LCQ17: Regulation of sale of coupons by shops
Following is a question by the Hon Christopher Chung and a written reply by the Secretary for Commerce and Economic Development, Mr Gregory So, in the Legislative Council today (December 2):
I have received complaints from members of the public that while the coupons sold in the past by some retail shops (such as cake shops, department stores and supermarkets) were indefinitely valid, the coupons sold recently by those shops have expiry dates specified on them and holders of such coupons can use them only before their expiry dates in exchange for products of the specified values or in the specified quantities. Coupon holders will suffer financial losses if they are not aware of the expiry dates specified on the coupons or forget to use the coupons before the expiry of their validity periods. The complainants opine that as the purchase of coupons by consumers with cash is tantamount to a mode of consumption by pre-payment, the setting of expiry dates by the shops concerned for such coupons is unreasonable and has prejudiced the rights of consumers. In this connection, will the Government inform this Council:
(1) whether it knows the total number of disputes and complaints involving the use of coupons received by the Consumer Council and relevant government departments in the past five years, and the details of such complaints;
(2) whether it has studied if the practice of shops setting expiry dates for coupons is reasonable and has prejudiced the rights of consumers;
(3) given that the terms and conditions for the use of coupons generally contain a clause to the effect that "in case of any disputes, the decision of the company shall be final", whether the authorities have assessed if such a clause is an exemption clause which has legal effect; and
(4) whether the authorities will consider regulating the sale of coupons by retail shops to protect the rights of consumers; if they will not, of the justifications for that?
My reply to the four parts of the question is as follows:
(1) Since the amendments to the Trade Descriptions Ordinance (Cap. 362) prohibiting unfair trade practices came into effect on July 19, 2013 and up to end October 2015, the Customs and Excise Department (C&ED) received 101 reports in relation to cash coupons. Details are set out in Annex 1. In terms of industries, the catering, food and beverage industry accounted for the largest share of these reports, at about 40 per cent. On the other hand, in about 70 per cent of the cases, there was insufficient evidence of an offence.
Separately, in the past five years (from 2011 to end October 2015), the Consumer Council received 1 097 complaints in relation to cash coupons. Details are set out in Annex 2. In terms of industries, the catering, food and beverage industry accounted for the largest share or about a quarter of these complaints. On the other hand, about 80 per cent of the cases were resolved following the Consumer Council's conciliation.
(2) Consumers purchasing cash coupons issued by traders are making prepayment. We understand that traders usually offer price advantages or discounts to such consumers. As in the case of other consumption transactions, consumers in deciding whether to purchase cash coupons concerned should consider, apart from the advantages offered by traders, other contractual terms of the purchase (such as the date of expiry designated by traders).
The Government and the Consumer Council are committed to encouraging "smart consumption" through publicity and public education. Before making a transaction, consumers should carefully consider their own needs as well as the terms and conditions concerned. Consumers with questions should ask for more details from traders or refuse the transaction. Consumers feeling aggrieved after the transaction may seek help from relevant agencies.
The Consumer Council issued a Report on Unfair Terms in Standard Form Consumer Contract in April 2012, which encouraged and assisted traders to avoid using unfair contract terms. Businesses formulating standard form consumer contracts may make reference to the recommendations of the Report.
(3) Under existing legislation, the Control of Exemption Clauses Ordinance (Cap. 71) limits the extent to which civil liability can be avoided by means of contract terms. It stipulates that if a consumer enters into a contract with a trader, the trader cannot by reference to any contract term, when himself in breach of contract, exclude or restrict any liability of his in respect of the breach; or claim to be entitled to render a contractual performance substantially different from that which was reasonably expected of him, or claim to be entitled, in respect of the whole or any part of his contractual obligation, to render no performance at all, except in so far as the contract term satisfies the requirement of reasonableness.
The Unconscionable Contracts Ordinance (Cap. 458) provides that if, with respect to a contract for the sale of goods or supply of services in which one of the parties deals as consumer, the court finds the contract or any part of the contract to have been unconscionable in the circumstances relating to the contract at the time it was made, the court may grant relief such as refusing to enforce the contract or enforcing the remainder of the contract without the unconscionable part etc.
(4) If consumers consider the terms in individual consumer contracts to be unconscionable or to be affecting their consumer rights, and the dispute cannot be resolved by negotiation with the trader, they may consider lodging complaints with the Consumer Council, pursuing mediation or obtaining legal advice for deciding whether to take legal action, which are existing ways for dealing with such matters.
In addition, the Trade Descriptions Ordinance criminalises some common unfair trade practices deployed by traders against consumers. If consumers suspect traders of infringing the Ordinance, they may file a report with C&ED. C&ED will take appropriate follow-up action.