Overall Consumer Complaints Dip 1% but Online Purchase & Budget Airlines Continue to Rise Unabated

8 February 2018
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Overall Consumer Complaints Dip 1% but Online Purchase & Budget Airlines Continue to Rise Unabated

Consumer complaints lodged with the Consumer Council totalled 24,881 cases in 2017, dipping 1% over the previous year (25,098 cases), with the service sector taking in 13,977 cases (56%), up 1%, and the goods sector 10,904 cases (44%), down 3%.

Despite a slight drop in overall complaints last year, the Council stressed that new consumer issues were emerging, demanding ever more vigilance and effort in consumer protection. Notably, with changing consumption behaviours, shopping online is rapidly becoming the mainstream, bringing with it a myriad of consumer disputes; complaints involving e-commerce surged over 20% last year. Budget airlines with low airfares are a big draw to consumers but their standard of service still remains much to be desired; a massive cancellation of budget air flights also triggered off a dash of complaints last year. While complaints against medical beauty services seemed to have abated, allegations of “suspected unsafe” services rose sharply by nearly 55%; the Government has yet to introduce regulatory control over the medical beauty sector.

Such are examples of the emerging new issues due to changing consumption pattern; unless early action is taken the problems may seriously harm the consumer public. Businesses are called to exercise corporate responsibility with honest trade practices, and the Government is urged to devise appropriate measures of effective deterrence to malpractices. The Council will continue to focus its endeavour in the protection of consumer rights and interests, and in enhancing consumer self-empowerment.  

Top 5 Complaint Categories

Telecoms services continue to top all complaint categories with 3,231 cases, rising 8% over 2016 and representing some 13% of overall complaints, with the main bulk of complaints concerning mobile phone services (1,283 cases) and internet services (807 cases). The past year saw a price war among several telecoms operators, vying customers with aggressive promotion, resulting in a sharp rise of complaints by 48% to 409 cases. The Council urged telecoms traders to refrain from sales tactics for new customers to the detriment of consumer interests, and to strengthen frontline sales teams in training and supervision.

Second on the 5 most consumer complaints were tourism matters which last year totalled 2,484 cases, up a significant 27% and the highest increase in the top 10 major complaint categories. Most complaints were about air tickets with 930 cases, among which 525 cases or 56% were against budget airlines, nearly doubling the previous year’s 352 cases. Next came complaints about services at 636 cases, split almost equally between the budget and non-budget airlines. But the 329 cases belonging to the budget airline sector represented a surge of nearly 70% over the previous year. Whereas the 307 cases from the non-budget airline sector rose only 5%.  

In the eve of last year’s National Day and Mid-Autumn Festival holidays, a budget airline abruptly cancelled a large number of air flights causing huge chaos and confusion in the ensuing arrangements for refund and flight changes, and an onset of consumer complaints. That incident alone accounted for over 90% of all complaints against budget airlines. As the complaints involved mainly last-minute flight cancellation disrupting the consumer itinerary, complaints on flight delay and alteration/termination of contracts rose by 1.6 times to 287 cases compared with the previous year’s 115 cases. The airline industry is urged to improve on flight arrangements and supporting services, as well as resolving the issue of overbooking to reduce the inconvenience caused to the consumers.  

The third and fourth position were taken up respectively by household electrical appliances and telecoms devices, with 1,634 and 1,273 complaints, in both cases down 10% and 30% from 2016. As with the past, electrical appliance complaints concerned mainly maintenance services representing nearly 40% of complaints; air conditioners have replaced TV sets as the electrical item with the most complaints. Technology development has also  a bearing on complaint trends; among the complaints on telecoms devices over 80% involved handset cell phones.

Restaurants and entertainment came fifth, rising 4% to 1,173 complaint cases last year. While restaurant complaints remained unchanged as the previous year, the increase in this category came mainly from the sub-categories of public performance and sports activities, for example, complaints related to pop concerts and sports tournaments rose to 76 cases and 73 cases respectively.

Online Purchase Escalating by over 20%

Online shopping has opened up a wide array of choices to consumers. But along the chain from placing the order to delivery of the goods are various service providers or merchants involved, thus opening up to consumer disputes when things go awry. Last year saw online purchase complaints rising to 3,928 cases, up 23% over the previous year, with 2,119 cases (54%) on services and the remainder 1,809 cases (46%) on products.

Among the various online purchase of goods and services, tourism and accommodation were the most frequently complained issues totalling 1,313 cases, a 31% increase over the previous year, concerning mainly air tickets and hotel accommodation.   

Purchasing online also motivates industries such as group shipping, storage and delivery services. For instance, for merchandise required to be delivered from abroad to Hong Kong, many consumers opted to use group shipping services, rising from 57 complaint cases in 2015 to 133 cases in 2016 and 334 cases last year, up almost 5 times over a short 3-year span.   Consumers are reminded that although online purchase offers great convenience but the process from purchase to delivery may give rise to unexpected problems. Consumers should clearly understand the clauses relevant to their protection to avoid disputes afterwards with financial loss. 

Complaints against online purchase involving sales practices, suspected spurious products and alteration/termination of contracts have all jumped exponentially by 118%, 168% and 332% respectively, amounting to over $10.8 million, the situation is most worrying. In an in-depth study report issued by the Council the previous year on online purchase, it was revealed that the consumer protection legislation governing online purchase is seriously lagging behind the European Union (EU), the UK, the Mainland and Taiwan. When online shopping has become the norm in lifestyle, consumer protection should also be in keeping with the times. The Government should regularly monitor the development of online purchase and devise suitable measures to strengthen the protection.

Tourist Complaints Continuing Its Upward Trend

Consumer complaints in relation to tourism, an important pillar of Hong Kong’s economy, climbed almost 30% to 2,681 cases last year compared with the previous year. Sales practices were among the most in the complaints (some 600 cases). Complaints levelled by mainland tourists jumped substantially by 34% rising from 1,572 cases in the previous year to 2,104 cases last year, representing 78% of all tourist complaints and involving $29 million, up a hefty 67%  over 2015.

The steep rise in mainland tourist complaints was mainly resultant from cases filed by several hundreds of mainlanders who, through paying intermediaries, visited Hong Kong to seek cervical cancer vaccinations but due to a shortage of the vaccines, many failed to receive the service. The Council has taken heed of the recent shortage of flu vaccines and will closely keep tabs on the forthcoming complaints.

Regulating Medical Beauty Services Urgently Needed

The overall beauty services sector recorded a drop of 7% to 1,148 complaint cases last year. Despite the decline in the number of complaints, consumer dissatisfaction over prepayment consumption, including the expiry of purchased coupons and alteration/termination of contracts were up respectively 82% and 292%.  

Furthermore, despite complaints of medical beauty services such as high-energy laser treatment and invasive surgical treatment were down 13% to 208 cases, complaints alleging “suspected unsafe” such as post-treatment bleeding, burns, scars and allergy symptoms, rose from 37 cases in 2015 to 57 cases last year, up nearly 55%.  

Medical beauty services involve high-risk procedures, severe consequences may follow if improperly performed. However, after a lapse of more than 5 years in the wake of the DR incident, the Government has only just submitted its “Proposal on Regulatory Framework for Medical Devices” at the beginning of last year, with the timetable of legislation still not yet confirmed. The Council reiterated the imperative of a comprehensive piece of legislation that will not only protect consumer interests and safety, but also regulate beauty devices and operators’ qualifications and quality, under a licensing regime, could provide the solution to proper supervision of the sector and safeguard of consumer safety.

In-depth Study Reports on Livelihood Issues

Besides handling consumer complaints, the Council published last year two in-depth research reports both dealing with significant consumer livelihood issues. First, the issue of consumers using credit cards in prepayment consumption. In the event of a business closure or for whatever reasons the trader could not provide the goods and services after payment, consumers should rightly be able to apply to the card issuers for refunds. In May, the Council released a report “Consumer Protection on Prepayment and Retailer Insolvency–Review of Chargeback and Beyond”, which revealed that such an important consumer right has been consistently denied to the card holders. The report also uncovered wide variations in the arrangements for refunds as well as a lack of transparency in information disclosure about individual refund policies which do not cover hire purchase plans paid by credit cards. Following the release of the report, some banks have since uploaded the refund application forms on their websites, in prominent display, to enhance information transparency.

In the other report “A Study of the Competition in the Personalised Point-to-Point Car Transport Service Market” released in November, noted the long-standing issue of service quality of the taxi industry, and recommended the Government to open up, in a progressive approach, the e-hailing service market to create a fair competitive environment between   e-hailing and taxi services in order to offer more choices and better service. The report has aroused enormous public reaction with positive support from various sectors in favour of the Council’s proposed way forward for the taxi industry.  

Crackdown on Sales Malpractices – First Regional Co-operation Memorandum

The Council has strived against sales malpractices. In September last year, the Council named a company, Great Time Universal (HK), for engaging consistently in misleading and coercive high-pressure tactics in the marketing and sales of overseas home sharing membership schemes, seriously detrimental to consumer interests. After the publicity sanction, the Customs and Excise Department followed up with the arrest of a number of the company’s responsible persons. Through such a naming mechanism, the Council hopes to deter rogue traders and alert consumers to avoid falling prey of undesirable sales practices.  

South Korea is a popular tourist and shopping destination for many Hong Kong consumers, but when consumer disputes arise it is difficult to seek redress due to language barrier. Last year, the Council in collaboration with the Korea Consumer Agency (KCA) signed a Memorandum for Cooperation establishing a mechanism for the exchange of information and consumer complaints in a joint effort to strengthen the cooperation in complaint resolution. This is the first such cooperation memorandum the Council has entered into with a consumer organisation overseas, and will continue to build similar ties with consumer organisations in the region, in furthering the safeguard of consumer rights and interests.

In a bid to foster in the young generation the correct consumer attitudes and behaviours, the Council undertook last year a new approach, in partnership with the Financial Services and the Treasury Bureau (FSTB), in the launch of a series of 3 short videos through the platform of the social media for the first time, in effectively reaching young adults to “avoid excessive eat, drink and merry indulgence that could lead to overspending and towering debts”. The response to this new venture has proved most positive and the Council will in future explore different channels to strengthen its interaction with consumers.

In addition, the Council also embarked on Consumer Education for Primary Schools targeting primary pupils and using an innovative learning approach. The aim was to provide the young the opportunity to review and learn about their own daily consumer behaviours and attitudes, and the impact they could bring to the planet environment, instilling in them at a young age the concepts of sustainable consumption. 

In looking forward to the work in the new year ahead, the Council will stay closely vigilant in anticipation of the changing consumer tides and future trends, investigating in-depth into the pros and cons of new emerging consumption patterns, and potential consumer entrapments confronting various strata of the society. Through systemic research and advocacy, the Council will formulate and strive for the enactment of consumer protection legislation for post-purchase cooling-off periods, and medical beauty services, in a comprehensive all-embracing safeguard for consumer rights and interests.