A Commerce Commission spokeswoman confirmed this week the watchdog had now opened a formal investigation into Fong and "possible bid rigging under the Commerce Act".
It would not comment further while the matter was under investigation.
Fong did not respond to requests for comment, but has previously denied acting unethically or taking advantage of vulnerable homeowners.
Consumer New Zealand chief Sue Chetwin said the commission's inquiry would help determine if any misleading or deceptive behaviour had occurred that breached consumer protection laws.
She was surprised Fong had promoted his tactics so openly "and thought that was perfectly acceptable and wasn't a breach of not only ethics but any legal issues".
"The sooner it's nipped in the bud the better."
The commission's investigation follows a complaint by Labour's consumer affairs spokesman Michael Wood.
Wood welcomed the commission's probe into Fong's practices.
"Ron Hoy Fong and other speculators are locking first home buyers out of the Auckland market. This is a man who has told young Aucklanders to 'toughen up' and join the army instead of complaining about the housing crisis."
Wood criticised the Government's response since revelations of Fong's "questionable tactics" emerged.
A broader inquiry was needed into speculation and its effect on house prices and affordability.
"Labour wants a fresh approach and I have written to the Commerce Select Committee asking them to conduct such an inquiry."
He hoped National would back an investigation "on behalf of New Zealand home owners and buyers who deserve to be treated fairly.
"Nine years of the Government's 'hands off' approach to the Auckland housing market has led to this property speculator anarchy. "
Commerce and Consumer Affairs Minister Jacqui Dean said she was always concerned when consumers were potentially being deceived. "However we should not jump to conclusions on this or any consumer matter. These issues are too important which is why they are referred to the Commerce Commission."
APIA confirmed it had been contacted by the commission in connection with Fong's coaching video and was fully cooperating with the inquiry.
"APIA definitely does not condone unethical business practices and bid rigging. To our knowledge there has not been a member who is involved in bid rigging or other unethical practices.
"Should any of our members bring our association into disrepute, we have very specific mechanisms under our constitution to deal with refusal and expulsion of their membership."
The non-profit organisation was embarrassed by its error in distributing the video and taking steps to ensure such events were not repeated.
