Consumer affairs minister Craig Foss believes consumer protection laws needed to be changed because existing rules were outdated, having been written before the internet evolved.
Key changes to consumer laws which came into force on Tuesday mean goods bought at auction, including those online, are covered by the Consumer Guarantees Act and online traders must disclose whether they're operating as a business.
The changes also mean retailers must spell out the benefits of extended warranties and introduce a five-day cooling off period for door-to-door and telemarketing sales.
Also, traders face tougher penalties. Individuals breaching either the Consumer Guarantees Act or the Fair Trading Act now face fines of up to $200,000 compared with $60,000 previously.
Businesses face fines of up to $600,000 compared with $200,000.
Consumer Affairs Minister Craig Foss said auctions were a good example of where the law had been lacking.
"So with auction sites, if someone clicked a 'buy now' on one of the auction sites they were covered under the Consumer Guarantees Act. If they participated in an online auction for the same goods, they actually weren't covered."
The minister said it was time for an overhaul of the laws.
"This is the biggest change in about 20 years and much of the underlying Acts didn't contemplate the internet, didn't consider credit cards, and so there were all sorts of gaps and grey areas in consumer laws, so we've modernised those and made them more robust."