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  • 1997.10.15

Is a subsidiary credit card a free gift with no strings attached? If you think so, you could not be more mistaken.

A Consumer Council survey has revealed that subsidiary credit cardholders, in many instances, are probably just as liable for debts incurred on the cards as the principal cardholders when things go wrong.

But unlike the principal cardholders, subsidiary cardholders are often in the dark of such obligation - and the extent of their liabilities.

According to the Council's survey on 18 credit card issuers in Hong Kong, subsidiary cardholders could face a number of dire prospects depending on the provisions in the cardholder agreement they have entered into with the card issuer:

First, they may be required to settle any outstanding debts incurred on the subsidiary credit cards in the event the principal cardholders fail to do so.

Second, they may be required to settle not only their own accounts but also the credit card accounts held by the principal cardholders.

Third, the debts could be recovered automatically from accounts of subsidiary cardholders they have in the banks of the card issuers who exercise the "right of set-off" as stipulated in some provisions.

Fourth, while "the Bank may terminate the Agreement at any time by cancelling the card with or without prior notice and with or without cause", the reverse is not always true for the subsidiary cardholders. In some cases, whether or not they can effectively cancel their subsidiary credit cards is a matter entirely at the absolute discretion of the card issuers.

In the survey, the Council has analysed and compared 18 credit card issuers for the provisions in cardholder agreements that may affect the rights - and obligations - of both the principal and subsidiary cardholders.

Consumers are urged to consult the findings of the survey, released in the latest issue (252) of the Council's monthly magazine 'CHOICE', for a clear understanding of their liabilities, several or joint, and the various practices of card issuers.

The survey found in many agreements a lack of clear provisions concerning the arrangement for cancellation of subsidiary credit cards either by the principal or subsidiary cardholders.

For instance, in a situation where the subsidiary card is not returned even when requested to do so by the principal cardholder, the principal cardholder will have no effective control over the further use of the subsidiary card.

The survey also drew the attention of consumers to some of the provisions of the cardholder agreements concerning the card issuers' "right of set-off". Some provisions stipulate that not only can the card issuer transfer funds from accounts, held solely or jointly by the principal and/or subsidiary cardholder, in its bank but the card issuer can also do so for accounts in other banks.

Credit card issuers including those not governed by the Code of Banking Practice, on the other hand, "when accepting a principal cardholder's instruction to issue a subsidiary card", are reminded and urged to strictly follow the recommendations of the Code. They should:

  • "provide general descriptive information to the primary and subsidiary cardholders on their respective liabilities for debts incurred on the cards issued";
  • "inform the primary cardholder of the means by which a subsidiary card may be cancelled and suspended; and
  • "make clear to both principal and subsidiary cardholders whether the card issuer claims the right to set off the debit balance in the credit card account of any of the principal or subsidiary cardholders against the credit balance in other accounts which may be held by one or more of the principal or subsidiary cardholders".

These recommendations should be considered the minimum standards to promote good banking and credit card service practices, and should be followed by all issuers of credit cards in their dealings with customers.


The Consumer Council has found many storage-type electric water heaters to be substandard posing a potential risk to the safety of their users.

This shock finding was revealed in a test on 19 samples of this product - 11 shower (open-outlet) type and 8 unvented (pressure) type.

Out of the 19 samples, an overwhelming majority (17 samples) failed to pass the test. Control of electric water heaters will come under the Electrical Products (Safety) Regulation (EPSR) due to be in force in May next year.

The test found most samples failed to pass the general electrical safety test with reference to IEC standard (International Electrotechnical Commission): creepage and clearance (insufficient distance between the current carrying parts of different polarities may cause electric flash-over or short circuit), construction, abnormal operation, moisture resistance and resistance against heat.

Unvented storage-type water heaters are pressure type heaters that can be connected to multiple hot water taps (to bathtubs, kitchen sinks and basins). They are a closed system type with no venting facilities for water expansion and steam generation.

As such, more stringent safety requirements are needed by law in order to prevent accidental explosion. Under the existing Waterworks Regulations, these heaters are required to be fitted with 4 safety devices, namely, thermostat, thermal cut-out, temperature relief valve and pressure relief valve, to prevent the temperature and pressure inside the water tank from rising to a dangerous level that may otherwise result in an explosion.

The legislative control of these electrical appliances will come under the EPSR which is very similar to the Waterworks Regulations, to be enforced by the Electrical and Mechanical Services Department next May.

The test showed that 6 of the unvented samples failed to meet the Waterworks Regulations on safety devices while none could pass both the tests on general electrical safety and Waterworks Regulations.

In the test, it was found that 3 unvented samples included in the test which have gained approval from the Water Supplies Department were found to fail the legislative requirements.

For the 3 non-compliance models, the department is clarifying with the suppliers to see whether they have altered the safety devices after obtaining the approval and the department may consider withdrawing the approval to these 3 models if they no longer comply with the requirements of the Waterworks Regulations.

Most samples, particularly the unvented type, were found to be without adequate marking and instruction manual which consumers should carefully read and understand to ensure the safe operation of the appliance.

As none of the unvented samples could fully satisfy the safety requirements, consumers are advised to consult the findings of the test, in this October issue of 'CHOICE', to check if the unvented storage-type water heaters they are using belong to any of the substandard samples. They should approach the agents or manufacturers for an inspection to find out what can be done to improve the safety of the appliances.

Consumers selecting unvented storage-type electric water heaters should be careful so as not to confuse them with the vented storage-type electric water heaters as both types look similar. A vented storage water heater should be supplied with water from a water storage cistern and be provided with an expansion pipe taken at the highest point and shall continuously rise without obstruction until it discharges to atmosphere above the storage cistern at sufficient height to prevent a constant outflow of hot water therefrom. But this is not practical to do so.

As some manufacturers do not make a clear distinction between the two types, consumers are advised not to buy a vented model and install it without an expansion pipe.

There have been incidents of explosion involving shower type electric water heaters and causing severe injuries and damage to the walls. Investigation has identified the cause to be due to wrong connection of the electric heaters thus blocking the venting facilities.

It is of utmost importance that any electric heater should be installed by licensed plumber and registered electrical worker according to the Waterworks Regulation and Electricity Ordinance.

In addition, the test also measured their performance which, on the whole, was rather satisfactory - continuous hot water supply runs from 5.2 to 8.8 minutes for (15L) shower type and 8.6 to 17.7 minutes for (25L) unvented type. Energy efficiency was high from 93.5% to 99.4%.


Schools are urged to give careful consideration to the usage of textbooks and instructional material before including them on the booklist for purchase.

The Consumer Council has conducted a survey in which over 200 students were interviewed about their usage of textbooks and supplementary teaching material such as workbooks, exercises and tests in the last school term 1996/97.

It was found that some 14% of books and teaching material in secondary schools were of less than half usage. Low usage was rare for primary schools.

In the survey, 90% of students and parents were of the view that schools or teachers should select textbooks and instructional material only if the usage is more than half. Otherwise they should be listed as for reference only and their purchase a matter for the parents and students to decide.

According to the survey, low usage - less than half usage - was particularly serious in the textbooks of music (37%) and religion (23%) and in the supplementary teaching material of mathematics (almost 25%).

If these books and material were replaced by notes or other means, students could save up to $180, representing some 12% of the average book expenditure for secondary schools last year.

The Educational Department has deemed that the selection of textbooks and instructional material is a matter requiring considerable care and thought, the guiding principle being that this should be determined mainly by the specific educational needs of the pupils using the books and material.

Since these needs vary not only from school to school but also from group to group within a school, it may well be that a book considered suitable for one group of pupils is quite unsuitable for another group.

Schools are urged to keep track on the usage of textbooks and instructional material, once selected, to ensure full utilisation as much as possible.

The Council has also completed a survey on revised textbooks and found none to be "reprint with minor amendments". However, some revised textbooks are available for purchase only until mid-September, causing much inconvenience to their buyers and possibly affecting the learning progress of the students.


The Consumer Council today sounded a warning on the potential hazard to children exposed to high level of noise emitted by some toy cellular phones. It may be damaging to the hearing of children vulnerable to loud noise.

Parents are advised not to allow their children holding a toy cellular phone too close to the ear to play for a long time.

The warning followed a Council's safety test on 20 samples of the toy. The test was conducted with reference to the American Society for Testing and Materials (ASTM F963-96a) standard.

The standard adopted is one of three statutory safety standards for toys under the Toys and Children's Products Safety Ordinance, and is the only standard which has set the requirement for the noise of toys.

The toy cellular phone samples were measured for their levels of "impulsive noise (peak noise for a duration of less than 1 second)" and "continuous noise".

When measured from a distance of 2.5 cm (i.e. close-to-the-ear) the highest levels emitted for "impulsive noise" ranged from 82 dB(A) to 105 dB(A). While from a distance of 25 cm (i.e. the average playing distance) the levels recorded ranged from 70 dB(A) to 90 dB(A). In both cases, the "impulsive noise" levels were below the upper limit of 138 dB(A) of the ASTM standard.

For "continuous noise", the highest noise levels ranged from 85 dB(A) to 114 dB(A) when measured at 2.5 cm and from 76 dB(A) to 101 dB(A) at 25 cm. ASTM, however, has not yet established the safety limit for "continuous noise".

While all the samples were deemed in compliance with the safety standard stipulated in the Ordinance, many would have failed if measured against the safety standards in other countries.

For instance, 16 samples (80%) would have failed the Canadian standard and 18 samples (90%) in the case of the draft European standard (pr EN71-1:1997). The safety limits of these countries on noise levels for toys are 100 dB(A) and 92 dB(A) respectively.

The Consumer Council has written to the Trade and Industry Bureau recommending that these safety standards be also included in the Ordinance.

In general, the noise levels emitted by these toy cellular phones should not impair hearing. But individuals differ in their sensitivity towards noise levels.

While the sensitivity of children to loud noise is basically unknown, some scientists hold the opinion that, since the auditory canal in children is smaller than in adults, there is a different amplification which makes children more sensitive to high frequency sounds.

Impulsive sounds are especially hazardous since it is very difficult for the human ear to determine the sound levels due to the very short time factor.

It is a fact that permanent damage to hearing may occur after only one exposure to high peak sound levels. It is also worth bearing in mind that once a hearing loss does occur, there is no way of repairing the damage.