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A half-yearly review of consumer complaints by Chairman of Consumer Council, Prof. Andrew CHAN Chi-fai

  • 2000.07.25

The fast growing telecommunications industry has scored a new record in the number of consumer complaints.

In the first 6 months of the new millenium year 2000, the Consumer Council has recorded a high 1,517 complaints on telecommunications services and 488 on telecommunications equipment.

Together they amounted to 2,005, out of a total of 9,514 consumer complaints for the period under review.

This means slightly more than 1 out of every 5 cases of consumer dissatisfaction was related to the telecommunications industry.

Telecommunications Services

Complaints on telecommunications services have been fast on the rise in recent years from 1,010 in 1998 to 1,820 in 1999.

A breakdown of the telecommunications services complaints so far this year showed: 29 were related to telephone/fax services, 968 mobile phone services (of which 399 arose from the price increases in January and March this year), 284 internet services, 48 paging services, 172 IDD/long distance calls, and 16 others.

Of particular interest was the rapid rise in internet services from 115 to 284 cases, an increase of 147%. The complaints were mainly about delay in installation and interruption of broadband services.

While every effort is being made to mediate and resolve these consumer complaints, the Consumer Council has sought the co-operation of the telecommunications Authority (TA) to look for ways to improve consumer safeguards in a number of issues.

Unilateral Power of Variation

First, the unilateral power of variation of contract terms by mobile phone services operators in the wake of the simultaneous price adjustments earlier this year. The concern is that operators invariably reserve the right to vary the charges or the terms and conditions of the service contracts.

The Council considers this practice unfair and has submitted to the TA that: a general unilateral power of variation should not be expressly or implicitly given to the service provider in contracts with consumers.

Specifically, the Council is concerned that, first, customers bound by packaged deals may be required to pay a penalty should they opt to terminate the service contracts and, second, customers are not given adequate notice of any contract term variations including price adjustments. Mobile phone operators have generally agreed to allow sufficient notice to customers in any contract variations.

In addition, the TA has discussed the issue with the objective of drawing up guidelines for mobile phone operators to work out new service contracts for the mutual benefits of consumers and mobile phone operators.

Metering and Billing Integrity

Second, the issue of rising disputes on the metering and billing integrity of telecommunications services, on which the TA has produced a consultation paper.

In its response, the Council has submitted that the paper has not addressed the issue of unauthorized use of another person's accounts (for example, internet access accounts), which may also be the cause of some charging disputes.

The Council has pointed out several areas that would warrant stringent security measures: access to passwords (limited access by selected personnel only), handling sensitive customer information (strict procedures on record) and the means of generating default passwords (avoid using customers' identity card numbers).

It has also recommended the need for self-regulatory "Guidelines for a trustworthy telecommunications operator". The emphasis on trustworthiness would require operators taking practical steps to limit the possibility of staff misusing customer's property or otherwise taking advantage of the trust between the operator and the customer.

Deposits and Prepayments

Third, the issue of customers' deposits and prepayments which are largely unprotected when a service provider goes into liquidation, and the not-so-rare problems that consumers encountered with the refund of deposits or prepayments when electing to have services terminated.

The TA has agreed to the Council's suggestions of obligating the telecommunications service provider to include cautionary reminder on customer documentation and to act with prudence in handling deposit and prepayment of charges. These suggestions will be incorporated into a code of practice to be issued soon.

The Council has also proposed, for TA's consideration, the alternative of lodging a credit card imprint in lieu of deposit and prepayment in the hope that provisions along similar lines could be added to the code of practice.

Overall Increase on Complaints

The complaint statistics under review showed an overall increase of 12% over the corresponding period last year, and that of the 67 classes of goods and services, there were 30 advances, 32 declines, 2 equals and 3 non-applicable (none for the corresponding period).

Consumer complaints are, to a certain extent, indicative of the state of the economy and patterns of consumer consumption.

Electrical Appliances

Notably, telecommunications services have now overtaken electrical appliances as the most frequently complained by consumers. In fact complaints on electrical appliances dropped from 667 to 605, a reduction of 9% over the corresponding period last year.

Food Coupons

The issue of prepayment was highlighted again in March when a major retail chain decided to close down its food coupon business. The coupons were for the redemption of roast pork, preserved sausages and cured meats.

This brought on a large number of complaints by coupon holders. Upon mediation of the Council, the retailer acted responsibly and was quick to offer to resolve the complaints with full refund.

A total of some $330,000 was paid out to 1,252 complainants - the highest amount in one single case involved $15,233 and the lowest $32. Some of the unredeemed coupons were found to date back as far as 20 years ago.

School Matters

An issue of considerable public attention recently concerned the Gloria Kindergarten. Consumer complaints on this issue accounted for 42 out of 56 cases of complaints on school matters. The parents were demanding the refund of tuition fees received by the kindergarten in excess of the levels of fees approved by the Education Department.

As the kindergarten concerned refused to resolve the complaints through mediation, the Council has offered to the complainants the assistance of the Consumer Legal Action Fund (CLAF) to pursue their claims further through litigation. A number of applications for CLAF assistance has been received, with the amount under dispute around $4,200 each pupil each year, and the Council will closely monitor the situation to offer help to parents in need.

Health Food and Chinese Medicine

The growing popularity of health food and Chinese medicine has brought its fair share of consumer complaints. The Council received altogether 368 complaints, an increase of 139%, on this class of medical products.

The breakdown showed: 267 on health food, 34 on Chinese herbal medicine, 23 on medical aids, 19 on drugs, 16 on ginseng, 5 on Chinese patent medicine and 4 others.

Building Defects

Another area of rising consumer dissatisfaction concerned building defects which drew 323 complaints in the first half of the year. This compared with a total of 337 for the whole of last year.

The defects under complaint included leakage at windows, inferior internal finishings, uneven flooring, damaged wall tiling, defective cupboards and sanitary wares.

The Council is of the view that developers bear the responsibility to thoroughly inspect the conditions of the property to their satisfaction before handing over to their customers. And action should be taken to immediately rectify defects once discovered.

While building defects were on the rise, the overall number of complaints on properties (inclusive of building defects) has actually been on the wane. There were 425 compared with 476 in the corresponding period last year.

Other Notable Changes

Highlights of other significant changes in the complaints during the period under review include :

  • Notable increases were recorded on broadcasting services (112 up 56%), computers (326 up 39%), clothings and apparels (282 up 12%), laundry services (160 up 13%), baby products (51 up 104%), and beauty salons (100 up 56%).
  • On the other hand, there were some welcoming decreases. They included 401 on travel agents (down 55%), 20 on modelling/talent hunt agencies (down 79%), 44 on medical services (down 19%), and 17 on lawyers (down 35%). And good news to the pub hoppers, no complaint was lodged during the period under review.
  • While there was a surprise jump in complaints on overseas removal services (from 1 to 17 complaints), there was a 24% drop on local removal services (from 17 to 13 complaints) as well as a 50% decrease on emmigration consultants (from 4 to 2 complaints).