Consumer issues related to debt and bankruptcy will be a top agenda of the Consumer Council in consumer empowerment and protection in the year ahead.
The Consumer Council is to launch a massive publicity campaign focusing on debt relief solutions, on the one hand, and preventive education, on the other.
The drive will target the growing number of consumers in debt and in particularly those who are marginalised under the current adverse economic environment.
Publicity drive on consumer credit
Through its in-depth studies and surveys, the Council will investigate a whole spectrum of issues related to consumer credit, i.e. the costs and benefits of different debt consolidation and restructuring services, trade practices with respect to truth in lending, debt collection, and legal protection for debtors, etc.
And through its consumer education activities, the Council will encourage consumers to exercise prudent financial planning, caution consumers on the perils of incurring excessive debt, and advise on saving plans and investment vehicles.
All information and advice, as they become available throughout the year, will be disseminated through various means such as its monthly magazine CHOICE, a special page in its website, a network of consumer advice centres throughout Hong Kong, schools and community agencies. The support of the media will be actively enlisted in this endeavour.
In short, the Consumer Council will play the combined role of an information provider, an educator to students and trainers alike, and a consumer advocate for consumer protection against market and debt collection abuses, etc.
Financial services (1,079 cases) represented the third highest category of all complaints received by the Council in 2002. A substantial portion of these complaints was about the imposition of excessive financial charges including high collection fees in regard to defaulted or delayed payments of credit cards.
The current credit squeeze by many financial institutions demanding immediate repayment of outstanding balances of credit cards also aroused significant consumer resentment and dissatisfaction.
Record number of consumer complaints
In the year 2002, the Consumer Council received an all-time high of a total of 22,890 cases of consumer complaints, a rise of 10% increase over the previous year.
The continued economic downturn is believed to have prompted some traders to be more prone to improper sales tactics to compete for business and less ready to settle consumer complaints. Consumers, on the other hand, are increasingly more aware of their consumer rights and intent on getting value for money.
Telecom services
The service quality and trade practices of the rapidly expanding telecommunications industry in this age of information and communication technology alone accounted for one-quarter of all consumer complaints in 2002.
Consumer dissatisfaction against the telecom industry began to climb steeply at the turn of the new millennium from 1,820 complaints in 1999 to 3,111 in 2000, and 4,683 in 2001 to 5,800 in 2002. The increase in 2002 was due mainly to complaints related to the internet services (2,851) that include :
- Automatic renewal of service agreements without prior notice to and/or consent of consumers, as well as renewal of service agreements before the expiry of the existing ones.
- Undesirable sales promotion tactics: In some cases, salesmen persuaded consumers to switch internet service to a new provider by allegedly claiming to terminate the existing uncompleted contracts on their behalf. As the contracts could not be legally cancelled unilaterally, the hapless consumers were left to bear the costs of the remainder periods of the contracts. In other cases, salesmen allegedly misrepresented to consumers that the company had signed a block contract with their housing estates and so all that they had to do was just to sign a register which in fact was a binding contract.
- Poor customer service including difficulties in accessing customer service hotlines, and no proportional increase in customer service staff despite a substantial increase in clientele.
Another major area of complaints related to the telecom industry concerned mobile phone services (1,653), due largely to disputes over air-time charges, and contractual rights and obligations.
In contrast, telecommunications equipment (1,033) recorded a decrease over the previous year. Most complaints concerned disputes over the question of responsibility for water damage of mobile phones - whether it was caused by improper use or moisture in the air.
Electrical appliances
Also high on the list of consumer complaints were electrical appliances (1,146), furniture and fixtures (1,062), and photographic equipment (891).
With regard to electrical appliances, the second highest number of complaints, a rising trend was observed in the high levels of costs charged for maintenance and repair services.
Furniture and fixtures, though lower than last year, concerned largely disputes over the quality of goods, particularly where there are no commonly recognized acceptable standards, and also over the use of particle boards instead of plywood.
A sharp increase of over 55% was recorded for photographic equipment. Undesirable sales tactics including bait-and-switch were the main cause of this category of complaints.
An analysis of the complaints further showed that the rising trend in the service sector continued unabated in 2002. There were 13,876 service-related complaints compared to 9,014 complaints on products.
Tourist complaints
The year under review saw an increase of 5.19% in the overall number of complaints lodged by tourists of all nationalities, totalling 1,188 complaints compared to 810 last year. In particular, complaints by tourists from the Mainland increased noticeably rising from 269 in 2001 to 519 last year. There has been an increase in the total number of tourists visiting Hong Kong during the year (visitor arrivals up to November 2002 increased by 19.9% and arrivals from the Mainland by 52.1%).
To enhance consumer confidence, traders are urged to adopt practices for greater information disclosure and transparency of their goods and services such as clear accurate price labelling, instead of high-handed and misleading sales tactics.
Highlights of Major Issues
Highlights of some major issues and concerns which the Consumer Council was involved in during the year 2002:
- The Council devoted much attention to the issue of pork prices after the supermarket initiative to vie for a larger share of the fresh produce market by offering big discounts, and the issue of traders passing off frozen or chilled pork and chicken meat as "fresh". The year ended with greater consumer awareness of the differentiation of the various types of meat on offer and the government commitment to enforce the law against passing-off behaviour.
- The liberalization of the rice market also resulted in price discounts just before the new year. The Council will continue with its regular price surveys on supermarkets in order to provide consumers with information on pricing behaviour and the trend.
- The Council played an active role with OFTA in devising the Billing and Metering Integrity standards for telephone calls, which is crucial in protecting consumer interest and forestalling consumer complaints.
- An assisted consumer of the Council's Consumer Legal Action Fund won a case against a mobile phone operator for the $10 tunnel charge increase. Although the Small Claims Tribunal ruling does not carry a precedential effect, the case does demonstrate that such fixed service contracts between service providers and consumers should not be unilaterally changed.
- The Council also submitted its comments to the Privacy Commissioner and the HKMA regarding the need to develop a benchmark and effective consumer safeguards if the government were to extend the sharing of positive credit information.
Chairing the year-ender press conference today (January 6) is Prof. Andrew CHAN Chi-fai, Chairman of Consumer Council.