The Consumer Council today named a video rental chain for business practices detrimental to consumer interests.
With a chain of 9 outlets (8 in the New Territories and 1 in Kowloon) still operating, Cheapy Laser & Video Express Services Ltd. has been a subject of 115 consumer complaints involving 5,839 prepaid coupons valued at $59,223 since October last year.
Its main shop is situated at: Shop 6, Ground Floor, Po Wah House, Tai Ming Lane, Tai Po. At the height of its business, Cheapy is believed to operate a chain of over 20 outlets mostly in the New Territories. Consumer complaints arose as the company began scaling down its operation.
The 115 complaints resulted from the closure of 8 outlets. They were directed at Cheapy's practice of closing down its outlets with neither adequate notice to consumers nor appropriate arrangements for the redemption of prepaid coupons.
Some complaints were about the company's practice of continuing to sell coupons, despite the imminent closure of outlets that took place shortly afterwards.
The complainants were greatly dissatisfied in that they were literally forced to use up all their coupons at short notice (sometimes within 1 to 2 months) and with only a very limited choice of videos as many new titles were not available.
Further, the company's notice of closure date was, in some cases, inaccurate or misleading. Some complained that after they had painfully used up the coupons, the outlet supposedly to be closed was found to be still operating.
According to the complainants, after the local shop closed the next nearest outlet in the chain was often much too far away and inconvenient. Customers were not offered the option of a refund or allowed to use the remaining coupons to purchase videos or other goods in the shop.
The Consumer Council has sent the company warning letters and made many attempts to contact the company's management. Finally, the manager promised to settle all the complaint cases outstanding.
However, this has turned out to be a delaying tactic as so far none of the complainants had received any satisfaction. Neither has the company improved its trade practices.
In the circumstances, the Council has no alternative but to expose the chain to alert the public to its undesirable trade practice.
The issue of security with consumer prepayments has been a subject of considerable public concern in the wake of recent closures of businesses accepting prepayments for goods and services.
Consumers are strongly urged to carefully balance the benefits and the risks of prepayment consumption, especially when buying a large quantity of such coupons.
The Council has issued, as a long-term preventative measure, a voluntary Code of Practice which businesses accepting consumer prepayments can adopt to reduce the chance of consumers suffering loss.
The voluntary measures a financially responsible company could take include:
- Refrain from overselling coupons. Don't push customers to buy more coupons than they are likely to use in the near future.
- Act with prudence to make sure they will have sufficient funds to meet their obligations.