Consumer complaints rose by 15% in the first year of the new millenium, with a total of 18,932 cases (16,470 cases in 2000) against goods sold (10,388) and services supplied (8,544).
In a year-ender briefing today (January 9), the Chairman of the Consumer Council, Professor Andrew CHAN Chi-fai, noted the rise in the level of consumer complaints particularly in the service sector which has grown at a much faster pace over the years.
In the 5-year period between 1996 and 2000, service-related complaints rose by 150%, from 3,405 to 8,544 cases whereas goods-related complaints grew by 92%, from 5,400 to 10,388 cases.
"Clearly this reflects a greater consumer awareness, and the changing structure of the economy as well as rapid technological development bringing with it new types of products and services as never before," he said.
A good example can be found in the services of the fast growing telecommunications sector, including the Internet, which topped the list of consumer complaints with the highest number at 3,112 cases, a 71% increase over the preceding year.
Prof. Chan stressed that with the best of endeavours, the Council is able, despite constraints in resources, to face the consumer demand and challenge in the year ahead.
Priority for 2001
As a matter of priority, the Council will continue to initiate and lobby for improved legislative protection for the consumer. Essentially, it will seek the support of the Government in the enactment of legislation curbing deceptive and misleading trade practices.
Further, the Council has been discussing with government on the feasibility of empowering the Council to sue on behalf of aggrieved consumers in cases of crucial consumer interest. The provision of this power will greatly enhance access to justice and legal redress by consumers who suffer from unconscionable contract terms or misleading claims of traders or the like.
Looking Ahead
In addition, the Chairman said, the Council will make greater use of the Internet for the provision of consumer information and advice. It will continue to study the myriad of consumer issues affecting e-shoppers such as personal privacy, payment security, information confidentiality, online disclosure, scams and Alternative Dispute Resolution, etc.
In view of the ever rising spending by Hong Kong consumers in the Mainland, and with Mainland tourists topping the list of Hong Kong's visitors, the Council's exchanges with its Mainland counterparts will be strengthened and will not limit to only handling complaints, but to sharing information and experiences on how best to protect consumers in a market economy, e.g. on regulation of insurance practices, enactment of consumer laws etc. Such exchanges are mutually beneficial at this critical time with China's impending accession to WTO.
There were 312 cases of Mainland tourist complaints, representing 32% of all tourist complaints or 1.6% of total consumer complaints last year; and 56 referrals to the Mainland in 2000.
The Council will also devote greater efforts to promoting corporate social responsibility through voluntary codes of trade practice, on the one hand, and sustainable consumption through greater consumer awareness, on the other.
Government Support
The Chairman added that the Council is much encouraged to see staunch support from various quarters. Notably, he cited the police role in the crackdown on malpractices by Chinese medicine and dried seafood shops and the most recent scams in suspected pyramid-selling schemes. The proposed legislative change should aim at making it easier for police enforcement actions against such trade malpractices.
He also noted the regular monitoring and warning on unsafe food products by the Food Environment and Hygiene Department, hazardous electrical appliances by the Electrical and Mechanical Services Department, and the enforcement work by the Customs and Excise Department against unsafe products.
Of far-reaching implications is the landmark High Court Judgement in which the indemnity clauses in credit card agreements were ruled "unconscionable" and the interest charged for personal loans "extortionate".
"All these efforts have contributed and no doubt will continue to contribute significantly to consumer welfare and better consumer protection," he added.
Complaints Analysed
During the year, telecommunications services continued to top the list of consumer complaints due largely to: (a) the introduction of broadband in Internet services resulting in delay in installation, account errors and slower than expected transmission speed (This seems to indicate that the operators were not well prepared to cope with the quality of service and technological advance expected of them by consumers); (b) price increases in mobile phone service plans; (c) drastic price adjustments in IDD roaming service.
In addition, telecommunications equipment and computers were also high on the list with 1,100 and 741 cases, an increase of some 31% and 32% over 1999 respectively. The increase was brought on by the proliferation of new models of these products, and rising consumer expectations for quality and after-sales services.
Of interest on the service sector was a 34% reduction in the number of complaints on travel agents - from 1,381 in 1999 to 906 in a year of slowdown in the properties market. There were also fewer complaints against restaurants - from 382 in 1999 to 357 in 2000, down 7%.
Another point of interest was in the properties sector which showed a continuing decline of 9%, from 745 cases in 1999 to 677 in 2000. The complaints were mostly related to building defects the design and material used of the properties.
But it should be emphasised that these cases, by nature, invariably involved huge sums of money and considerable time and effort of the Council in the mediation and resolution of complaints. Developers are urged to pay greater attention to this long-standing consumer dissatisfaction.
Other categories high on the list of consumer complaints include: cake and food coupons (1,257 cases largely due to closure of a multi-outlet Chinese food distributor), electrical appliances (1,162) and furniture and fixtures (1,160), which were traditionally among the most complained with the former actually registering an 8% decrease and the latter 3% increase.
In cases involving important public interest and where mediation in the resolution of complaints has been exhausted and failed, consumers could apply for legal redress under the Consumer Legal Action Fund (CLAF). Since the Fund was set up in 1994, it has altogether considered 40 groups of cases with each group ranging from one single individual to thousands of consumers.
Pursuing judicial redress is inevitably very time-consuming. For example, the two cases where compensation was obtained last year, the time they took from the moment assistance was granted by the Fund to finally receiving the full amount of the compensation was on average 3 years.
During the year, CLAF considered 6 groups of cases and granted assistance to 2 cases. In the other 4 cases, 2 were not deemed strong enough to warrant assistance. One was dropped after counsel's advice not to institute proceedings, and in another one (the credit card case), assistance was not required following the court's own engagement of a senior counsel as "friend of the court".
Monitoring of Trade Practices
It was a rewarding year for the Council's work in monitoring trade practices. At the start of 2000, it released a detailed study, termed "Energising the Energy Market", into gasoline, diesel and LPG markets in Hong Kong. In the study of the Council outlined its research on various aspects of those markets, made observations on the market structure and barriers to competition, and put forward recommendations for industry and government to consider.
The recommendations had three basic aspects - encouraging entry by new retail operators, inducing price competition, and improving government oversight. The Government responded by creating a Competition Sub-committee of the Energy Advisory Committee with the Council's representation. The Subcommittee had examined, inter-alia, the Council's recommendations, some of which were subsequently implemented, such as removing regulatory barriers to new entry. It was considering how others could be addressed in the future, for example, monitoring market structure, and ensuring competitiveness at the wholesale level.
During the year, the Council also examined complaints made to it by merchants against the imposition of an increase in transaction fees for the debit card network retail payment system known as 'EPS'.
The Council was pleased to note that following discussions with the Hong Kong Monetary Authority, the agency began a comprehensive review of retail payment services in Hong Kong, in which it proposed to consider the degree of competition that exists in the provision of retail payment services.
The Council will continue to work closely with the Competition Policy Advisory Group (COMPAG), by examining complaints, and by discerning appropriate areas for research, in order to promote competitive processes in the attainment of economic efficiency.
Product Testing and Research
During the year, the Council completed and published 38 comparative product testing reports, and 61 research and survey reports on the evaluation of goods and services available to consumers. Prominent among these reports was the survey on credit cards, which provided information for the High Court to rule on the credit card debts redemption case.
Other reports included such topical issues of important consumer interest such as the survey on Mandatory Provident Fund Schemes bringing to light their complex and varied pricing structures, and the test of Genetically Modified Foods calling on the Government to conduct feasibility study for the introduction of labelling requirements. A Government working group, with representation of the Council, has subsequently been formed with a view to set up a labelling scheme for GM foods.
The Council aims also to undertake more green testing on the environmental aspects of products and services including energy consumption and efficiency of domestic appliances. It will publish test results of refrigerator, compact fluorescent lamps and room air-conditioners.
Consumer Education
Consumer empowerment through information and education is ultimately the best form of consumer protection in an open, free and competitive marketplace. The Council has stepped up substantially its programmes and activities on consumer education, and is taking advantage of the new educational goal for lifelong continuous learning to push consumer education to all levels of learning, tertiary, secondary and primary.
With the new Consumer Information Education Centre, due for completion in mid-2001 in Tsimshatsui, the Council will be able to further its objective in consumer empowerment.