since our last update, the Commission has now filed charges against the two PAK’nSAVE supermarkets, alleging that PAK’nSAVE Silverdale in Auckland, and PAK’nSAVE Mill Street in Hamilton have breached the FTA by:

1. advertising prices for grocery products that did not match the price charged at the point-of-sale; and
2. promoting grocery products at a special or discounted price where the promotional price did not offer a genuine ‘special’.

Foodstuffs North Island (the cooperative which both PAK’nSAVE stores are part of) has announced that it is complying fully with the Commission’s investigation.

Again, we will need to see whether the proceedings are defended, or whether they are settled with any hearing limited to the agreement and confirmation of a penalty. The latter was the case with the recent enforcement action the Commission took against Foodstuffs North Island under the Commerce Act 1986 for use of restrictive land covenants, which we wrote about in August 2024.

What you need to know

The Commission’s crackdown on misleading and deceptive conduct in the food and grocery sectors aligns with its enforcement and compliance priorities announced in December 2024. Both subscription traps, such as those the Commission alleges HelloFresh was engaging in, and accuracy of pricing and promotions in supermarkets, are referenced in these priorities as conduct the Commission is targeting this year. We expect an increase in the number of investigations in this space in the next 12 months.

You can read more about the Commission’s 2025 priorities in our article here. As noted there, specific enforcement and compliance priorities for the Commission in 2025 in the FTA space are:

• Illegal on-line sales conduct: Buying products on-line is increasingly a way of life for Kiwi consumers. We will prioritise taking action to protect consumers from illegal on-line sales practices, such as fake reviews, misleading scarcity claims, misleading social proof sales tactics, drip pricing and subscription traps;
• Breaches in the Grocery Sector: Groceries are a critical purchase for all New Zealanders. Consumers should be able to rely on supermarket prices and price promotions being accurate. We will take action where we consider sales practices are illegal. We will also focus on compliance by retailers, wholesalers, and suppliers with codes and other obligations;
• Breaches in the Telecommunications Sector: Telecommunications services are essential to Kiwi consumers and we will take action where we see false, misleading or deceptive marketing, sales or billing practices. We will also focus on compliance by providers with codes and other obligations;
• Unconscionable Conduct: We will act when we see businesses behaving unconscionably. Unconscionable conduct is behaviour that substantially departs from expected standards of business conduct and is so harsh that it goes against good conscience. This is conduct of a type that should rarely occur but if it does we will act to avoid continuing harm to consumers or businesses.

The recent proceedings commenced by the Commission serve as a timely reminder of the importance of maintaining transparent and accurate business practices. For your business, this means ensuring that all promotional activities, subscription processes, and pricing policies are clear and specific to avoid any potential breaches of the FTA. We recommend businesses regularly review and update their practices to ensure compliance with the FTA.

Get in touch

Please get in touch with one of our experts to discuss any aspect of this article and its potential implication for you and/or your business.

Special thanks to Achi Simhony and Henry King for their assistance in preparing this article.