Speeches and Presentations



LCQ9: Enforcement of the Trade Descriptions (Unfair Trade Practices) (Amendment) Ordinance 2012

Following is a written reply by the Secretary for Commerce and Economic Development, Mr Gregory So, to a question by the Hon Ronny Tong in the Legislative Council today (January 22):

Question:

Some members of the public consider that although the Trade Descriptions (Unfair Trade Practices) (Amendment) Ordinance 2012 (Ordinance No. 25 of 2012) (the Amendment Ordinance) has been in full force since July 19 last year, advertisements alleged to be contravening that Ordinance are still very common at present. For instance, while the game pieces for food offers provided by a fast food chain in its lucky draw campaign were claimed to be applicable to "all extra value meals", such game pieces are in fact not applicable to three set meals of lower prices. In this connection, will the Government inform this Council:

(1) whether it knows the numbers of relevant complaints received so far by the Consumer Council and the Customs and Excise Department (C&ED) respectively, with a breakdown by type of complaints and progress of follow-up actions;

(2) of the respective numbers of cases of alleged contravention of the Amendment Ordinance so far in respect of which C&ED had (i) instituted prosecutions, and (ii) accepted the undertakings given by the traders concerned that they would cease the unfair commercial practices and decided not to institute prosecutions, with a breakdown by the commercial practice involved;

(3) whether it has studied if advertisements alleged to be contravening the Amendment Ordinance are prevalent in the market at present; if the study outcome is in the affirmative, of the reasons for that, and whether the reasons include (i) inadequate deterrence because of the small number of prosecutions instituted by C&ED, and (ii) perfunctory law enforcement by the authorities; whether it has plans to strengthen its efforts to combat such kind of advertisements in order to protect consumers' rights and interests; if it has, of the details; if not, the reasons for that; and

(4) whether it has considered further amending the Trade Descriptions Ordinance (Cap. 362), with a view to protecting consumers' rights and interests more effectively; if it has, of the details and the timetable; if not, the reasons for that?

Reply:

President,

The Trade Descriptions (Unfair Trade Practices) (Amendment) Ordinance 2012 (the Amendment Ordinance) came into full implementation on July 19, 2013. The scope of the Trade Descriptions Ordinance (Cap. 362) (the Ordinance) as amended by the Amendment Ordinance has been extended to cover both goods and services and to prohibit some commonly seen unfair trade practices, including false trade descriptions, misleading omissions, aggressive commercial practices, bait-and-switch, bait advertising and wrongly accepting payment. Convicted traders may be liable to a maximum penalty of imprisonment for five years and a fine of $500,000. The Ordinance has also introduced a civil compliance-based mechanism to encourage compliance by traders and to stop identified non-compliant practices in a timely manner.

As the enforcement agencies, the Customs and Excise Department (C&ED) and the Communications Authority (CA) have been actively handling relevant enquiries and complaints. Enforcement actions are taken accordingly, on the basis of the facts and evidence of individual cases. The Consumer Council (CC) assists in resolving disputes by conciliating between complainants and traders concerned. The enforcement agencies and the CC have established a case referral mechanism, ensuring that enquiries and complaints received are handled effectively and efficiently.

The Ordinance covers a wide range of goods and services. With a view to maximising the effectiveness of enforcement actions, the enforcement agencies adopt a risk-based approach and the principle of effective resource deployment, under which priority is accorded to handling cases that may have a significant impact on consumers, the trade or the community. The enforcement agencies also consider all the relevant facts and evidence, and take into account the extent of co-operation that the traders have given in the investigation, whether the traders admit having engaged in the conduct of concern, the compliance record of the traders, etc., in deciding the appropriate enforcement actions, including accepting written undertakings of the traders, applying for injunctions from the court and instituting criminal proceedings.

My reply to the various parts of the question is as follows:

(1) and (2) From July 19 to December 31, 2013, C&ED, the Office of CA (OFCA) and CC received 2 051, 188 and 716 complaints respectively. A breakdown of the complaints according to the offences involved is set out below:

OffenceC&EDOFCA (Note)CC
----------------------------------------
False Trade Descriptions1 30353364
Misleading Omissions34610984
Aggressive Commercial Practices634117
Bait Advertising85146
Bait-and-switch15119
Wrongly Accepting Payment1995986
Others (e.g. cases outside the
scope of the Ordinance)
4047-

Note: As some complaints received by OFCA involve more than one accusation of the suspected breach of the Ordinance, the total number of cases according to the offences involved is greater than the total number of complaints received.

C&ED has, upon preliminary examination of 810 complaints, found no contravention of the Ordinance and closed the cases. For another 359 complaints, although evidence of breaching the Ordinance was not found, C&ED has educated and advised the traders concerned, reminding them of the relevant provisions of the Ordinance and urging them to comply with the statutory requirements. Besides, C&ED has launched detailed investigation into another 622 complaints. The remaining complaints are either under initial examination or have been referred to other relevant departments for follow-up actions.

Concerning complaints of which detailed investigation has been completed, C&ED has issued warning or advisory letters to the owner and sales staff concerned in 61 cases, urging them to comply with the statutory requirements. Meanwhile, C&ED has instituted prosecution in six cases among which three involve false trade descriptions of goods or services and three involve misleading omissions. With the written consent of the Secretary for Justice, C&ED has accepted the traders' written undertakings of ceasing the trade conduct concerned in two cases and did not institute prosecution.

Among the complaints received, OFCA has, upon preliminary examination of 62 complaints, found no contravention of the Ordinance and closed the cases. For another three complaints, although evidence of breaching the Ordinance was not found, OFCA has advised the traders concerned, urging them to comply with the statutory requirements. Besides, OFCA has launched investigation into another 123 complaints. CA has not initiated prosecution or accepted undertakings from traders yet.

Regarding CC, 552 complaints have been considered pursuable, among which 199 have been closed (186 have been settled upon CC's conciliation). Another 77 complaints have been referred to C&ED or other relevant organisations for follow-up actions. The remaining 276 complaints are still in the process of conciliation.

(3) There are numerous types of consumer transactions involving different goods and services, and trade and promotion practices are changing. As stringent provisions and elements have been formulated for the offences concerning unfair trade practices under the Ordinance, the enforcement agencies could not readily determine whether a trader has contravened the Ordinance simply based on one aspect (such as an advertisement) of a trade practice, or it would be unfair to both the trader and consumers. As mentioned above, the enforcement agencies have been actively enforcing the Ordinance. They consider all the relevant facts and evidence, and adopt a risk-based approach and the principle of effective resource deployment, in deciding the appropriate enforcement actions.

Besides enforcement, the enforcement agencies have adopted a strategy with equal emphasis on prevention and education. Publicity and education activities on the Ordinance have been strengthened for traders. Briefings have been organised for different sectors, and proactive visits have been conducted for different traders, in a bid to help them understand and comply with the requirements of the Ordinance. Since the passage of the Amendment Ordinance by the Legislative Council, the enforcement agencies have held about 80 seminars and 400 outreach briefings. Moreover, the enforcement agencies in co-ordination with the CC have embarked on extensive publicity and education work through various channels, aiming to enhance the knowledge of traders and consumers about their rights and obligations under the Ordinance as well as the awareness of the concept of "Smart Shopping". Many traders have adjusted their trade practices for compliance with the requirements of the Ordinance. Consumers have an increased understanding of their rights and obligations.

(4) The new criminal offences under the Ordinance tackle unfair trade practices at source and strengthen consumer protection. As the amended Ordinance has come into operation for only about half a year, we will keep in view the effectiveness of the Ordinance in combating unfair trade practices deployed in consumer transactions.

Wednesday, January 22, 2014