The consumer watchdog is this morning lodging a complaint with the Commerce Commission over Air New Zealand's ongoing refusal to refund passengers from all its cancelled US flights.
The airline last month confirmed that people who had flights booked from or into the United States are entitled to a refund, in accordance with US law.
Consumer NZ chief executive Jon Duffy said the organisation has had a steady stream of complaints from people who have been given misleading information by the national carrier about their refund rights.
Under US regulations, passengers on flights to or from the United States, including transiting passengers, are entitled to refunds where flights are cancelled, regardless of the reason.
But he said Air New Zealand was still not refunding passengers who were to transit in the US.
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The US Department of Transportation had confirmed that this was against US regulations, he said.
"We believe that the legal position is clear here and that these people are entitled to a refund and Air New Zealand is coming out and saying that they are not.
"We believe that Air New Zealand is misleading New Zealanders about their rights, which could be a breach of the Fair Trading Act."
In addition, Duffy said Air New Zealand was encouraging people to get flight credits rather than refunds and is only acknowledging that a refund is available when asked.
"When you think of the volatility that we're likely to experience in the aviation industry in the coming months and potentially years, having your money locked up as a credit with the airline may not necessarily be the best thing for you. You might be better to get your money out."
Consumer NZ ultimately wants a law change to bring New Zealand in line with the US, where people are entitled to a refund regardless of whether or not it's the airline's fault.
"Air New Zealand flies through the US so if they run foul of US federal authorities, that might not be good for their business," he said.
"The fact that it's virtually impossible for a New Zealand consumer to make a complaint to a foreign jurisdiction's authority [is] why we've involved the Commerce Commission because we believe a New Zealand regulator is best place to help consumers here when they're being mislead about their rights."
One passenger who has been refused a refund told RNZ she expected better from the national airline.
The woman and her partner paid about $9000 for return flights to the UK via Los Angeles in June.
After it was cancelled she contacted Air New Zealand to try and get her money back, but was told this was not an option.
"I got an email from them to say that they'd be crediting the flight, even though I never accepted the credit - I wanted a refund," said the woman, who did not want her name used.
"'Cause I don't know when I'm going to travel again."
She was given hope last month when the airline said refunds would in fact be available for cancelled US flights, but she was told this did not apply in her case.
"I heard about the refunds and then I phoned them back and that's when they said, 'No, for your particular ticket transiting through, the US law does not apply'. They were quite categoric about it," she said.
The Consumer Affairs Minister, Kris Faafoi, has previously acknowledged that New Zealand's laws are out of step with other jurisdictions and that the government would look at amending the Civil Aviation Act.
Air New Zealand has been approached for comment.