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Consumer protection in Hong Kong

It’s high time we warmed up to a cooling-off period for contracts

Experience in the banking, insurance and telecommunications sectors shows that this serves to enhance consumer confidence rather than undermining the business environment.

PUBLISHED : Monday, 23 April, 2018, 4:40am
UPDATED : Monday, 23 April, 2018, 4:40am

Much has been said about the need for a cooling-off period to protect consumers from the high pressure sales tactics adopted by fitness and beauty centres. But the authorities were of the view that such safeguards may adversely affect the business environment.

 Meanwhile, unscrupulous companies taking advantage of vulnerable consumers continue to make the headlines from time to time. We may all have paid for goods and services that we later regret. 

 But that is different from signing up for services under duress. Fitness and beauty centres are notorious for such sales practices, partly because of the fierce competition in those industries.

Plan for gyms and beauty salons to offer contract cooling-off period

 It is not unusual for customers to be lured into signing up for exorbitant prepaid packages or service contracts that last for unreasonably long periods.

 The Consumer Council receives more than 200 complaints about such sales tactics every year for fitness clubs alone. The amount money involved has reached HK$14 million a year, or about HK$36,000 on average per case. In 2016, California Fitness was named and shamed by the watchdog for aggressive and misleading sales practices.

The announcement by the government to mandate a cooling-off period by law is therefore a welcome move. Although it falls short of covering all sectors, the proposal would cover high-risks businesses such as health clubs and beauty centres. Long overdue as it is, the undertaking is a step in the right direction. 

Credit also goes to the Consumer Council for fleshing out the details for public discussion. Under its proposals, a seven-day cooling-off period will be applied to five types of contracts, including fitness, beauty and timeshare firms.

Hong Kong businesses dismiss cooling-off periods

 Deals worth more than HK$500 will be covered. The period applies to beauty and fitness contracts that run at least six months or involve prepayment, while that for timeshares is more than a year. The law is to be policed by a new public body.

Cooling-off periods are already provided for in the banking, insurance and telecommunications sectors. Experience shows that this serves to enhance consumer confidence rather than undermining the business environment. The proposed safeguard is in the mutual interest of traders and consumers. The earlier the law is enacted, the better.