The costs of settling a case under the trade law

Can, and should, a trader settle a criminal case under the Trade Descriptions Ordinance?

The ordinance was amended on July 19 last year to better protect consumers from unfair trade practices. Among the changes, a new civil compliance-based mechanism was introduced.

Under this mechanism, traders suspected of committing an offence under the ordinance may offer an undertaking to the enforcement authorities - customs and the Communications Authority - in lieu of prosecution.

This mechanism aims to resolve cases more expeditiously by encouraging the traders to voluntarily correct the conduct complained of and commit themselves not to repeat it.

While investigating a suspected offence, enforcement authorities may explain to traders the availability of this mechanism, but they cannot compel them to offer an undertaking. Likewise, the authorities are not bound to accept an undertaking offered as they must first have the secretary for justice's approval before they can accept it.

Undertakings are more likely to be accepted in cases where the breach is of a less serious nature and no significant harm was done. But if the trader is a repeat offender or if the conduct was outrageous or caused real loss to many consumers, the authorities are more likely to press on with prosecution.

Since July 19, 2013, there have been four reported cases where customs accepted such an undertaking. The first related to an education institution that falsely claimed on its website that graduates of its diploma course could directly enter the final year of local universities' degree programmes.