LCQ17: Complaints on unfair trade practices in sale of products or pre-paid services
Following is a written reply by the Secretary for Commerce and Economic Development, Mr Gregory So, to a question by the Hon Pan Pey-chyou in the Legislative Council today (June 29):
In Hong Kong, there are many consumer transactions adopting a pre-payment mode, which require consumers to sign contracts of relatively longer duration and pre-pay large amounts of money. Recently, I have received a complaint in which the complainant's family member who had been suffering from mental illness for 20 years was allegedly induced by the staff of a fitness centre using improper selling tactics to sign a contract for joining fitness courses and buying membership packages, and to pre-pay over $60,000 in total. They subsequently requested for a refund and produced a medical certificate on the mental illness of the family member concerned, but their request was rejected by the fitness centre on the ground of "respecting the spirit of contract". In this connection, will the Government inform this Council:
(a) whether it knows the number of complaints involving unfair trade practices in the sale of products or pre-paid services to persons with disabilities (PWDs) received or handled by the Consumer Council (CC) and the relevant law enforcement departments in the past three years; the reasons for and the amounts of money involved in such complaints as well as the outcome;
(b) whether it knows the number of cases involving unfair trade practices in the sale of products or pre-paid services in which the victims had resorted to civil litigation to claim compensation in the past three years; the amounts of money involved; the average time required by the courts to handle such cases; and whether the claimants were successful in their claims;
(c) what government departments at present offer assistance and advisory services to PWDs aggrieved by the unfair trade practices used in the sale of products or pre-paid services; whether the authorities have any plan to amend the legislation to allow PWDs who can prove their disabilities to enjoy longer "cooling-off periods" and claim periods for consumer transactions than those applicable to able-bodied persons; if they have, of the details; if not, the reasons for that; and
(d) whether the authorities have any plan to enlarge CC's scope of investigation power and improve its redress mechanism to enable it to handle in a timely manner in the future disputes between consumers and business operators arising from the pre-payment mode of consumer transactions, and to empower CC to suspend the installment payments by bank credit cards for the pre-payments involved in the complaint cases, so that the complainants will not have to claim for compensation through complicated and prolonged litigation proceedings; if they have, of the details; if not, the reasons for that?
(a) The Consumer Council (the Council) and the Customs and Excise Department (the Customs) do not enquire about the physical or mental condition of complainants in their handling of complaints in relation to unfair trade practices in the sale of products or pre-paid services. Therefore, neither the Council nor the Customs have statistics on complaint cases lodged by persons with disabilities.
(b) The Judiciary does not keep statistics on cases involving suspected unfair trade practices in the sale of products or pre-paid services. Therefore, we are not able to provide such information.
(c) At present, a dedicated division in the Council is tasked to provide advice on consumer issues, and conduct mediation and render assistance in consumer disputes. Besides, the public may refer to the Customs cases involving suspected application of false trade descriptions to goods in the course of trade which may be in breach of the Trade Descriptions Ordinance. The Customs would follow up on these cases in accordance with the Ordinance.
To tackle unfair trade practices more effectively, we consulted the public on legislative proposals to enhance protection for consumers against unfair trade practices last year, and published a consultation report in January this year.
Regarding the imposition of a mandatory cooling-off period on consumer contracts, after taking into account the views received during the consultation period, we propose in the consultation report that a mandatory cooling-off period of seven days be imposed on contracts involving goods and/or services with a duration of not less than six months.
A cooling-off period allows consumers to consult third parties where necessary, and reconsider their decisions free from any undue influence that may have been exerted during the course of the transaction. Moreover, the availability of a cooling-off period can also add to deter unscrupulous acts like aggressive practices in the first place. If a longer cooling-off period is to be imposed on contracts entered into by persons with disabilities, they have to disclose their disabilities to traders. We consider that such arrangements undesirable. A more prudent approach is to set up a cooling-off period of an appropriate length to protect all consumers. We consider that a cooling-off period of seven days can provide appropriate protection for consumers (irrespective of their mental or physical conditions).
(d) One of the legislative proposals to enhance protection for consumers against unfair trade practices is to introduce a compliance-based mechanism. Apart from instituting criminal prosecution, the enforcement agency can use the civil avenues under the mechanism to tackle false trade descriptions and other unfair trade practices.
Specifically, the enforcement agency will look into the complaints, and if justified, it may seek undertakings from businesses to stop or refrain from continuing an offending act as appropriate. The enforcement agency will be empowered to publish the undertakings, and to apply to the court for an injunction if a business has breached any undertaking it has given, or in other circumstances as the enforcement agency sees fit. The court may make an order directing the business to comply with the undertaking, or to refrain from engaging in conduct that constitutes or might constitute an unfair trade offence.
The Council will continue to play the existing mediating role between aggrieved consumers and businesses under the proposed regime. We expect that the effectiveness of the Council's mediation work will be enhanced with the back up of the compliance-based mechanism and possible criminal prosecution under the charge of the enforcement agency.
Besides, according to our understanding, where some consumers use credit-card installment payments to finance pre-paid transactions, they have in effect entered into a loan agreement with the credit-card issuing bank for credit to finance the transactions. The loan is to be repaid by credit card installment payments in accordance with the terms of the loan agreement. The credit-card issuing bank is not a party to the transaction between the consumer and supplier of the goods or services. Therefore, we do not consider it appropriate to empower the Council (or any executive authorities) to take up an adjudicating role and direct a bank to stop receiving installments when disputes between the consumers and the suppliers of goods or services arise.
Wednesday, June 29, 2011