Year-end Review for 1999

Consumer dissatisfaction on the purchase of goods and services remained high in a year of economic slowdown.

This was reflected in the number of complaints the Consumer Council received for the year 1999. There was a total of 16,470 complaints.

A record number of 22,750 was lodged in 1998 when the economic downturn began to set in. But had it not been for the closure of 2 major retail chains - KPS Video and Maria Bakery - which brought in a combined total of 7,873 complaints, the number would have been only 14,877.

There was no closure of retail chains of similar magnitude for 1999. Nonetheless consumer complaints remained high at 16,470.

In many ways, the nature and pattern of consumer complaints mirrored the changes in the marketplace and community at large.

Prominent among the classes of goods and services which recorded significant increase in consumer complaints in 1999 was telecommunications - 1,820 up 80% over the previous year. This is due largely to the intense competition and a proliferation of sales claims that failed to live up to the expectations of consumers.

Another sector of rising consumer complaints concerned further education services - 621 up 76% over 1998 due largely to the closure of tutorial centres offering computer and commercial studies. The slowdown in economy had apparently induced more people to seek further education.

The year saw a steady rise in complaints (393 up 15%) against Chinese medicine and dried seafood shops engaged in malpractices. The Council named 5 such shops on Nathan Road in the Mongkok and Yaumatei districts to alert the public. The police should be commended for its recent action on one of the shops named and since then, the incidence of malpractices has been on the wane.

There was also a notable increase of complaints (1,381 up 42%) against travel agents. This was caused by the large number of cancellations just before the last Chinese New Year period. Because of these complaints, the Travel Industry Council raised the compensation from 3% to 15% or ($1,000) of tour price if tours were cancelled within 7 days of the scheduled departure date.

On the other hand, there were notable decreases in complaints in such sectors as properties (745 down 43%) and automobiles (152 down 44%). Both are costly investments hard hit by a sagging economy.

There was a welcoming decrease in complaints against modelling agencies (114 down 61%) - due possibly again to vigilant police action and heightened consumer awareness.

Another decrease of interest was in the services of migration consultants (6 down 79%) and overseas removal (6 down 63%). Despite the state of economy, more people are obviously opting to stay in Hong Kong.

In addition to the Council's mediation efforts in the resolution of consumer complaints, the Consumer Legal Action Fund (CLAF) had also a fruitful year in obtaining redress for aggrieved consumers.

The CLAF set up in November 1994 has since considered a total of 34 groups of cases that ranged in a group from a single individual to thousands of affected consumers.

Assistance for proceeding with legal litigation was granted to 14 groups of cases in which compensation was successfully obtained for 6 groups of consumers.

Notably, one of the cases involved a claim for damages arising from a ferry collision in 1996. Through the assistance of the CLAF, judgement on liability was obtained on behalf of the two assisted consumers in June 1999, and settlement reached on the amounts of damages in December. With the assistance of the CLAF, the two consumers obtained compensation of $430,000 and $137, 500 respectively.

Another case involved the purchase of uncompleted units in a New Territories development in 1995. It later transpired that the developer concerned was neither the registered owner of the site nor had been authorised by the registered owner to develop the site. No unit was ever built in the site. 34 groups of purchasers approached the CLAF and were granted assistance.

With the assistance of the CLAF, a settlement agreement was signed by the developer in December 1996 under which it agreed to repay a sum of about $1.7 million by 12 instalments to the assisted consumers. However, the developer defaulted in the third instalment payment. The total amount repaid prior to default is about $256,000.

Further assistance was provided in which the CLAF (1) assisted the consumers to issue a statutory demand against the developer; (2) proceeded to file petition for winding up against the developer. In October 1997, a winding up order was subsequently obtained from the court.

The Council also referred the case to the police to reactivate criminal investigations. Charges of obtaining property by deception were also laid against the two directors of the developer. The CLAF requested the prosecution to apply for compensation orders for the victim consumers in the criminal proceedings.

In March 1999, one of the developer's directors was convicted and sentenced to three years' imprisonment. Compensation orders for the total sum of $149,157 were also granted to all victims by the court. Among the victims were 4 assisted consumers who were awarded compensation orders in the sum of $76,866.50.

The CLAF is presently engaging a firm of solicitors for pursuit of claims by other assisted consumers (who were not included in the Police case) against the director of the developer in person.

In the year ahead, the Consumer Council will shortly be releasing the conclusions and recommendations of two major reports - one on the petroleum products (motor gasoline, diesel and LPG) market and another on the issues of misleading and deceptive advertising and related trade practices as well as powers for the Council to sue in its own name on behalf of consumers.

Much work will clearly need to be done to bring these recommendations to their fruition in future.

The Council will continue to be actively engaged in the support of important Bills and legislative proposals introduced in the past year and in particular, the Trade Marks Bill and Civil Liability for Unsafe Products.

The Council fully supports these legislations which will bring Hong Kong on par with such international cities as London and New York in inducing better market discipline and consumer protection which will, ultimately, `strengthen the competitiveness of Hong Kong. They do not therefore impose unnecessary barriers to trade to the business community.

The introduction of Civil Liability for Unsafe Products legislation, in particular, will bring Hong Kong in line with the emerging international trend towards enacting strict product liability legislation to supplement the traditional contract and negligence law. Hong Kong is lagging behind many jurisdictions, including the EC countries, the United States, Australia and Japan.

In the field of research and survey, the Council completed 37 tests, 16 surveys and 49 indepth reports in addition to numerous reports of smaller scale.

Looking ahead, the Council will keep abreast of the global development and will initiate more "Green Testing" projects which, apart from traditional parameters of toxic ingredients, energy consumption and efficiency, will study (a) Recyclability; (b) Upgradability; and (c) Repairability of the products.

The Council will join forces with the Environmental Protection Department in conducting a large scale comparative testing on disposable food and beverage containers, with the objective of identifying products that can be used to replace the existing polystyrene foam containers which are not degradable and harmful to the environment.

It is also undertaking a test on a wide variety of foods, both processed and natural, to screen if they contain genetically modified ingredients.