Are traders allowed to charge cancellation fees without justification?

The essence of consumer protection under New Zealand law dictates that any fees charged by traders, including cancellation fees, must be reasonable and justified. This means that traders cannot impose arbitrary fees without a clear rationale. The law promotes fairness and transparency in consumer transactions, requiring traders to ensure that any charges reflect actual costs incurred or a fair estimate of the potential losses suffered due to the cancellation.

Such regulations aim to prevent exploitative practices that could harm consumers by imposing excessive fees that are not commensurate with the service provided. Therefore, if a trader wishes to charge a cancellation fee, they must demonstrate the justification for that fee, ensuring that it is not merely a way to penalize consumers or gain undue advantage.

It’s also about maintaining trust in the marketplace; consumers should feel protected from hidden or unreasonable charges that they may encounter. Hence, the requirement for fees to be reasonable and justified is foundational to the consumer’s right to fair treatment in business transactions.