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City Weekend

Consumer watchdog needs to be more dragon than paper tiger, say Hong Kong legislators

Legislators call for action as consumer watchdog remains toothless in face of unscrupulous business practices

PUBLISHED : Saturday, 31 March, 2018, 10:03am
UPDATED : Saturday, 31 March, 2018, 10:03am

City legislators want to give Hong Kong’s official consumer watchdog powers to prosecute unscrupulous traders operating in a city known as a “shoppers’ paradise”.

Tens of thousands of complaints are filed to the Consumer Council every year, covering everything from shampoo to the purchase of flats.

However, the body, which was set up more than 40 years ago, only operates in an advisory capacity and has no legal authority to actually prosecute anyone. The most it can do is mediate complaints, and name and shame businesses in the hope it will force people to change their ways.

“Consumer protection measures have improved in Hong Kong in recent years,” says Andrew Wan Siu-kin, who represents the New Territories West constituency. “Yet, we are still lagging behind compared with other countries.”

Meanwhile, Wong Kwok-tung, a lawyer who specialises in consumer protection, also believes that shoppers are being let down by the Customs and Excise Department, who he accused of being “passive” when it came to cracking down on retailers who contravene the Trade Descriptions Ordinance.

Fewer than half of the 420 complaints made to the department between 2015 and 2017 resulted in prosecution, and only 174 of those were successful.

The need for action in Hong Kong has been thrown into sharp relief in recent months with the closure of several travel agencies, which has left hundreds of consumers in limbo. The most high-profile of these closures involves Action Travel Services, where two directors were arrested on suspicion of defrauding at least 200 customers of some HK$3.6 million, and throwing their Easter travel plans into chaos.

From 2016 to 2017, the Consumer Council received 25,039 complaints – a decrease of seven per cent compared to the previous year’s figure of 26,793.

Beware risks of buying property overseas, Consumer Council warns Hongkongers

A paper tiger?

In Britain, consumer protection legislation is enforced by several regulatory bodies, such as the Office of Fair Trading, and the Association of British Travel Agents.

However, in Hong Kong, enforcement of the Trade Descriptions Ordinance is largely carried out by the Custom and Excise Department, which is also responsible for fighting against smuggling and illegal trade.

The Hong Kong Monetary Authority, which is responsible for maintaining monetary and banking stability, handles complaints relating to credit cards.

“The Consumer Council is the most high-profile and publicly known consumers’ protection organisation in Hong Kong,” says Wan. “But, it can only perform market research so far, which may exert pressure on bad sales practice, or act as a mediator in consumer disputes.”

Legislator Alice Mak Mei-kuen, who represents the same constituency as Wan, and has handled consumers’ complaints against fitness and beauty centres, believes consumers need to take the lead when it comes to fighting against unethical businesses.

“Consumers for sure can take legal actions themselves,” she says. “However, the legal costs are very high, and many individuals would not go the extra mile to sue the companies.”

Mak believes giving the council more power could cut down on the bad practices of retailers. However, as a heavy workload means it can take months for a council to look into just one complaint, she believes an overall review on the changes that are needed is essential.

The council declined an interview request by the Post, and did not respond to questions on what sort of support it would like to see from the government.

‘Wait for complains’

For Wong, the blame when consumers lose money due to unethical business practises lies squarely on the shoulders of the Customs and Excise Department.

The lawyer points to legislation that is already there to protect people, and says that enforcement, not more regulation is the answer.

I think the protection of Trade Description Ordinance is sufficient. It’s just a matter of enforcement
Wong Kwok-tung, lawyer

“I think the protection of Trade Description Ordinance is sufficient,” Wong says. “It’s just a matter of enforcement.”

The ordinance, which came into effect in 2013, prohibits unfair trade practices such as, false trade description for services, aggressive commercial practice, and wrongly accepting payment.

Between 2015 to 2017 Customs has handled 420 cases which were suspected of violating the Trade Descriptions Ordinance. Of those, 208 were prosecuted, 174 were ruled in favour of the consumers, while the remaining 34 prosecutions were not successful.

According to a department spokesman, a further 163 cases were not prosecuted as they were“without sufficient evidence” after investigation or “as per legal advice”. The remaining 49 cases are still being investigated.

Unlike the Consumer Council, Wong says Customs has the authority to take legal action but is “quite conservative and hesitant when it comes to prosecution”. The low prosecution rate, he says, could not possibly serve as a warning to unscrupulous traders.

“The department only act on complaint, while, according to the law, it is free to initiate investigations,” he says. “However, they only sit there and wait for complains.”

A Customs spokesman said it does not maintain statistics on the number of cases proactively developed by the department.

“Customs attaches great importance to protecting consumers rights and will take appropriate and prompt enforcement,” the spokesman added.

A cooling-off period

As well as new powers to prosecute, Wan wants to see the government add a cooling-off period into the Trade Descriptions Ordinance.

The move would allow consumers to seek refunds for goods and services at least seven days after the purchase, says the legislator.

A cooling-off period was first proposed as part of the original ordinance in 2013, but the proposal was later dropped amid strong opposition from business.

Wan says he understands that the proposal may include some costs for the business sector, but believes it will also improve consumers’ confidence in buying goods and services; something that will ultimately benefit traders.

“The government and the business should really consider the issue from this angle, and see for themselves the benefits bought by cooling-off periods,” Wan says.

For Wan, the suggested period is essential when consumers prepay for services, such as at fitness centres and beauty parlours. A belief supported by the Consumer Council, who called for such two years ago after issues surrounding the now-defunct chain California Fitness.

The business was named and shamed by the council for employing intimidation and misleading sales techniques to coerce customers into purchasing memberships and high-priced private lessons.

In 2016, the watchdog received 1,667 complains relating to different gyms and recreation clubs.

“I once came across a case where the customer had to pay a 10-year fee when he had the contract as it was a 10-year contract,” Wan says. “The fee is of course discounted, but nobody can guarantee what would happen after 10 years.

“Cooling-off periods should be longer when the contract terms last, say, more than three or five years.”

Wan believes that if the cooling-off period has not been introduced in the near future, the city will see a surge in consumer complaints.

“Bad businessmen will still use aggressive and other unethical selling practices,” he says.


CONSUMER COUNCIL COMPLAINT PROCESS

1. Negotiation

When consumers come across an unfair deal, such as a delay in delivery, or they find that goods and services do not match their descriptions, they should approach and negotiate with the supplier directly first. If that fails, consumers can then lodge their complaint with the Consumer Council by phone, mail, by filling in an online complaint form at the council’s website, or going to a consumer advice centre in person.

2. Notification

If a case is found to be a consumer dispute within the council’s purview, and the supporting documents are sufficient, a case officer will then take over. Consumers will be told within seven working days whether the case will proceed further. Consumers, while filing their complaints, are required to provide their details, and those of the trader involved, the transaction, and their desired outcome for the complaint.

3. Mediation

After receiving a complaint, the case officer will negotiate on the consumers’ behalf with the trader. The duration of the mediation depends on whether the trader is cooperative. If mediation fails, the council might advise the consumers to take legal action. The centre could provide free legal advice before mediation. Those who need financial support and legal help can apply for the Consumer Legal Action Fund, a trust fund set up by the council. There is no means test, and the trustee will decide whether to grant financial help based on the applicants’ background.

4. Litigation

Both the consumer and trader face a lengthy process and high legal costs if they want to resolve the dispute in court. The Small Claims Tribunal can demand traders compensate a consumer as much as HK$50,000 (US$6,370), depending on the nature of the case. The average waiting time for the first hearing, according to 2015 statistics, is one month. Those seeking greater compensation will need to go to the District or higher courts.

Source: Hong Kong Consumer Council


WHERE DID THE WEDDING CAR GO?

Complainant: Miss Fong

Case background: The bride-to-be was convinced by a salesman to sign a HK$3,688 (US$470) transport package on her wedding day, including a pink London-style taxi as her wedding car. The salesman promised the driver would come to her on time on that day. Fong paid HK$1,800 (US$229) in advance for a deposit. On her wedding day, the driver called in the morning, saying the taxi had a flat tyre. The rental company later sent Fong an ordinary private car for her wedding, as opposed to the promised “high-end car model”. Fong reluctantly took the private car, which was 15 minutes later than scheduled. She then realised that one of the car’s windows could not be opened. Her photo shoot in the car had to be cancelled due to the reflection from the window.

Follow-up actions: After the wedding day, the rental company demanded Fong settle the remaining HK$1,888, which she declined to do. Instead, she asked the company for a refund of her deposit plus another HK$1,800 on top for breaching the contract. But the company rejected her requests. Fong later sought help from the Consumer Council. The company’s representative declined a face-to-face interview with the council. The council then advised Fong to complain to Customs. It is unknown whether Fong received any compensation.

A ‘THREE-STAR’ HOTEL IN AN ALLEY

Complainant: Miss Law

Case background: Due to her tight schedule, Law booked a hotel for her holiday in Taiwan through an online booking site a week before she arrived. The hotel was rated as a three-star on the booking site. When she landed on the island, Law had trouble locating the hotel. She later realised it was located in an alley without any signs. She also needed to walk up the narrow and dirty staircases at the hotel while carrying her luggage to her room herself. She later left a negative review on the booking site with a picture of the hotel environment. The comment was soon deleted. She also asked for a full refund from the booking site, saying its information of the hotel she stayed in was inaccurate and misleading

Follow-up actions: Law complained to the Taiwan Tourism Bureau and notified the Consumer Council about her incident. She eventually got a full refund from the booking site.

Source: Hong Kong Consumer Council