Consumer protection in Hong Kong

Buyers rejoice, there’s finally a plan for Hong Kong’s gyms and beauty salons to offer a cooling-off period for service contracts

The government says it will submit bill to Legco before July 2020 to regulate businesses known for strong-arming consumers into making purchases 

PUBLISHED : Wednesday, 18 April, 2018, 9:14pm
UPDATED : Wednesday, 18 April, 2018, 11:33pm

Gyms and beauty salons in Hong Kong will likely have to offer a cooling-off period to customers purchasing service contracts, the government said on Wednesday, as it announced plans to push for a new law in the next two years. 

Secretary for Commerce and Economic Development Edward Yau Tang-wah on Wednesday said the government would submit a bill for Legislative Council approval before the council’s term ends in July 2020. 

His proposal – which could require companies to offer full refunds if customers change their mind within a specific period – was cheered by lawmakers and rights groups who have long lobbied for better consumer protection, but beauty industry representatives were worried about increased costs.

Yau promised that a mix of views, including those from the business sector, would be taken into account when drafting the bill.

The city’s Consumer Council has for years called for a mandatory cooling-off period, as it warned customers to beware of salons and fitness centres that flattered or coerced them into spending thousands on expensive treatments and packages.

Beware beauty and fitness centre sales tactics, Hong Kong consumer watchdog warns

Last year, 5 per cent or 1,148 complaints it received were about beauty parlours. It also received 554 complaints about recreation or health clubs last year.

In 2016, the now-defunct chain California Fitness was named and shamed by the council for intimidating and misleading consumers into buying memberships and expensive private lessons. In the same year, a woman also accused a beauty salon of forcing her to sign up for an HK$8,000 treatment upgrade while she lay naked on a bed.

Yau stressed the plan was not to have a blanket law but one targeting businesses that were common sources of grievances, such as beauty services providers and health clubs.

“It will focus on services that were targets of a lot of complaints, involving transactions of relatively large values, or where operators had used coercive sale methods before.

Hong Kong must introduce a cooling-off period for service contracts to protect consumers

“With a cooling-off period, consumers would have the clear impression that they can spend a specific period of time to think about the service contract they signed,” Yau said.

A cooling-off period was proposed as part of amendments to the Trade Descriptions Ordinance in 2012, but it was dropped amid strong opposition from the business sector. 

On Wednesday, Yau said: “I hope that when our principles are clearly specified, the business sector’s unnecessary worries can be avoided.”

Nelson Ip Sai-hung, founding chairman of the Federation of Beauty Industry, bemoaned the proposed law.

“It was just a minority of operators tarnishing our image, and now the whole industry has to suffer,” he said.

Joseph Ho Shiu-chung, former president of the Cosmetic and Perfumery Association of Hong Kong, worried about higher costs to companies if customers were allowed to ask for refunds after receiving gifts or services during the cooling-off period.

Mentally disabled Hong Kong man ‘strong-armed’ into signing up for gym classes that left him HK$700,000 out of pocket

“Disputes between frontline staff and customers could increase,” he warned.

Ho said under the Trade Descriptions Ordinance, it was already illegal for sales staff to adopt coercive sales methods, such as pestering their customers, and law enforcement agencies could step in if needed.

But Federation of Trade Unions lawmaker Alice Mak Mei-kuen argued business operators should welcome the new law as it would help to rebuild customer confidence, which had been dented by horror stories of aggressive sales practices.

“The law should not be a big problem for those already doing business lawfully,” Mak said.

Democratic Party lawmaker Andrew Wan Siu-kin said legislation should cover prepaid telecommunications services as well. 

On Thursday, the Consumer Council will make public its policy paper on the mandatory cooling-off period. It submitted the paper to the Commerce and Economic Development Bureau on Wednesday.