Businesses surveyed by the Government have reported being negatively affected by unfair practices including being threatened, verbally abused and blacklisted after asking for payment.
A range of businesses were surveyed by the Government and around half of them had experienced what they considered to be unfair conduct or contract terms.
It led to Consumer Affairs Minister Kris Faafoi and Minister for Small Business Stuart Nash to announce proposed measures to better protect businesses and consumers from unfair commercial practices.
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"We're taking action to prohibit the most serious types of commercial misconduct, and to ensure there are better protections against unfair contract terms," Faafoi said on Tuesday.
The Government is proposing prohibiting conduct that is "unconscionable", described as "the very worst type of behaviour, or serious misconduct that goes far beyond being commercially necessary or appropriate".
It also wants to extend consumer protections under the Fair Trading Act against unfair contract terms to also protect business contracts with a value below $250,000.
Nash said some of the examples of misconduct that people in business provided during a recent consultation on the issue were particularly concerning.
"We heard about a range of potentially unfair contract terms, including extended payment terms, one-sided contract terms, and businesses being locked-in to contracts for long periods of time," he said.
"We also heard that some businesses aren't complying with the terms of existing contracts, making excessive demands, and blacklisting and bullying their suppliers."
The Government heard of suppliers being made to pay compensation to retailers for perceived losses after they ran promotions with other retailers.
It also heard of contractors having the scope of their work increased without consultation or compensation.
Other instances included a lender who repossessed and dumped a borrower's personal items, not to recover their unpaid debt but to send a message.
The Government also heard of a trader who used aggressive sales tactics to sell expensive skincare products to vulnerable people, including two with autism who paid $10,000 for their purchases.
"While we don't know the full details around each case, these examples indicate just how pervasive the problem is for both businesses and consumers," Faafoi said.
The Government also heard of a mobile trader who entered a mental health unit and signed up nearly all its patients to unreasonable contracts for phones and PlayStation consoles.
Faafoid said the Government expected to introduce changes through a Fair Trading Amendment Bill by early next year.
It follows the Government's proposed measures to protect consumers from loan shark lenders who charge high interest on small loans.
Faafoi announced earlier this month that the amount of interest loan sharks charge per day will be limited to 0.8 percent if the Government's legislation passes.
The Government is also proposing measures to regulate mobile traders, such as 'truck shops', who often sell goods on credit at inflated prices, particularly in low-income areas.